Puerto Rico World Economic Forum (WEF) 2010 - 2011 Puerto Rico’s current global competitiveness...
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World Economic Forum – The Global Competitiveness Report Puerto Rico: Global Competitiveness Report and Outlook at a Glance
Transcript of Puerto Rico World Economic Forum (WEF) 2010 - 2011 Puerto Rico’s current global competitiveness...
World Economic Forum –
The Global Competitiveness Report
Puerto Rico:
Global Competitiveness Report
and Outlook at a Glance
2
Agenda
Overview of the Global Competitiveness Report
Puerto Rico’s Competitiveness at a Glance – Reforms and Initiatives
Macroeconomic Results and Indicators
1
2
3
3
Agenda
Overview of the Global Competitiveness Report
Puerto Rico’s Competitiveness at a Glance – Reforms and Initiatives
Macroeconomic Results and Indicators
1
2
3
138
123
87
49
89
17
87
22
28
45
20
68
1
24
16
0
20
40
60
80
100
120
Burden of Gov. Regulation Total Tax Rate Internet Usage
Puerto Rico U.S. Ireland Chile Singapore
3641 42 41
1 12
47 5 3
2
22 2225
2928 28
30 30
96 9895
101
0
20
40
60
80
100
120
2007 2008 2009 2010 2011
Rankings de Competitividad Global Global Competitiveness Ranking
Source: World Economic Forum (WEF) 2010 - 2011
Puerto Rico’s current global competitiveness
ranking is below some of its competitors
Factors that adversely affect the ranking
U.S..
Singapore
Ireland.
Chile
PR
Dominican Republic
2010-2011 Ranking (Out of 139 countries)
After 2 years of consecutive drops, for the first time PR’s
ranking had a small improvement
4
PR Overall Ranking: 41
5
Agenda
Overview of the Global Competitiveness Report
Puerto Rico’s Competitiveness at a Glance – Reforms and Initiatives
Macroeconomic Results and Indicators
1
2
3
The Global Competitiveness Index (GCI) includes a weighted average of 12 pillars and
110 indicators, each measuring a different aspect of competitiveness
6
The 12 Pillars of Competitiveness
42
33
87
49
40
34
51
19
34
62
29 31
44
49
38
51
38 34
41 40
52
62
27
33
1st pillar:
Institutions
2nd pillar:
Infrastructure
3rd pillar:
Macroeconomic
environment
4th pillar: Health
and primary
education
5th pillar: Higher
education and
training
6th pillar: Goods
market efficiency
7th pillar: Labor
market efficiency
8th pillar:
Financial market
development
9th pillar:
Technological
readiness
10th pillar: Market
size
11th pillar:
Business
sophistication
12 pillar:
Innovation
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139) PR Ranking 2010-2011: 41
PR Ranking 2009-2010: 42
Pillar description: The legal and administrative framework within which individuals, firms and governments interact to generate income and wealth in the economy
In addition to all of the benefits under U.S. intellectual property laws, Puerto Rico has undertaken intellectual property protection efforts of its own • Intellectual property protection:
− Approved new Trademarks Act (Act No. 169 of 2009) to regulate and modernize trademark registration
procedures in Puerto Rico
− Amended the Puerto Rico Government Employee Ethics Code (Act No. 150 of 2010) to facilitate the
commercialization of research by UPR professors
− Supported Business Trade Secrets Bill (Senate Bill No. 1850) to adopt a new statute governing the use and
protection of trade secrets in Puerto Rico
7
1st Pillar: Institutions (1 of 6)
18 11
51
68
40 40
67
110
131
24
33
71
54
94
49 47
38
19
37
7 15 12
8
51
79
43 42
88
102
138
31 31
96
69
108
67
42 38
13 20
4
16
Property rights Intellectual
property
protection
Diversion of
public funds
Public trust of
politicians
Irregular
payments and
bribes
Judicial
independence
Favoritism in
decisions of
government
officials
Wastefulness
of government
spending
Burden of
government
regulation
Efficiency of
legal
framework in
settling
disputes
Efficiency of
legal
framework in
challenging
regulations
Transparency
of government
policymaking
Business costs
of terrorism
Business costs
of crime and
violence
Organized
crime
Reliability of
police services
Ethical
behavior of
firms
Strength of
auditing and
reporting
standards
Efficacy of
corporate
boards
Protection of
minority
shareholders'
interests
Strength of
investor
protection*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Institutions: 44
Pillar description: The legal and administrative framework within which individuals, firms and governments interact to generate income and wealth in the economy
The government’s goal of a balanced budget in just 4 years is well on track • Wastefulness of government spending:
− At the end of 2008 the government of Puerto Rico had a budget deficit of approximately $3.3 B and its
credit was on the verge of junk status
− The Fiscal Restructuring & Stabilization Board (Act No. 7 of 2009) was established in 2009 in order to set a
wide range of measures including reduction of government spending, increase of government revenues,
better tax compliance and more efficient government financing
− For FY 2010-2011the government has cut its spending by 19% ($2.1 B less than FY 2008-2009) and is on target
to balance the budget by 2013
8
1st Pillar: Institutions (2 of 6)
18 11
51
68
40 40
67
110
131
24
33
71
54
94
49 47
38
19
37
7 15 12
8
51
79
43 42
88
102
138
31 31
96
69
108
67
42 38
13 20
4
16
Property rights Intellectual
property
protection
Diversion of
public funds
Public trust of
politicians
Irregular
payments and
bribes
Judicial
independence
Favoritism in
decisions of
government
officials
Wastefulness
of government
spending
Burden of
government
regulation
Efficiency of
legal
framework in
settling
disputes
Efficiency of
legal
framework in
challenging
regulations
Transparency
of government
policymaking
Business costs
of terrorism
Business costs
of crime and
violence
Organized
crime
Reliability of
police services
Ethical
behavior of
firms
Strength of
auditing and
reporting
standards
Efficacy of
corporate
boards
Protection of
minority
shareholders'
interests
Strength of
investor
protection*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Institutions: 44
Pillar description: The legal and administrative framework within which individuals, firms and governments interact to generate income and wealth in the economy
Reforms that address challenges of businesses and citizens regarding efficiency and functionality • Burden of government regulation:
− 13 agencies are already in the process of being restructured as part of the Executive Branch Re-
organization and Modernization Reform (Act No. 182 of 2009) which promotes a government structure that
responds to current needs and eliminates unnecessary duplicity and overlaps
− Bureaucratic processes have been replaced with efficient e-government services (PR.GOV)
− Approved and implemented the Permits Reform (Act No. 161 of 2009) which creates a new permits system
that is transparent, agile, efficient and accurate and consolidated and simplified the evaluation and
granting or denying of permits under a single agency
9
1st Pillar: Institutions (3 of 6)
18 11
51
68
40 40
67
110
131
24
33
71
54
94
49 47
38
19
37
7 15 12
8
51
79
43 42
88
102
138
31 31
96
69
108
67
42 38
13 20
4
16
Property rights Intellectual
property
protection
Diversion of
public funds
Public trust of
politicians
Irregular
payments and
bribes
Judicial
independence
Favoritism in
decisions of
government
officials
Wastefulness
of government
spending
Burden of
government
regulation
Efficiency of
legal
framework in
settling
disputes
Efficiency of
legal
framework in
challenging
regulations
Transparency
of government
policymaking
Business costs
of terrorism
Business costs
of crime and
violence
Organized
crime
Reliability of
police services
Ethical
behavior of
firms
Strength of
auditing and
reporting
standards
Efficacy of
corporate
boards
Protection of
minority
shareholders'
interests
Strength of
investor
protection*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Institutions: 44
Pillar description: The legal and administrative framework within which individuals, firms and governments interact to generate income and wealth in the economy
Promoting investment and healthy government while conveying a vision and a sense of direction
