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Introduction

The 16th Century to the 18th Century

During the years of conquest and colonization, the economy of Puerto Rico could best be defined as an agricultural subsistence economy. The food needed to support the population was obtained through a combination of Taino agricultural methods, the raising of domestic animals, and the cultivation of crops originally imported from Europe. Both indigenous peoples and slaves, who were brought to the island due to the dwindling numbers in the local native workforce, were subjected to forced labor.

Due to the country's overall poverty, economic assistance was provided by Spain beginning in 1582 through funds transferred from New Spain (Mexico): the Situado Mexicano. The situado was the principal source of financing for the island's administration until it was terminated in 1810, when Mexico gained its independence from Spain.

Marshal Alejandro O'Reilly, the general sent by the King of Spain to Puerto Rico in 1765, drafted an official report on the island's socio-economic conditions. O'Reilly described Puerto Rico as Spain's poorest colony in the Americas. Thus, the Spanish Crown began to pave the way for the arrival of more Spanish settlers, which led to a tripling in the island's population during the last third of the 18th century.

By the end of that century, the main economic activities were centered on subsistence farming or contraband trade. Low population density and Spain's insistence on establishing mercantilismmercantilism: An economic system that began after the Middle Ages and in which the wealth of nations or European monarchs was in principle determined by the amount of land conquered, by the accumulation of mineral wealth and the volume of trade of the country in question. It was the hegemonic system until the second half of the 18th century, in which the foundations were laid for capitalism. as the principle economic structure were major factors contributing to the technological backwardness and non-competitiveness of its colonies.