Third Party Indicators
How does Puerto Rico compare to the rest of the world?
If Puerto Rico does not know where it stands in relation to other countries or states, it is difficult to track its progress towards meeting goals.
There are areas where Puerto Rico is performing very well. For example, Puerto Rico’s educational attainment, measured through “Mean Years of Schooling,” is among the highest in the world. In particular, the educational attainment of Puerto Rican women (Female Mean Years of Schooling) is comparable to that of women in highly educated economies, such as Norway and Finland. Though the quality of education is just as important and studies have found we are lagging behind in this aspect, our educational attainment speaks to the potential of our island’s human capital.
Unfortunately, there are many more areas in which we are lagging behind. The following selection of indicators allows us to assess where Puerto Rico stands in critical economic development areas and therefore provides insight into the areas that require prioritization.
In terms of measuring economic development holistically, one of the most widely used indicators is the United Nations’ Inequality-adjusted Human Development Index (I-HDI). The I-HDI measures the jurisdiction’s average achievements in health, education, and income while considering how those achievements are distributed among the population. The indicator suggests Puerto Rico is an economy of “medium levels of development,” and neighboring economies such as Chile, Panama, and Costa Rica have already surpassed us in terms of economic development.
The World Bank’s Ease of Doing Business Ranking highlights that neighbors (such as the US, Mexico, and Chile) and key competitors (such as Singapore and Ireland) all have business environments that are much more conducive to the generation of new businesses, and therefore jobs.
Closely related, the World Bank’s Worldwide Governance Indicators highlight that Puerto Rico has among the most ineffective governments in the world.
In sum, the data illustrates Puerto Rico has fallen behind in living standards and wellbeing and needs to build a more effective government that can create an environment that fosters economic development.
Ease of Doing Business Index
Inequality-Adjusted Human Development Index
Economic development is much more than economic growth. Development also implies, for example, growing in a manner that improves living standards, health, and education.
The United Nations’ Inequality-adjusted Human Development Index (IHDI) measures a country’s average achievements in health, education, and income while taking into account how those achievements are distributed among the country’s population.
Worldwide Governance Indicators
Good governance and effective institutions are necessary in order to implement economic development strategies. To monitor progress in governance and measure its impact on the economy, the World Bank publishes its Worldwide Governance Indicators for over 200 countries and territories.
The six categories of governance outlined by the World Bank are: 1) government effectiveness, 2) rule of law, 3) control of corruption, 4) regulatory quality, 5) political stability, and 6) voice and accountability. Puerto Rico is significantly outranked by its neighbors in all six of the World Bank’s governance indicators. In 2019, the island’s worst ranking was “Government Effectiveness.” In this category, Puerto Rico ranked 115th of 209 countries and territories, well below the United States (19th) and other regional neighbors such as Chile (39th), U.S Virgin Islands (51st), and Uruguay (54th).
Global Entrepreneurship Monitor (GEM)
The Global Entrepreneurship Monitor (GEM) is a consortium of national country teams, primarily associated with top academic institutions, that carries out survey-based research on entrepreneurship around the world.
GEM’s Entrepreneurial Framework Conditions (EFC) measures the adequacy of 12 areas that impact entrepreneurship, such as taxes and bureaucracy, entrepreneurial education, and physical infrastructure. The EFC scale ranges from 0 (very inadequate) to 10 (very adequate).