• Transparency of government policymaking:
− The Strategic Model for a New Economy, an economic model based on transparency and communication,
has provided the step-by-step progression of the implementation of government initiatives and results
− The government has met its revenue estimates for two consecutive years after four years of not doing so
− In the past 2 years the Governor has given 7 state addresses to the legislature
− The DEDC has hosted 2 Economic Development Summits, the GDB has held 2 Credit Conferences and 7
regular quarterly Investor Webcasts, the Public-Private Partnership Authority has had 1 Investor Conference
10
1st Pillar: Institutions (4 of 6)
18 11
51
68
40 40
67
110
131
24
33
71
54
94
49 47
38
19
37
7 15 12
8
51
79
43 42
88
102
138
31 31
96
69
108
67
42 38
13 20
4
16
Property rights Intellectual
property
protection
Diversion of
public funds
Public trust of
politicians
Irregular
payments and
bribes
Judicial
independence
Favoritism in
decisions of
government
officials
Wastefulness
of government
spending
Burden of
government
regulation
Efficiency of
legal
framework in
settling
disputes
Efficiency of
legal
framework in
challenging
regulations
Transparency
of government
policymaking
Business costs
of terrorism
Business costs
of crime and
violence
Organized
crime
Reliability of
police services
Ethical
behavior of
firms
Strength of
auditing and
reporting
standards
Efficacy of
corporate
boards
Protection of
minority
shareholders'
interests
Strength of
investor
protection*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Institutions: 44
Pillar description: The legal and administrative framework within which individuals, firms and governments interact to generate income and wealth in the economy
Close collaboration with U.S. Federal agencies in order to safeguard Puerto Rico’s citizens and investors
• Business costs of terrorism / Business costs of crime and violence / Organized crime / Reliability of police services:
− Puerto Rico is under the U.S. customs border jurisdiction with presence of Homeland Security, Federal Courts,
National Guard and the FBI who actively collaborate in the disarticulation of drug trafficking structures
− The Police Department received over $860,000 for new vehicles, equipment and training from ARRA funds
− The Police Department, in collaboration with the Office of the CIO, developed a System for Public Safety
and Incidence Management that provides real time updates on police work and other emergencies
11
1st Pillar: Institutions (5 of 6)
18 11
51
68
40 40
67
110
131
24
33
71
54
94
49 47
38
19
37
7 15 12
8
51
79
43 42
88
102
138
31 31
96
69
108
67
42 38
13 20
4
16
Property rights Intellectual
property
protection
Diversion of
public funds
Public trust of
politicians
Irregular
payments and
bribes
Judicial
independence
Favoritism in
decisions of
government
officials
Wastefulness
of government
spending
Burden of
government
regulation
Efficiency of
legal
framework in
settling
disputes
Efficiency of
legal
framework in
challenging
regulations
Transparency
of government
policymaking
Business costs
of terrorism
Business costs
of crime and
violence
Organized
crime
Reliability of
police services
Ethical
behavior of
firms
Strength of
auditing and
reporting
standards
Efficacy of
corporate
boards
Protection of
minority
shareholders'
interests
Strength of
investor
protection*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Institutions: 44
Pillar description: The legal and administrative framework within which individuals, firms and governments interact to generate income and wealth in the economy
As part of the U.S., Puerto Rico shares some of the most extensive benefits and protections in the world for companies and investors
• Ethical behavior of firms / Strength of auditing and reporting standards / Efficacy of corporate boards / Protection
of minority shareholders / Strength of investor protection*:
− Applicability of the U.S. Constitution, presence of the U.S. Federal Courts
− Intellectual property protection under U.S. Intellectual Property Law and local statutes
− U.S. currency and banking regulated under the U.S. system (FDIC)
− Long-term decrees are available to investors in key sectors, such as manufacturing and export services (Act
No. 73 of 2008 ), tourism development (Acts No. 74 and 118 of 2010) and film production (Act No. 27 of 2011)
12
1st Pillar: Institutions (6 of 6)
18 11
51
68
40 40
67
110
131
24
33
71
54
94
49 47
38
19
37
7 15 12
8
51
79
43 42
88
102
138
31 31
96
69
108
67
42 38
13 20
4
16
Property rights Intellectual
property
protection
Diversion of
public funds
Public trust of
politicians
Irregular
payments and
bribes
Judicial
independence
Favoritism in
decisions of
government
officials
Wastefulness
of government
spending
Burden of
government
regulation
Efficiency of
legal
framework in
settling
disputes
Efficiency of
legal
framework in
challenging
regulations
Transparency
of government
policymaking
Business costs
of terrorism
Business costs
of crime and
violence
Organized
crime
Reliability of
police services
Ethical
behavior of
firms
Strength of
auditing and
reporting
standards
Efficacy of
corporate
boards
Protection of
minority
shareholders'
interests
Strength of
investor
protection*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Institutions: 44
Pillar description: The extensiveness and effectiveness of infrastructure networks for transportation, telecommunications and electricity
Puerto Rico has a modern world-class infrastructure • Quality of overall infrastructure:
− Puerto Rico has an Urban Train that is utilized by over 40,000 daily passengers
− Puerto Rico’s Convention Center is the largest and most advanced convention center in the Caribbean
− Recent infrastructure investments include the following:
o $870 MM allocated for infrastructure from ARRA funds and $335 MM from the local stimulus plan (PEC)
o $1.2 B in infrastructure were committed for both FY 2008-2009 and FY 2009-2010 and $1.5 B will be
invested in infrastructure projects for FY 2010-2011
o $76 MM will be invested in the Bus Rapid Transit (BRT) system between Bayamon and Toa Baja
13
2nd Pillar: Infrastructure (1 of 6)
36 31
72
25
15
35
57
43 38
28
19
38
59 60
101
Quality of overall
infrastructure
Quality of roads Quality of
railroad
infrastructure
Quality of port
infrastructure
Quality of air
transport
infrastructure
Available airline
seat kilometers*
Quality of
electricity supply
Fixed telephone
line*
Mobile
telephone
subscriptions*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Infrastructure: 49
n/a n/a n/a
Pillar description: The extensiveness and effectiveness of infrastructure networks for transportation, telecommunications and electricity
Ensuring that the citizens count on modern roads and safe and accessible transportation • Quality of roads:
− Puerto Rico has an extensive highway system with over 4,600 miles
− The Department of Transportation and Public Works will invest $475 MM in road infrastructure in FY 2010-2011
− The PPP for the development and improvements for roads and highways will have an economic impact of
over $1.0 B for upgrading the following roads:
o PR 22 - the Island’s most transited highway
o PR 52 - the Island's longest highway
o PR 66 - connects San Juan to the eastern part of the Island
14
2nd Pillar: Infrastructure (2 of 6)
36 31
72
25
15
35
57
43 38
28
19
38
59 60
101
Quality of overall
infrastructure
Quality of roads Quality of
railroad
infrastructure
Quality of port
infrastructure
Quality of air
transport
infrastructure
Available airline
seat kilometers*
Quality of
electricity supply
Fixed telephone
line*
Mobile
telephone
subscriptions*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Infrastructure: 49
n/a n/a n/a
Pillar description: The extensiveness and effectiveness of infrastructure networks for transportation, telecommunications and electricity
We are maximizing the role of maritime ports in the industrial supply chains and tourism development • Quality of port infrastructure:
− Puerto Rico has 4 major ports and 7 additional secondary ports
− In terms of volume, the Port of San Juan is ranked 8th in the U.S.
