Reliance on tax breaks hits Puerto Rico economy

Arecibo, Puerto Rico

PRUDO Jimenez was born on a sugar farm here in 1941, when agriculture ruled Puerto Rico's economy. He grew up to be a supervisor for drug maker Syntex in the 1960s, after US manufacturers came in droves, seeking a tax haven.

The peppy 75-year-old personifies an economic development movement designed to transform a generation from poor farmers to industry leaders. Yet when Mr Jimenez started his own venture, a horse breeding operation, he couldn't make it work.

His sons fared no better. Carlos Jimenez, 48, and Anjoe, 50, each started businesses only to see them go under in a decade-long economic slump that continues today.

Families such as the Jimenezes highlight the US territory's failure over decades to nurture a sustainable economy, one anchored by local entrepreneurs, even a…