In the early 20th century the greatest contributor to Puerto Rico's economy was agriculture and its main crop was sugar. In the late 1940s a series of projects codenamed Operation Bootstrap encouraged a significant shift to manufacture via tax exemptions. Manufacturing quickly replaced agriculture as the main industry of the island. Puerto Rico is classified as a "high income country" by the World Bank.
Economic conditions have improved dramatically since the Great Depression because of external investment in capital-intensive industries such as petrochemicals, pharmaceuticals and technology. Once the beneficiary of special tax treatment from the U.S. government, today local industries must compete with those in more economically depressed parts of the world where wages are not subject to U.S. minimum wage legislation. In recent years, some U.S. and foreign owned factories have moved to lower wage countries in Latin America and Asia. Puerto Rico is subject to U.S. trade laws and restrictions.
Also, starting around 1950, there was heavy migration from Puerto Rico to the Continental United States, particularly New York City, in search of better economic conditions. Puerto Rican migration to New York displayed an average yearly migration of 1,800 for the years 1930–1940, 31,000 for 1946–1950, 45,000 for 1951–1960, and a peak of 75,000 in 1953. As of 2003, the U.S. Census Bureau estimates that more people of Puerto Rican birth or ancestry live in the U.S. than in Puerto Rico.
On May 1, 2006, the Puerto Rican government faced significant shortages in cash flows, which forced the closure of the local Department of Education and 42 other government agencies. All 1,536 public schools closed, and 95,762 people were furloughed in the first-ever partial shutdown of the government in the island's history. On May 10, 2006, the budget crisis was resolved with a new tax reform agreement so that all government employees could return to work. On November