− $250 MM have been invested in the development of the Port of the Americas in Ponce that will be able to
accommodate Post-Panamax vessels
− Puerto Rico is served by 14 cruise lines and receives over 1.2 MM cruise passengers on a yearly basis
− Homeport cruise ship passenger traffic has increased 18% in 2010
15
2nd Pillar: Infrastructure (3 of 6)
36 31
72
25
15
35
57
43 38
28
19
38
59 60
101
Quality of overall
infrastructure
Quality of roads Quality of
railroad
infrastructure
Quality of port
infrastructure
Quality of air
transport
infrastructure
Available airline
seat kilometers*
Quality of
electricity supply
Fixed telephone
line*
Mobile
telephone
subscriptions*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Infrastructure: 49
n/a n/a n/a
Pillar description: The extensiveness and effectiveness of infrastructure networks for transportation, telecommunications and electricity
Improvements to what is already the best air access in the Caribbean have been achieved • Quality of air transport infrastructure / Available airline seat kilometers*:
− The SJU International Airport is the busiest airport in the Caribbean serving over 410 MM passengers a year
− Puerto Rico maintains 30% of U.S. seat capacity into the Caribbean, nearly 3 times the U.S. inbound seat
capacity of the next largest markets
− There are 63 daily flights from 20 major U.S. cities
− Puerto Rico has 12 airports, 3 of which have runways exceeding 10,000 ft. (SJU, Aguadilla, Roosevelt Roads)
− Over 250 additional weekly flights were added in 2009-2010, with close to 12 MM seats annually, including
flights to Europe's busiest markets: Madrid, London and Frankfurt
16
2nd Pillar: Infrastructure (4 of 6)
36 31
72
25
15
35
57
43 38
28
19
38
59 60
101
Quality of overall
infrastructure
Quality of roads Quality of
railroad
infrastructure
Quality of port
infrastructure
Quality of air
transport
infrastructure
Available airline
seat kilometers*
Quality of
electricity supply
Fixed telephone
line*
Mobile
telephone
subscriptions*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Infrastructure: 49
n/a n/a n/a
Pillar description: The extensiveness and effectiveness of infrastructure networks for transportation, telecommunications and electricity
Public policy to diversify and ensure the generation of electricity on the Island • Quality of electricity supply:
− Installed electrical power capacity of 5,839 megawatts serving 1.45 MM clients with a transmission system of
2,416 miles and approximately 28,952 aerial miles and 1,723 underground miles of distribution lines
− $450 MM Vía Verde natural gas pipeline will reduce costs by over $1.0 B per year and cut pollution by 64%
− Approved the Renewable Energy Reform (Acts No. 82 and 83 of 2010)
o Establishes Renewable Portfolio Standards, requiring a minimum percentage of renewable energy
production of 12% by 2015 and 15% by 2020
o Creates the $290 MM Green Energy Fund to incentivize green energy investment and generation
17
2nd Pillar: Infrastructure (5 of 6)
36 31
72
25
15
35
57
43 38
28
19
38
59 60
101
Quality of overall
infrastructure
Quality of roads Quality of
railroad
infrastructure
Quality of port
infrastructure
Quality of air
transport
infrastructure
Available airline
seat kilometers*
Quality of
electricity supply
Fixed telephone
line*
Mobile
telephone
subscriptions*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Infrastructure: 49
n/a n/a n/a
Pillar description: The extensiveness and effectiveness of infrastructure networks for transportation, telecommunications and electricity
Puerto Rico has a well-developed and modern telecommunication infrastructure system • Fixed telephone lines*:
− Telephone density is high, with more than 1.4 MM digital lines
− Fixed telephone lines has increased from 21.9 lines per 100 population to 25.1 lines per 100 population
(14.6% increase)
• Mobile telephone subscriptions*:
− Around 300 cellular transmission towers have been built, providing coverage for the entire island
− Mobile telephone subscriptions has increased from 68.2 subscribers per 100 population to 78.7 subscribers
per 100 population (15% increase)
18
2nd Pillar: Infrastructure (6 of 6)
36 31
72
25
15
35
57
43 38
28
19
38
59 60
101
Quality of overall
infrastructure
Quality of roads Quality of
railroad
infrastructure
Quality of port
infrastructure
Quality of air
transport
infrastructure
Available airline
seat kilometers*
Quality of
electricity supply
Fixed telephone
line*
Mobile
telephone
subscriptions*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Infrastructure: 49
n/a n/a n/a
Pillar description: The stability of the macroeconomic environment in terms of price changes and government fiscal imbalances and debt obligations
Fiscal reconstruction measures are yielding results and we are rapidly closing the structural deficit
• Government budget balance*:
− At the end of 2008 the government Puerto Rico had a budget deficit of approximately $3.3 B
− The government’s budget deficit has been reduced over 70% or $2.3 B in just two years and is expected to
be balanced by FY 2012-2013
− Puerto Rico no longer has the highest budget deficit gap in the U.S., from #51 position or 43.6% in terms of
deficit as a % of revenues in FY 2008-2009 to #20 position or 10.9% for FY 2010-2011
− The government budget deficit as percentage of GDP has decreased from -4.0% to -2.6% (35% decrease)
19
3rd Pillar: Macroeconomic environment (1 of 3)
92
120
60
12
88
68
89
118
99
11
Government budget
balance*
National savings
rate*
Inflation* Interest rate spread* Government debt* Country credit
rating*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Macroeconomic
Environment: 38
n/a n/a
Pillar description: The stability of the macroeconomic environment in terms of price changes and government fiscal imbalances and debt obligations
Overestimating inflation can have tangible consequences, such as excessive price and wage increases that can damage the island’s global competitiveness and cause unnecessary job losses
• Inflation*:
− In July 2010, the Consumer Price Index (CPI) was revised through a collaborative effort between local and
federal agencies, assigning the correct change in the level of prices and eliminating the decades-long
issue of gross overestimation
− With the CPI revision, the inflation estimate for 2009 was 0.3% instead of the 4.4% reported to the WEF
− For calendar year 2010 the inflation rate remained at 2.5%
20
92
120
60
12
88
68
89
118
99
11
Government budget
balance*
National savings
rate*
Inflation* Interest rate spread* Government debt* Country credit
rating*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Macroeconomic
Environment: 38
3rd Pillar: Macroeconomic environment (2 of 3)
n/a n/a
Pillar description: The stability of the macroeconomic environment in terms of price changes and government fiscal imbalances and debt obligations
The market has already recognized Puerto Rico’s superior credit rating • Interest rate spread* / Government debt* / Country credit rating*:
− Puerto Rico’s credit in December 2008 was on the verge of obtaining a non-investment grade rating and
had an interest rate spread of 2.36% which has now been reduced to 0.37%
− Puerto Rico’s credit rating and outlook has been improved by all three mayor credit rating agencies:
− Moody’s recalibrated Puerto Rico General Obligation bonds by 3 notches from Baa3 to A3, the
