{"id":1517,"date":"2019-11-22T20:40:34","date_gmt":"2019-11-22T20:40:34","guid":{"rendered":"http:\/\/mission2023.wpengine.com\/?page_id=1517"},"modified":"2019-11-27T06:27:44","modified_gmt":"2019-11-27T06:27:44","slug":"boosting-economy","status":"publish","type":"page","link":"https:\/\/mission2023.mit.edu\/?page_id=1517","title":{"rendered":"Boosting the Economy"},"content":{"rendered":"\n

Economic Development: Why does it matter, and what is our goal?<\/h3>\n\n\n\n
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In order to fund many of our proposals long term, it is crucial that Puerto Rico\u2019s economy grows. Currently, the territory would struggle to sustain many of the proposals; since Section 936 of Possession Tax Credit, which gave enormous tax breaks to manufacturing companies, and its subsequent phased out, Puerto Rico\u2019s \u201cpolitical and economic institutions are increasingly oriented towards and co-opted by wealthy international elites to the detriment of its people.” [1]<\/a><\/sup> <\/p>\n\n\n\n

\u201cSection 936 made foreign investment in Puerto Rico artificially attractive\u2026 [which] left the island vulnerable to a crash if the tax provisions were ever to be repealed.\u201d [2]<\/a><\/sup> Section 936 was fully repealed in 2006.<\/p>\n\n\n\n

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Figure 1: \u201cPuerto Rico economic growth for 2018 was $101.13B, a 2.99% decline from 2017.\u201d<\/em> [3]<\/a><\/sup> <\/figcaption><\/figure><\/div>\n\n\n\n
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The Puerto Rican government is already burdened by debt and hurricane recovery costs in addition to an overall economic state weakened by a continuing decrease in the working population and dependence on imports. Additionally, the US government has neglected to enact effective economic policies toward the island, further complicating economic recovery. <\/p>\n\n\n\n

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Figure 2<\/em>: Puerto Rico’s trade balance changes in past years.<\/figcaption><\/figure><\/div>\n\n\n\n
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Our proposal for economic development aims to reduce reliance on imports and draw people and jobs back onto the island. Though we do not address specific policy changes in this proposal, we acknowledge that even implementing these measures can only provide so much benefit if growth is not supported by a change in policy. This kind of change takes a lot of time and effort especially considering Puerto Rico\u2019s unique political state.<\/p>\n\n\n\n

Puerto Rico Trade Balance (2000-2018)<\/strong><\/p>\n\n\n\n

\u201cExternal balance on goods and services equals exports of goods and services minus imports of goods and services. Data are in current U.S. dollars. Puerto Rico trade balance for 2018 was $14.11B, a 43.9% decline from 2017.\u201d <\/em>[4]<\/a><\/sup><\/p>\n\n\n\n

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Combating Brain Drain and Supporting Local Businesses<\/h3>\n\n\n\n
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From 2017 to 2018, Puerto Rico saw a net population decrease of about 123,000 people [15]<\/a><\/sup> Many of those leaving Puerto Rico are young people seeking an education and a living off the island, which stifles development within Puerto Rico. The Puerto Rican government has already implemented some strategies to motivate change, such as Act 20, which attracts businesses to the island in order to increase exports through tax exemptions; Act 22, which attracts investors similarly with other tax incentives; and Act 135, which benefits Puerto Rican entrepreneurs between the ages of 16 and 35.
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We chose to focus on drawing Puerto Rican people back to the island, and thus further investigated efforts already being made to stimulate entrepreneurship, such as Act 135 below.<\/p>\n\n\n\n

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ACT 135: Benefits (<\/strong>Puerto Rico Business Link, 2018<\/strong><\/a>)<\/strong><\/p>\n\n\n\n

1) Income tax exemption on the first $40,000 gross income generated (from ages 16-24).<\/p>\n\n\n\n

2) Tax exemptions on the first $500,000 gross income generated during the first 3 years of operation of a new business<\/p>\n\n\n\n

3) Expedited process to obtain permits<\/p>\n\n\n\n

4) Access to low cost real estate<\/p>\n\n\n\n

5) Access to financing, Venture Capital Investment, and financial advice through the Economic Development Bank of Puerto Rico.<\/p>\n\n\n\n

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It is crucial to let young entrepreneurs know about these opportunities. Similar to the rebranding within the visitor economy, we propose a campaign to make success stories and resources for entrepreneurs more visible.<\/p>\n\n\n\n

There are already similar programs in place, such as Parallel18, based out of San Juan, which acts as an accelerator for startups that are starting to scale up. [16]<\/a><\/sup> Parallel18 has succeeded in attracting high growth businesses, which have generated $14 million in sales\u2013\u2013however, as the director of the School of Business Administration at Universidad del Sagrado Coraz\u00f3n in Puerto Rico pointed out, there is still not much support for entrepreneurs in the initial stages of entrepreneurship. [17]<\/a><\/sup><\/p>\n\n\n\n

Thus, we would propose that this new campaign focus on entrepreneurs that are just beginning the journey. This program would have the following focuses:<\/p>\n\n\n\n