The State of Entrepreneurial Ecosystems of an Economy in Distress
11 Pages Posted: 8 Dec 2015
Date Written: December 8, 2015
Puerto Rico’s economic development strategy has hit rock-bottom. The once so called 'most open economy of Latin America' (Collins et al., p.1) now faces the insolvency of its 52 state-owned enterprises, the degradation of its triple-tax-exempt municipal bonds to junk grade as well as multi-million losses in the stock market value of the banking industry. To make things worse, the Governor of Puerto Rico recently announced that the $73 billion debt in municipal bonds is unpayable. The causes of this strategic and economic downfall have been brewing for the past six decades: (a) a political system whose economic strategy mostly favored the big enterprise over the local entrepreneur, (b) a pervasive governmental intervention in economic affairs, and (c) a lack of connectivity and continuity between the initiatives and actors responsible for fostering an entrepreneurial climate on the island (Soto-Rodriguez, 2014). As depicted on Table 1, the effectiveness of Puerto Rico’s 60-year old model was short lived. Its benefits reached their peak by the end of the 1970s when the economy reported an average growth of 4%. Thereafter, the economy has never been able to grow above the 3% mark.
Suggested Citation: Suggested Citation