highest rating Moody’s has assigned Puerto Rico since 1975
− Standard & Poor's raised its outlook on PR’s credit from “stable” to “positive”
− Fitch Ratings initiated coverage of the GO bonds of P.R. at a BBB+ rating with a “stable” outlook
21
92
120
60
12
88
68
89
118
99
11
Government budget
balance*
National savings
rate*
Inflation* Interest rate spread* Government debt* Country credit
rating*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Macroeconomic
Environment: 38
3rd Pillar: Macroeconomic environment (3 of 3)
n/a n/a
Pillar description: Health condition of the general population and quantity and quality of basic education
The Federal and Local Health Reforms will transform the public health system into one that is a less complex and with increased focus on the patients’ welfare • Business impact and incidence of malaria, tuberculosis and HIV/AIDS*:
− Puerto Rico has 72 hospitals, including Centro Medico public hospital, the largest in the Caribbean
− The Affordable Care Act will boost funding to Puerto Rico by $6 B over the next nine years, most of it in
additional Medicaid funding, which increases by $5.4 B (increase of 269%)
− Mi Salud will add 200,000 new beneficiaries, increasing enrollment to 1.5 MM
− Malaria incidence in Puerto Rico remains not endemic, tuberculosis incidence reduced from 2.4 per 100,000
to 1.6 per 100,000 (33% decrease) and HIV prevalence reduced from 0.4% to 0.34% (15% decrease)
22
68 69
26
4
76
101
49
36
73
22
1 1
27
5
69 76
46 33
84
28
Business
impact of
malaria
Malaria
incidence*
Business
impact of
tuberculosis
Tuberculosis
incidence*
Business
impact of
HIV/AIDS
HIV
prevalence*
Infant
mortality*
Life
expectancy*
Quality of
primary
education
Primary
education
enrollment
rate*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Health and Primary Education: 51
4th Pillar: Health and primary education (1 of 2)
Pillar description: Health condition of the general population and quantity and quality of basic education
Aggressive investments are in the pipeline for the modernization of public schools
• Quality of primary education:
− Puerto Rico has over 1,500 public schools are in operation in the Public Education System
− There are 473,735 students enrolled in public schools (97.6% graduation rate), 1,408 in accelerated schools
and 11,284 in private schools
− The PPP project “Schools for the 21st Century” will provide for the modernization and construction of over
100 schools with an investment of $756 MM that have been allocated for the next two years
o $135 MM have already been assigned through 15 contracts
23
68 69
26
4
76
101
49
36
73
22
1 1
27
5
69 76
46 33
84
28
Business
impact of
malaria
Malaria
incidence*
Business
impact of
tuberculosis
Tuberculosis
incidence*
Business
impact of
HIV/AIDS
HIV
prevalence*
Infant
mortality*
Life
expectancy*
Quality of
primary
education
Primary
education
enrollment
rate*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Health and Primary Education: 51
4th Pillar: Health and primary education (2 of 2)
Pillar description: The quantity and quality of higher education and the extent of staff training
One of the best advantages the Island offers is a highly trained, educated and productive workforce • Secondary education enrollment rate / Tertiary education enrollment rate*:
− Secondary education enrollment has decreased from 82.2% to 81.6% (0.7% decrease)
− Tertiary education enrollment has increased from 61.1% to 73.1% (16.4% increase)
• Quality of educational system / Quality of math and science education / Quality of management schools:
− There are over 100 post-secondary institutions operating in Puerto Rico (33,000 degrees annually)
− 12,000 degrees in science, engineering, technology and business are awarded annually
− The UPR Mayagüez Campus and Polytechnic University of Puerto Rico Engineering Schools are among the
top 20 engineering schools in the U.S. based on volume of enrollment
24
5th Pillar: Higher education and training (1 of 2)
42 49
53
87
55 53
23 22
83
28
51
96
54 59
18 17
Secondary
education
enrollment rate*
Tertiary education
enrollment rate*
Quality of the
educational
system
Quality of the
math and science
education
Quality of
management
schools
Internet access in
schools
Local availability
of research and
training services
Extent of staff
training
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Higher Education and Training: 38
Pillar description: The quantity and quality of higher education and the extent of staff training
In an increasingly competitive world our student will need access to the endless opportunities that the internet offers • Internet access in schools:
− The Office of the Government CIO is working with the Department of Education in order to find the best
and most attractive internet rates for all public schools
− With the “Schools for the 21st Century” PPP program, most of the new public schools will have access to
broadband internet
− The Development of Free Internet Access Centers Act (Act No. 101 of 2010) orders the Regulatory
Telecommunications Board to establish free internet centers and free WiFi in each municipality
25
42 49
53
87
55 53
23 22
83
28
51
96
54 59
18 17
Secondary
education
enrollment rate*
Tertiary education
enrollment rate*
Quality of the
educational
system
Quality of the
math and science
education
Quality of
management
schools
Internet access in
schools
Local availability
of research and
training services
Extent of staff
training
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Higher Education and Training: 38
5th Pillar: Higher education and training (2 of 2)
Pillar description: The level of domestic and foreign market competition, openness to foreign investment and trade, and demand conditions
The most aggressive Tax Reform in the history of Puerto Rico has been approved • Extent and effect of taxation / Total tax rate*:
− The comprehensive Tax Reform (Act No. 1 of 2011) simplifies the tax system, reduces the tax burden for
individuals and corporations, rewards work and success, and fosters economic development
− The Tax Reform will provide $1.2 B in annual tax relief to individuals and corporations over the next 6 years
− Tax relief will average a 25% cut for individuals and a 30% cut for businesses in Puerto Rico in 2011
− Relief for individual taxpayers will average a nearly 50% cut in the tax burden over 6 years
− Special incentives laws provide even lower tax rates for strategic sectors, such as 0-4% for manufacturing
and export services, 3% for tourism and hospitality, 4-10% for film studios and 5% for international insurance
26
6th Pillar: Goods market efficiency (1 of 4)
18 20 18
95
115
46
15
106
55
33 33 34 32
61
38
29
20 19
109
123
57
21
97
52
30 28 36
49
30
Intensity of
local
competition
Extent of
market
dominance
Effectiveness
of anti-
monopoly
policy
Extent and
effect of
taxation
Total tax rate* Number of
procedures
required to
start a business
Time required
to start a
business
Agricultural
policy costs
Prevalence of
trade barriers
Trade tariffs* Prevalence of
foreign
ownership
Business
impact of rules
on FDI
Burden of
customs
procedure
Degree of
customer
orientation
Buyer
sophistication
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Goods market efficiency: 34
n/a
