An historical analysis of the Economic Development Administration: Inception, structure, programs, and contributions to the economic development of Puerto Rico, 1942-1993

The purpose of this study was to trace the origins of the Economic Development Administration (EDA), to examine and analyze the changes in its structure and the development of its programs, and to determine to what extent this agency contributed to the economic development of Puerto Rico from 1942 to 1993. The historical method was used to obtain, analyze and derive inferences from the data. Quantitative data were analyzed in three categories: the construction of time series for selected variables such as investment, income, and employment; the assessment of the economic impact of these variables through the multiplier effect; and the construction of a Human Development Index for the period 1960 to 1990. Historical data were organized and evaluated under the light of Rostow's stages approach, Harrod-Domar's investment approach, and the institutional approach of development.;The study found that economic history of Puerto Rico can be explained using Rostow's stages of economic growth. It was also found that the social, political, and economic conditions prevailing at the inception of the 1940's decade created the appropriate environment for a socioeconomic reform directed to foster economic development and to improve social and economic welfare. As called for by the institutional approach, the creation of EDA was vital in the promotion of the take-off environment necessary for economic development. EDA succeeded in promoting foreign private investment, in line with the Harrod-Domar approach, positively impacting income and employment. To further achieve its aim, EDA evolved over time in response to changes in economic policy designed to adapt to changes in market demand.;EDA has made significant contributions to the manufacturing sector, and to the whole economy as well, through the multiplier effect on income and employment, although these contributions have been less significant during the last two decades. Economic development fostered by EDA contributed to place the Island in the high human development category, among other 173 countries. However, emphasis of economic policy in attracting foreign investment, specifically to the manufacturing sector, neglected other sectors in the promotion of development. Economic policy should be revised to refocus promotional efforts in a more balanced strategy, emphasizing local industry and resources, particularly human capital.