Puerto Rico's economy is mostly a numbers game where corporate 'extraction' creates a $42 billion hole in what residents actually earn.
March 24, 2026
Original Paper
Two Economies in Puerto Rico: IP-attributed Returns, Transfer Dependence, and Accounting Closure, 2002-2025
SSRN · 6325358
The Takeaway
The paper reveals that multinational firms book massive intellectual property returns in Puerto Rico to boost GDP figures, but that money immediately leaves the island. This results in a 'two economies' system where 40% of resident personal income must be provided by federal transfers because the local productive economy is geared toward non-resident owners.
From the abstract
Puerto Rico exhibits a sharp divergence between territorial production and resident welfare. This paper documents and quantifies two interacting structural conditions over 2002-2025. First, non-resident primary-income outflows: multinational firms book large IP-attributed returns that elevate measured GDP ($129.4 billion in FY2025) while the associated property income accrues to non-resident owners, leaving gross national product at $87.6 billion-a $41.8 billion gap. Foreign direct investment (F