Pillar description: The level of domestic and foreign market competition, openness to foreign investment and trade, and demand conditions
The government has made dramatic advancements in regards to reducing the procedures, time and effort required to start a business • Number of procedures required to start a business / Time required to start a business:
− The Permits Reform (Act No. 161 of 2009) creates a new permits system that is transparent and efficient
o Consolidates and simplifies the evaluation and granting or denying of permits under a single agency
o Establishes a maximum of 90 days for granting or denying most permits and reduces the time
required for an occupancy permit from 5-days to 1-day
− The General Corporations Act (Act No. 164 of 2009) provides for online corporate registration
− PR.GOV replaces bureaucratic processes with efficient e-government services (2.5 MM transactions)
27
6th Pillar: Goods market efficiency (2 of 4)
18 20 18
95
115
46
15
106
55
33 33 34 32
61
38
29
20 19
109
123
57
21
97
52
30 28 36
49
30
Intensity of
local
competition
Extent of
market
dominance
Effectiveness
of anti-
monopoly
policy
Extent and
effect of
taxation
Total tax rate* Number of
procedures
required to
start a business
Time required
to start a
business
Agricultural
policy costs
Prevalence of
trade barriers
Trade tariffs* Prevalence of
foreign
ownership
Business
impact of rules
on FDI
Burden of
customs
procedure
Degree of
customer
orientation
Buyer
sophistication
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Goods market efficiency: 34
n/a
Pillar description: The level of domestic and foreign market competition, openness to foreign investment and trade, and demand conditions
Puerto Rico offers an ideal environment for trade and investment, acting as a bridge between the U.S. and Latin America • Prevalence of trade barriers / Trade tariffs*:
− Puerto Rico operates under U.S. customs jurisdiction and allows for free movement of goods and people
without passports between the Island and the U.S.
− Puerto Rico enjoys all of the same low trade barriers as the U.S. and participates in all U.S. free-trade
agreements such as CAFTA-DR
− Puerto Rico offers 3 Free Trade Zones that benefit from no taxes on value-added merchandise, deferment
of customs duties, exemption of local excise tax, among others
28
6th Pillar: Goods market efficiency (3 of 4)
18 20 18
95
115
46
15
106
55
33 33 34 32
61
38
29
20 19
109
123
57
21
97
52
30 28 36
49
30
Intensity of
local
competition
Extent of
market
dominance
Effectiveness
of anti-
monopoly
policy
Extent and
effect of
taxation
Total tax rate* Number of
procedures
required to
start a business
Time required
to start a
business
Agricultural
policy costs
Prevalence of
trade barriers
Trade tariffs* Prevalence of
foreign
ownership
Business
impact of rules
on FDI
Burden of
customs
procedure
Degree of
customer
orientation
Buyer
sophistication
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Goods market efficiency: 34
n/a
Pillar description: The level of domestic and foreign market competition, openness to foreign investment and trade, and demand conditions
Throughout the years Foreign Direct Investment has had a huge significance to the local economy • Prevalence of foreign ownership / Business impact of rules on FDI:
− Over 50% of the most prominent pharmaceutical companies have operations in Puerto Rico
− In terms of volume, Puerto Rico's biotechnology sector is 3rd in the world
− Of the 16 leading medical device companies in the world, 13 have a presence in Puerto Rico
− Controlled Foreign Corporations (CFCs) can establish themselves in Puerto Rico and enjoy the protection
under U.S. Federal Laws in a Foreign Tax Jurisdiction
− Puerto Rico provides attractive tax incentives for foreign and local investors in manufacturing and export
services (0-4%), tourism and hospitality (3%), film studios (4-10%) and international insurance (5%)
29
6th Pillar: Goods market efficiency (4 of 4)
18 20 18
95
115
46
15
106
55
33 33 34 32
61
38
29
20 19
109
123
57
21
97
52
30 28 36
49
30
Intensity of
local
competition
Extent of
market
dominance
Effectiveness
of anti-
monopoly
policy
Extent and
effect of
taxation
Total tax rate* Number of
procedures
required to
start a business
Time required
to start a
business
Agricultural
policy costs
Prevalence of
trade barriers
Trade tariffs* Prevalence of
foreign
ownership
Business
impact of rules
on FDI
Burden of
customs
procedure
Degree of
customer
orientation
Buyer
sophistication
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Goods market efficiency: 34
Pillar description: Efficiency and flexibility of the labor market, brain drain level and the level of gender equality in the labor force
Puerto Rico faces the challenge, as do all other jurisdictions, of finding the right balance between worker protection and labor market efficiency • Flexibility of wage determination / Rigidity of employment* / Hiring and Firing Practices:
− There is a statutory probation period of 3 months that can be extended to 6 months, to allow employers
more time to evaluate employees' performance
− The workforce protection and minimum wage standards of the U.S. also apply to Puerto Rico
− Flextime, which allow employees to work outside the usual 8-hour work day and 40-hour work week, will
lower the degree of labor market rigidities in Puerto Rico
− A new labor code (House Bill No. 3181) that consolidates all labor laws is being considered by the legislature
30
7th Pillar: Labor market efficiency (1 of 3)
81
64
41
99
1
48
28
74
94
54
66
33
97
1
46
21
72
97
Cooperation in
labor-employee
relations
Flexibility of wage
determination
Rigidity of
employment*
Hiring and firing
practices
Redundancy
costs*
Pay and
productivity*
Reliance on
professional
management
Brain drain Female
participation in
labor force*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Labor Market Efficiency : 41
Pillar description: Efficiency and flexibility of the labor market, brain drain level and the level of gender equality in the labor force
Puerto Rico is taking measures to increase labor productivity in order for income levels to rise
• Pay and productivity:
− Puerto Rico has a highly educated and productive workforce with labor costs that are 10% lower than the
U.S. average
− The Tax Reform (Act No. 1 of 2011) increased the Earned Income Tax Credit (EITC) to $600 and made it
available to those that make up to $35,000 in order to incentivize more people to work
− Labor productivity during the last decade has grown at an average annual rate of 0.6% from 2000-2009
31
81
64
41
99
1
48
28
74
94
54
66
33
97
1
46
21
72
97
Cooperation in
labor-employee
relations
Flexibility of wage
determination
Rigidity of
employment*
Hiring and firing
practices
Redundancy
costs*
Pay and
productivity*
Reliance on
professional
management
Brain drain Female
participation in
labor force*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Labor Market Efficiency : 41
7th Pillar: Labor market efficiency (2 of 3)
Pillar description: Efficiency and flexibility of the labor market, brain drain level and the level of gender equality in the labor force
Puerto Rico must continue offering more economic opportunities to all of its citizens • Brain Drain:
− Between 2000 and 2009, there was a net migration of 299,790 people from Puerto Rico to the rest of the U.S.
