Puerto Rico — buffeted by natural disasters, a debt crisis and most recently, COVID-19 — is struggling under the weight of a hobbled economy that relies heavily on tourism.
However, the so-called “Island of Enchantment” may yet see better days, as the Biden administration, and a chance to become fully recognized as a U.S. state, could help restore a much-needed sense of normalcy after a rough stretch of years.
In the U.S. Congress, where Democrats currently hold a slim majority, key lawmakers are united in their desire to bolster Puerto Rico’s future — but exactly how that gets done is up for debate. One option currently being discussed with more intensity is a bid for statehood, an option that some have floated for Washington, D.C. as well.
Last year, an effort spearheaded by New York Democrats Nydia Velázquez and Alexandria Ocasio-Cortez culminated in a November referendum where Puerto Ricans voted to become a U.S. state, the latest in a years-long effort to clarify the island’s relationship with America.
Earlier this month, Puerto Rico’s sole representative in Congress, González Colón (R-PR) and Congressman Darren Soto (D-FL 9) introduced the Puerto Rico Statehood Admission Act, which would pave the way to make Puerto Rico the 51st state.
To be certain, Puerto Rico’s economy wasn’t always defined by crisis. For decades, U.S. tax incentives made the island a draw for subsidiaries of most U.S. companies that operated within its borders, turning into a manufacturing hub for big pharmaceutical companies like Johnson & Johnson (JNJ), Roche (RHHBY), Pfizer (PFE), and Novartis (NVS).
However, legislation passed in 1996 phased out those incentives within a decade, hastening a decline that made the economy far more reliant on tourism.
Edwin Melendez, director of the Center for Puerto Rican Studies and a professor of urban policy and planning at New York’s Hunter College, faulted a lack of investment in Puerto Rico for its most recent economic downturn.
“It’s not a decline because the companies packed up and left. It’s that the companies stopped investing in Puerto Rico,” Melendez told Yahoo Finance in a recent interview.
He noted that Puerto Rico’s pattern of economic decline was briefly interrupted when The American Recovery and Reinvestment Act of 2009 (ARRA) funds were injected as a stimulus. However, the reprieve would be short-lived: In the years that followed, two hurricanes, an earthquake, a rolling debt crisis and COVID-19 would turn life on the island upside down in the years that followed.
COVID-19 wreaked havoc on Puerto Rico much later than it did for many other parts of the U.S. However, in August, the island recorded an average of 419 daily hospitalizations. At present, the island nation has had 135,552 cases and 2,066 deaths.
Clinical Epidemiologist Roberta Lugo tells Yahoo Finance that Puerto Rico’s Government and Department of Health efforts to fight the COVID-19 have been slow and “full of stumbles.”
Lugo, who was on the island during its first wave, notes that the Puerto Rican government’s slow reaction time caused severe problems.
“We experienced poor decision making, and the economic sector had more weight than the scientific community. I can describe the emergency response as reactive rather than proactive,” she said.