Gross Domestic Product (GDP) is a measure of the total marketplaceworth of final goods and services produced in a certain year. Theprimary objective of the GDP’s calculation is to determine financial production,and assesses outflows about income, as it is states in the article,”National Income Accounting: Measuring Output,” 2007 from the StateUniversity Of New York. The article debates fluctuations inPuerto Rico’s economy and the resolutions diverse writers have suggested. Also,it makes a contrast between the Puerto Rican and USA GDP and the islands reliance.A breakdown of fiscal growth discloses that fiscal policies are crucial in thedetermination of solutions to economic welfare when referring GDP (real and nominal).As of 2000, with 31percent, Puerto Rico had the lowest employment in the Americas and theCaribbean, as the article “Restoring Growth in Puerto Rico: The Economicand Policy Challenges”, claims. Also,Puerto Rico’s economy has had numerous defeats since the 70’s, in disparity torises in the 50’s and 60’s.
The articles suggest that these downfalls wereconsequences of US dependency and poor labor force input. Additionally, botharticles conclude that the substantial dependence on assistance programs loweredlabor rates on the country.The articles powerfully state that risingemployment is vital to reestablishing economic growth, and, if it is notaccomplished it, it will result in a decrease in GDP for many years. Mutually,the articles compare GDP measurements on the island and in the US. In the UnitedStates, consumption (being two thirds of the GDP) is the key element, investment,government spending and the net exports.
In the same way, Puerto Rico measuresfor GDP, but they use the domestic investment factor in a different perception,which is mostly because fixed domestic investments and inventory fluctuations areprovided by both the private and public areas of the country’s economy.Moreover,LaBossiere’s article, “Who Is Responsible for A Living Wage” states: “…eitheremployers can pay employees enough to live on or the taxpayers will need topick up the tab.” The issue is, if Puerto Rican’s employers pay all theiremployees a living wage instead of the stablished minimum wage, this could leadto an even higher unemployment on the island. Since most small business wouldnot be able to assure many medium salaries; they will employ fewer workers. Thus,this fact could negatively impact the island’s overall economy.Similarly,Derek Thompson in his article, “This is the American worker’s saga” says that thestuff people are making nationally is getting cheaper, but the stuff peopleneed is getting more expensive. That is why people in Puerto Rico feel sosqueezed.
LaBossiere’s article reflects every aspect of what Thompsonemphasizes in that thought. He makes a clear point that the worker-classstruggles each day more and more to keep up with the essential necessities, butwork much more hours than in previous decades and, paradoxically, live indesperate poverty. Low income families hardly can pay for the main necessities:shelter, food, and health care.The aim of raising employment engagement throughgovernment incentives and fiscal policy is achieved through public transfersfrom the USA. These allocations represent 25 % of the people’s income. Thefederal supported Food Stamps Program was introduced in 1975. Soto-Class &Lamba-Nieves articles’ points out that the way this and other federal programswere administered produced labor force involvement to falling-off.
One of the articles is about a singlemother of two children. Absurdly, it states that if she has $0 income and besuitable for all transfers, she would earn more in entitlements than if sheworked part time less than twenty hours per week. Also, she would earn about$40 per month, which is more than if she worked full time at a minimum wage.This example proves the negative consequence that fiscal policy has had by incentivizingthe islands’ citizens to not work.”RestoringGrowth in Puerto Rico: The Economic and Policy Challenges” also states that the low employment percentage ofPuerto Rican males can be accredited to numerous aspects: exile of extremelyemployable applicants to the US for higher salaries, the lucrativeness of disabilitycoverage and the Nutrition Assistance Program transfers from the USA government.
Furthermore, in the article, “Chapter 5National Income Accounting: Measuring Output,” a contrast between nominal andreal GDP was not straightway debated; therefore, further revisions where requiredto develop a contrast. According to a study made in 2014 by Soto-Rodriguez, theeconomic growth in Puerto Rico in the 80’s period had an average GDP of 0.3%,which contemplates 4.
8% average inflation percentage for that period. Consequently,by taking in account the inflation ratio, the percentage in query is the realGDP and not nominal. The difference between one and the other is that the real GrossDomestic Product includes theinflation rate and nominal does not take it into consideration.GDP Growth in the island has endured delayedsince recent years, 2006 according to the inferences of a study made byEnchautegi and Freeman in the same year. The economic growth study displaysthat a diversity of reasons contributed, which was that the GNP was raisingmuch less quickly than the GDP and the employment growth persisted shockingsince the year in mention. Inconclusion, all articles develop a comparable conclusion, which is all aboutsimilarities.
All consumers will draw on upcoming credit to support thehousehold income. The income-saving bond in Puerto Rico is moderately lowbecause 25% of the residents obtain federal funds as particular salary, whichdoes not allow savings. The federal funds are the principal reason of the weak workforceinput that is conducive to deprived savings relationships, which develops highinterest rates after customers use credit to compensate the domestic earnings. Sinceevery dollar is spent as a tendency to consume, consumption will permanently exceedincome for the lowermost earning section of the labor force.