− Puerto Rico’s population decreased 2.2% over the past decade to 3,725,789 in 2010, down from 3,808,610
in 2000 according to recently published U.S. Census data
− A dynamic and growing economy retains and attracts talented and productive professionals
• Female participation in the labor force*:
− The female-to-male participation ratio in the labor force remained at 70% (35%/50%) in 2010
− Women’s participation in the workforce has been gradually increasing during the past 3 decades
32
81
64
41
99
1
48
28
74
94
54
66
33
97
1
46
21
72
97
Cooperation in
labor-employee
relations
Flexibility of wage
determination
Rigidity of
employment*
Hiring and firing
practices
Redundancy
costs*
Pay and
productivity*
Reliance on
professional
management
Brain drain Female
participation in
labor force*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Labor Market Efficiency : 41
7th Pillar: Labor market efficiency (3 of 3)
Pillar description: The level of sophistication, robustness and trustworthiness of the financial markets and their ability to provide capital for innovative investment projects
Access to financial services can have a significant impact on entrepreneurship and growth • Availability of financial services / Affordability of financial service:
− Puerto Rico has 7 retail banks with over 440 branches
− Puerto Rico’s banks have deposits in excess of $52 B and Credit Unions have over $5 B in deposits
− Brokerage houses and investment banks provide the full spectrum of financial services and have over $27 B
in assets under management
• Financing through local equity market / Ease of access to loans / Venture capital availability:
− The EDB has approved over 1,283 loans for a total of $306 MM from January 2009 to February 2011
− The P.R. Science, Technology & Research Trust and PRIDCO provide venture capital financing
33
8th Pillar: Financial market development (1 of 3)
63
40 35
61 65
13 18 21 22
70
45 37
63
103
18
39
Availability of
financial services
Affordability of
financial services
Financing through
local equity market
Ease of access to
loans
Venture capital
availability
Restriction on
capital flows
Soundness of banks Regulation of
securities
exchanges
Legal rights index*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Financial market development: 40
n/a n/a
Pillar description: The level of sophistication of the financial markets, robustness and trustworthiness of banks, access to capital for and innovative investment projects
The banking sector is slowly restoring its ability to provide for the needs of consumers and businesses • Soundness of banks:
− Market capitalization of local financial institutions is at $4.22 B, a 75% increase compared to June of 2010
− The successful consolidation of three banks was carried out in an orderly manner and did not affect the
services in transactions facilitated by the FDIC valued at $18 B
− The FDIC expects to absorb up to $5.3 B in losses due to toxic assets acquired in the process
− Banco Popular, Scotiabank and Oriental Financial raised some $1.8 B to participate in the consolidation
− The New Housing Incentives Act (Act No. 132 of 2010) has resulted in a 11.4% increase in housing sales
during its first five months which has reduced the amount of on-hand inventory 34
63
40 35
61 65
13 18 21 22
70
45 37
63
103
18
39
Availability of
financial services
Affordability of
financial services
Financing through
local equity market
Ease of access to
loans
Venture capital
availability
Restriction on
capital flows
Soundness of banks Regulation of
securities
exchanges
Legal rights index*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Financial market development: 40
n/a n/a
8th Pillar: Financial market development (2 of 3)
Pillar description: The level of sophistication of the financial markets, robustness and trustworthiness of banks, access to capital for and innovative investment projects
Puerto Rico shares the same sophisticated financial market and bankruptcy regulations and protections as the U.S. • Regulation of securities exchanges / Legal rights index*:
− Puerto Rico’s brokerage houses and investment banks are subject to the U.S. Securities and Exchange
Commission (SEC) and the Financial Industry Regulatory Authority (FINRA)
− Additionally, Puerto Rico has a local Commissioner of Financial Institutions (OCIF) and the regulatory and
legal framework required to balance the interests of investors, service providers and consumers
− Puerto Rico is subject to U.S. Bankruptcy laws, which are litigated in the U.S. Federal Bankruptcy Courts that
are part of the U.S. Federal District Court system that have a presence on the Island
35
63
40 35
61 65
13 18 21 22
70
45 37
63
103
18
39
Availability of
financial services
Affordability of
financial services
Financing through
local equity market
Ease of access to
loans
Venture capital
availability
Restriction on
capital flows
Soundness of banks Regulation of
securities
exchanges
Legal rights index*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Financial market development: 40
n/a n/a
8th Pillar: Financial market development (3 of 3)
Pillar description: The agility with which an economy adopts existing technologies to enhance the productivity of its industries
The government recognizes the importance of using the latest technologies to remain competitive and enhance the productivity of industries and government operations • Availability of latest technologies:
− The Office of the Government CIO was created to fully leverage the latest information and communication
technologies in government operations, thus enhancing productivity
o It has identified over $400 MM in government savings due to the use of the latest technologies
− Microsoft, Oracle, HP and other leading information technology companies have operations in Puerto Rico
and have been key collaborators of the government in looking for ways of maximizing latest available
technologies
36
9th Pillar: Technological readiness (1 of 3)
22 23 28
66
24 24
60
87
46
60
Availability of latest
technologies
Firm-level technology
absorption
FDI and technology
transfer
Internet users* Broadband Internet
subscriptions*
Internet bandwidth
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Technological Readiness: 52
n/a n/a
Pillar description: The agility with which an economy adopts existing technologies to enhance the productivity of its industries
Both the local and Federal governments have established the proliferation of high-speed internet access as one of their main goals • Internet users*:
− A new Federally funded study by Connect PR shows a revised and more accurate number for internet users,
substantially increasing from 25.1 per 100 population to 64 per 100 population (150% increase)
− 65% of adult residents use a computer and 50% of adult residents subscribe to home internet service
− E-government services (including PR.GOV) are utilized by 61% of businesses in Puerto Rico
− The Development of Free Internet Access Centers Act (Act No. 101 of 2010) orders the Regulatory
Telecommunications Board to establish free internet centers and free WiFi in each municipality
37
22 23 28
66
24 24
60
87
46
60
Availability of latest
technologies
Firm-level technology
absorption
FDI and technology
transfer
Internet users* Broadband Internet
subscriptions*
Internet bandwidth
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Technological Readiness: 52
9th Pillar: Technological readiness (2 of 3)
n/a n/a
Pillar description: The agility with which an economy adopts existing technologies to enhance the productivity of its industries
Puerto Rico is investing in the improvement of its broadband infrastructure and adoption
