By: Gustavo Vélez
See which emerging sectors are leading the development of the island’s economy.
When we talk about economic crisis, what comes to mind is something negative. In reality, the current process is one of great changes.
Emerging economic sectors
Since 2006, the most recent process of economic change and the search for a new economic and productive identity has been underway. The current process of economic contraction, the longest the island has experienced, is nothing more than a process of adjustment from which a new economic structure will emerge. Instead of being intimidated or adopting a defeatist attitude because of the current economic challenges, we should assume leadership and a creative attitude that allows us to adapt our businesses to the new reality. Examining the recent economic indicators reveals that there are sectors that are showing recovery. Technology and information, professional services, the aerospace industry, education, the health sector and tourism are some of the emerging economic sectors that are leading the process of change in the local economy. These sectors experiencing sustained growth in new economic productivity and in creating jobs will be the keys to helping bring about a gradual stabilization of the economy.
The professional services sector has increased its level of employment from 101,000 jobs in 2003 to 112,000 jobs during 2013. Meanwhile, the health sector has also increased employment, from 98,000 to 118,000, during the same time period. The health industry has reached a level of maturity that, along with the government, is promoting the development of a health tourism industry. With respect to the technology industry, a new class of local entrepreneurs is gaining ground at the local and global levels by exporting services in the most recent trends, such as the cloud and designing applications. Between 2010 and 2013, this emerging sector has increased employment from 18,800 to 19,500.
Tourism showed a significant improvement between 2013 and 2014. Cruise ship arrivals increased 12.7% while the occupancy rate during 2014 was 76.1%, a modest improvement over 2013, when it was 76%.
The aerospace industry
Another sector that offers opportunities for the new emerging economy is manufacturing of industrial operations. The Industrial Development Company has gradually identified new niches of competitiveness, such as the aerospace industry. The arrival of a Lufthansa project is already generating opportunities for local businesses to become part of the supply chain for this and other companies that have come to the western region. In fact, from 2013 to 2014, the value of industrial operations exports increased 8.7%. Meanwhile, from 2012 to 2013, this manufacturing sector’s contribution to production increased by 4.5%.
Finally, Law 20 of 2012, which provides incentives for exporting services, has created a platform for local professional services businesses to enter into the Central American and Caribbean regional markets. Now, around 300 local businesses enjoy a tax break under this law.
The common denominator among successful businesses in the emerging industries is that they have embraced change as a basic principle in their business model. Clearly, the economic situation is not going to change from one day to the next, but slowly some industries are consolidating and will help us move beyond the crisis or the process of change.
Source: 2013 Statistical Appendix of the Economic Report to the Governor, published by the Planning Board of Puerto Rico