Author: Sergio M. Marxuach

Puerto Rico’s Anemic Private Sector

Professors Steven Davis and Luis Rivera Batiz, in an analysis conducted for their contribution to the book The Economy of Puerto Rico: Restoring Growth, published in 2006 by the Center for the New Economy and the Brookings Institution, found that a “truly striking feature of Puerto Rico’s economy is the underdeveloped state of its private sector.” According to their analysis, private sector employment rates in Puerto Rico are less than half the U.S. rates in recent decades.

The Dangers of (de)Globalization

Between 1870 and 1914 the world lived the high point of the first era of economic globalization. The globe was effectively connected through railways, steamships, and telegraph lines.

The Rule of Law and the Enforcement of Contracts

The rule of law is one of the most important institutions for economic development. For Friedrich von Hayek, Nobel prize winner in economics, the rule of law meant that “government in all its actions is bound by rules fixed beforehand – rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one’s individual affairs on the basis of this knowledge.”

Seeing Things in their Precise Shape and Color

The current economic situation, both locally and globally, is the most complicated the world has seen since the Great Depression. In the midst of all this complexity is it imperative that we see things as they really are in order to properly diagnose the situation and to prescribe the correct course of action.

The Importance of Bond Ratings

Puerto Rico’s credit rating has been in the news recently. When the government of Puerto Rico or one of its agencies issues bonds, credit rating agencies, such as Moody’s Investors Service and Standard & Poor’s Rating Services, analyze various quantitative and qualitative factors that may affect the borrower’s ability and willingness to repay, including, but not limited to, the financial condition of the borrower, the prevailing economic conditions in the island, and the political environment at the time of going to the market.

The Determinants of Economic Growth

Ever since the days of Adam Smith, economists have struggled to understand the process of economic growth. While this effort has produced a better understanding the determinants of growth, many puzzles remain unsolved.

PREPA: A Deadweight on Puerto Rico’s Economy

In August of 2005, the Center for the New Economy published a research paper entitled “Restructuring the Puerto Rico Electricity Sector”. In that report we noted that the Puerto Rico Electric Power Authority suffered from various financial and operating inefficiencies that should be corrected as soon as possible.

A New Look at Puerto Rico’s Electricity Sector

In August of 2005, the Center for the New Economy (CNE) published a research paper entitled “Restructuring the Puerto Rico Electricity Sector”. In that report we noted that the Puerto Rico Electric Power Authority (PREPA) suffered from various financial and operating inefficiencies that should be corrected as soon as possible. In this update we find, unfortunately, that most of those deficiencies are still present three years later.