• Broadband internet subscriptions* / Internet bandwidth:
− Connect PR’s study shows a revision from 10.8 to 31 subscribers per 100 population (187% increase)
− 91% of households in Puerto Rico have access to broadband
− Nearly three-quarters, or approximately 35,000 of Puerto Rican businesses, subscribe to broadband service
− The average download speed among broadband-connected Puerto Rican businesses is 3.9 Mbps
− $40 MM in ARRA funds have already been awarded for Mapping/Planning, INTECO Broadband
Infrastructure Project for the Central East Region of Puerto Rico, and the PR Bridge Initiative
38
22 23 28
66
24 24
60
87
46
60
Availability of latest
technologies
Firm-level technology
absorption
FDI and technology
transfer
Internet users* Broadband Internet
subscriptions*
Internet bandwidth
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Technological Readiness: 52
9th Pillar: Technological readiness (3 of 3)
n/a n/a
Pillar description: Size of the domestic market and extent of export activity
Puerto Rico has one of the most dynamic economies of the Caribbean Basin and serves as a gateway to the U.S. market • Domestic market size index*:
− According to the latest Planning Board figures, GDP for FY 2009-2010 was $96.3 B (last year’s WEF Report
mistakenly published the GNP - $62.8 B)
− GDP per capita for FY 2009-2010 was $25,836 (last year’s WEF Report published the GNP per capita $15,846)
− Puerto Rico is the 7th largest economy in Latin America and the largest in the Caribbean
− Puerto Rico has been a very attractive market for many leading U.S. retail chains with retail sales exceeding
$34 B a year
39
10th Pillar: Market size (1 of 2)
65 61
70
48
Domestic market size index* Foreign market size index*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Market Size: 62
Pillar description: Size of the domestic market and extent of export activity
As a relatively small and open economy, Puerto Rico is promoting companies to look to other markets to expand and take advantage of economies of scale • Foreign market size index*:
− Puerto Rico exports over $60 B a year, most of which includes: medical devices, pharmaceutical and
chemical products, and electronics and computer equipment
− Exports for the first 10 months of 2010 have increased by 4.9% compared to the same period in 2009
− Imports for the first 10 months of 2010 have increased by 2.5% compared to the same period in 2009
− Puerto Rico is the 8th largest exporter in the Americas
− Puerto Rico has the largest, noncontiguous Free Trade Zone(FTZ) system in the United States
40
65 61
70
48
Domestic market size index* Foreign market size index*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Market Size: 62
10th Pillar: Market size (2 of 2)
Pillar description: The quality of a country’s business networks (suppliers, clusters, value chain) as well as the quality of individual firms’ operations and strategies
Puerto Rico is equipped with highly sophisticated business networks and top-notch local suppliers
• Local suppliers quantity / Local suppliers quality:
− Many multinational corporations use local suppliers of goods and services in key areas such as validation
services, construction services, information technology, manufacturing components, among others
− The Economic Incentives for the Development of PR Act (Act No. 73 of 2008) provides attractive tax and
other incentives to key suppliers and in FY 2009-2010, 5 companies received Act 73 decrees as key suppliers
− Puerto Rico Supply Chain Online (PRSCO) is a new online directory to find information about local suppliers
and buyers and is being expanded to include matchmaking and transactional capabilities
41
11th Pillar: Business sophistication (1 of 3)
43
18
38
23
36
98
24 26 29
48
18
45
22
31
90
20 21
22
Local suppliers
quantity
Local supplier
quality
State of cluster
development
Nature of
competitive
advantage
Value chain
breadth
Control of
international
distribution
Production
process
sophistication
Extent of
marketing
Willingness to
delegate
authority
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Business Sophisitcation: 27
Pillar description: The quality of a country’s business networks (suppliers, clusters, value chain) as well as the quality of individual firms’ operations and strategies
Puerto Rico supports numerous clusters to improve competitiveness and seek sustainable growth
• State of cluster development:
− The government is establishing alliances with the private and academic sectors to promote supply chain
integration and the formation and strengthening of clusters
− Active clusters in Puerto Rico include: Pharmaceuticals, Biotechnology, Medical Devices, Construction
Services and Materials, Energy, and Electronic and Communications Products
− Three new clusters have been formed to pursue the Federal Market, including Information Technology
Services, Electronics and Robotics, and Textiles and Apparel
42
43
18
38
23
36
98
24 26 29
48
18
45
22
31
90
20 21
22
Local suppliers
quantity
Local supplier
quality
State of cluster
development
Nature of
competitive
advantage
Value chain
breadth
Control of
international
distribution
Production
process
sophistication
Extent of
marketing
Willingness to
delegate
authority
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Business Sophisitcation: 27
11th Pillar: Business sophistication (2 of 3)
Pillar description: The quality of a country’s business networks (suppliers, clusters, value chain) as well as the quality of individual firms’ operations and strategies
Many companies in Puerto Rico operate with state-of-the-art technology and best practices • Production process sophistication:
− Life Sciences products companies in Puerto Rico are required to meet FDA standards, which provide for
high product process sophistication at all stages of production
− The National Institute of Standards and Technology's (NIST) Malcolm Baldrige Performance Excellence
program is part of an effort to help local companies establish standards of excellence to increase their
quality and productivity and equip themselves to compete in the global economy
− The Federally-funded Puerto Rico Manufacturing Extension (PRIMEX) provides cost effective technical
assistance and technology transfer to small and medium sized businesses in Puerto Rico
43
43
18
38
23
36
98
24 26 29
48
18
45
22
31
90
20 21
22
Local suppliers
quantity
Local supplier
quality
State of cluster
development
Nature of
competitive
advantage
Value chain
breadth
Control of
international
distribution
Production
process
sophistication
Extent of
marketing
Willingness to
delegate
authority
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Business Sophisitcation: 27
11th Pillar: Business sophistication (3 of 3)
Pillar description: The conduciveness of the environment for generating innovative activity (design and development of cutting edge products and processes)
Puerto Rico continues to invest in research institutions so that the can continue leading the path towards becoming a knowledge-based and innovation-driven economy • Quality of scientific research institutions:
− From 2003-2009, the UPR received $297 MM in NIH research grants and attracted 4 new world class
researchers to conduct research in the Island
− Puerto Rico boasts state-of-the-art scientific research facilities, including the UPR Molecular Sciences
Building and the Bioprocess Development and Training Complex
− Development is underway for Science City and the MD Anderson Comprehensive Cancer Center that will
solidify Puerto Rico as the medical research and treatment center of the Caribbean
44
12th Pillar: Innovation (1 of 3)
