Leaving the Fields Behind
After World War II, Puerto Rico faced a difficult economic reality. Agriculture had long dominated, but the Great Depression, hurricanes, poverty, and fragile infrastructure had weakened the island. Large numbers of young Puerto Ricans migrated to mainland industrial cities, while others sought work in expanding local industries.
Governor Luis Muñoz Marín’s government responded with Operation Bootstrap, a development program designed to attract American investment and build manufacturing. Agrarian reform limited the land held by large sugar interests, while tax concessions encouraged companies to establish factories.
The Manufacturing Boom
The program helped transform Puerto Rico from a rural agricultural society into an industrial working class. During the 1950s, labor-intensive industries such as textiles expanded. In the 1960s and 1970s, manufacturing moved toward heavier industries, including petrochemicals and oil refining.
Economic growth was substantial: roughly 6% in the 1950s, 5% in the 1960s, and 4% in the 1970s. Puerto Rico became one of Latin America’s more affluent economies, even though it imported about 80% of its food.
The Cost of Incentives
The model depended heavily on tax advantages, cheap labor, and access to U.S. markets without import duties. In 1976, companies received an exemption from income tax on Puerto Rican revenue. When that exemption was phased out between 1996 and 2006, many companies moved production elsewhere, contributing to recession.
Operation Bootstrap proved that economic geography could be redesigned. But it also revealed the danger of building prosperity around policies controlled from outside the island: when the incentives changed, the foundations shook.