54
33
50
28
90
15
33
53
33
54
31
78
14
36
Capacity for innovation Quality of scientific
research institutions
Company spending on
R&D
University-industry
collaboration
Gov't procurement of
advanced tech
products
Availability of scientists
and engineers
Utility patents per million
population*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Innovation: 33
Pillar description: The conduciveness of the environment for generating innovative activity (design and development of cutting edge products and processes)
Puerto Rico is strengthening the links between university research efforts and private industry
• University-industry collaboration:
− The P.R. Science, Technology & Research Trust is a multi-sector, non-profit entity with participation from
government, academia, and industry, which has a $12 MM annual budget and is the leading entity
promoting research and the commercialization of research
− The Trust’s programs aimed at commercialization of research include a multi-client technology-transfer
office to help organizations and individuals establish businesses and obtain patents and licenses
− Amended the Puerto Rico Government Employee Ethics Code (Act 150 of 2010) which will promote the
participation of faculty in the UPR in knowledge development and technology transfer
45
54
33
50
28
90
15
33
53
33
54
31
78
14
36
Capacity for innovation Quality of scientific
research institutions
Company spending on
R&D
University-industry
collaboration
Gov't procurement of
advanced tech
products
Availability of scientists
and engineers
Utility patents per million
population*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Innovation: 33
12th Pillar: Innovation (2 of 3)
Pillar description: The conduciveness of the environment for generating innovative activity (design and development of cutting edge products and processes)
Puerto Rico is working to increase the number of scientists, engineers and patents awarded as it improves an economy’s ability of producing innovative and growing ventures • Availability of scientists and engineers / Utility patents per million population*:
− 12,000 degrees in science, engineering, technology and business are awarded annually
− The UPR Mayagüez Campus and Polytechnic University of Puerto Rico Engineering Schools are among the
top 20 engineering schools in the U.S. based on volume of enrollment
− 14 utility patents granted in 2009 or 3.7 per 1 MM population
− The Puerto Rico Science, Technology & Research Trust has partnered with the UPR School of Law, and
serves as the financial supporter in creating the UPR Intellectual Property Institute and Clinic
46
54
33
50
28
90
15
33
53
33
54
31
78
14
36
Capacity for innovation Quality of scientific
research institutions
Company spending on
R&D
University-industry
collaboration
Gov't procurement of
advanced tech
products
Availability of scientists
and engineers
Utility patents per million
population*
2009-2010 (Rank out of 133)
2010-2011 (Rank out of 139)
PR Overall Ranking: 41
PR Innovation: 33
12th Pillar: Innovation (3 of 3)
47
Agenda
Overview of the Global Competitiveness Report
Puerto Rico’s Competitiveness at a Glance – Reforms and Initiatives
Macroeconomic Results and Indicators
1
2
3
GDB Economic Activity Index is reflecting
constant improving economic trends
GDB Economic Activity Index
Recent months improvement in EAI has not been seen since April 2008
Economic Activity Index - GDB Year-over-year change in EAI (%)
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
-9.0%
-7.0%
-5.0%
-3.0%
-1.0%
1.0%
3.0%
48
Employment in the private sector reflected the
most favorable change since September 2007
Private Sector Employment (Annual Change)
1.1%
-2.7%
-0.3%
-2.3%
-8.9%
-4.6%
-1.7%
-0.8%
-0.4%
-9.0%
-7.0%
-5.0%
-3.0%
-1.0%
1.0%
3.0%
Ja
n-0
6Fe
b-0
6M
ar-
06
Ap
r-06
Ma
y-0
6Ju
n-0
6Ju
l-06
Au
g-0
6Se
p-0
6O
ct-
06
No
v-0
6D
ec
-06
Ja
n-0
7Fe
b-0
7M
ar-
07
Ap
r-0
7M
ay-0
7Ju
n-0
7Ju
l-07
Au
g-0
7Se
p-0
7O
ct-
07
No
v-0
7D
ec
-07
Ja
n-0
8Fe
b-0
8M
ar-
08
Ap
r-08
Ma
y-0
8Ju
n-0
8Ju
l-08
Au
g-0
8Se
p-0
8O
ct-
08
No
v-0
8D
ec
-08
Ja
n-0
9Fe
b-0
9M
ar-
09
Ap
r-09
Ma
y-0
9Ju
n-0
9Ju
l-09
Au
g-0
9Se
p-0
9O
ct-
09
No
v-0
9D
ec
-09
Ja
n-1
0Fe
b-1
0M
ar-
10
Ap
r-10
Ma
y-1
0Ju
n-1
0Ju
l-10
Au
g-1
0Se
p-1
0O
ct-
10
No
v-1
0D
ec
-10
Total employment has increased for 4 out of the last 6 months and 19,000 net jobs have been created since july of 2010
49
The New Puerto Rico Manufacturing Purchasing
Managers Index continues on a positive trend
The PRM-PMI has remained above the threshold for the 3rd consecutive month
55.1 53.8
45.7
50.5
49.1
50.8
55.1
51.1
30
35
40
45
50
55
60
65
70M
ay-1
0
Ju
n-1
0
Ju
l-1
0
Au
g-1
0
Se
p-1
0
Oc
t-10
No
v-1
0
De
c-1
0
Ja
n-1
1
Fe
b-1
1
Ma
r-1
1
50
+ e
xp
an
sio
n
50
– c
on
tra
ctio
n
The index is built with five basic questions
on: New orders, Production, Employment, Supplier Deliveries and Inventories
50
Growth in air capacity, hotel occupancy and
average hotel rate remains strong
The local tourism industry already left the recession behind
and is enjoying the beginning of a recovery
68.5%
69.5%
2009 2010
$119.91
$121.84
2009 2010
Airline Passenger Movement
(First 9 months of the CY)
Small Inn Occupancy Rate
(First 9 months of the CY)
Hotel Occupancy Rate (First 9 months of the CY)
Average Daily Room Rate (First 9 months of the CY)
+1.5% +1.6%
38.5%
38.2%
2009 2010
-0.7%
7,135,011
7,616,219
2009 2010
+6.7%
51
Retail Sales* (MM)
Consumer confidence has started to improve
Retail and Automobile Sales have also shown growth
enero-agosto
2009
enero-agosto
2010enero-agosto 2009 enero-agosto 2010
$33,999
$34,550*
76,393
89,685
CY 2009 CY 2010
+1.6% +17.4%
CY 2009
Auto Sales (number of automobiles)
CY 2010
52
The most recent trade data show a sustained
recovery in foreign trade
We’re seeing a positive trend in Puerto Rico’s economic activity
$45,001
$47,725
CY 2009 CY 2010
Exports (First 10 months of the CY, in MM of $)
Imports (First 10 months of the CY, in MM of $)
During the first ten months of calendar year 2010 (Jan. – Oct.) exports have
increased by 4.9% with respect to the same period in calendar year 2009,
while imports have increased by 2.5% reflecting
+6.1%
Exportaciones(Primeros 10 meses, en millones)
Importaciones(Primeros 10 meses, en millones)
+2.5%
AC 2010AC 2009
$50,887
$53,397
AC 2009 AC 2010
$33,825
$34,662
+4.9%
Exportaciones(Primeros 10 meses, en millones)
Importaciones(Primeros 10 meses, en millones)
+2.5%
AC 2010AC 2009
$50,887
$53,397
AC 2009 AC 2010
$33,825
$34,662
+4.9%
CY 2009 CY 2010
53
Summary:
Growth, Competitiveness and Jobs
We have responded diligently through our Fiscal Reconstruction Plan and the
Strategic Model for a New Economy aimed at addressing the current fiscal and
economic challenges
We have stabilized the credit situation and there are several economic indicators
that show signs of stabilization and recovery in the economy
Funds are being made available for strategic projects to develop a world-class
physical infrastructure to stimulate the economy and reduce the operational
costs of doing business
Laws are being passed and implemented to reform Puerto Rico’s institutional and
regulatory framework and improve our global competitiveness, to turn
government into a facilitator and to strengthen the private sector
Continued improvements in key sectors, capital injections in infrastructure projects
and a rise in consumer confidence should drive the performance of the economy
in 2011
We have a clear and comprehensive plan and are committed to reaching our goals
54
World Economic Forum –
The Global Competitiveness Report
Puerto Rico:
Global Competitiveness Report
and Outlook at a Glance
