This densely populated island has 3.6 million people, with about one third living in the metropolitan area around the capital city of San Juan. Another 2.5 million Puerto Ricans live on the United States mainland, largely in east coast cities like New York. More recently, Orlando, Fla. has become a mecca.

Spanish is the native language, but English is widely spoken, especially in San Juan, and the government recognizes both Spanish and English as official languages. The currency is the U.S. dollar.

The influence of its Spanish heritage and its close ties to American life creates an island of sharp contrasts, where the old mingles with the new. It is evident in the island's architecture, which mixes Spanish colonial with ultra-modern, and can be seen in the abundance of North American-style malls and fast-food restaurants that compete with small, family-run stores and restaurants.

Just what is Puerto Rico, part U.S. territory and part Latin America at the same time? It has held a commonwealth association with the United States, called Estado Libre Asociado or free associated state, since 1952. Puerto Ricans are U.S. citizens, and the U.S. Constitution is the law of the land. Residents elect their own governor and representatives to two legislative bodies: the House of Representatives and the Senate. The island has a representative in the U.S. Congress, but the resident commissioner's vote doesn't count in passing federal legislation.

Puerto Rico contains aspects of both a state of the union and a separate nation. The Island receives federal transfers for social and infrastructure programs, and Puerto Ricans have been drafted to fight in U.S. wars. Yet, islanders don't pay federal taxes and can't vote for the president.

Political status is a matter of constant debate among Puerto Ricans, and the three major political parties are aligned with a distinct status: the New Progressive Party supports statehood, the Popular Democratic Party backs the current commonwealth system and the Puerto Rican Independence Party strives to make the Island an independent republic.

The statehood movement has grown steadily over the last two decades, but islanders appear to maintain a strong autonomous streak —despite the small shows of support for outright independence. In a 1993 plebiscite on the matter, Puerto Ricans voted to maintain an enhanced form of the current Commonwealth designation. Another vote was held in 1998, but the results were less clear, as the winning option was the so-called "fifth column," listed on the ballot as "none of the above." The choice was backed by the pro-Commonwealth Popular Democratic Party, who declined to support the commonwealth option on the ballot as a protest over how it was defined. The pro-statehood legislative majority in Puerto Rico, which voted to hold the status plebiscite, argued that the commonwealth definition was in line with a bill which passed the U.S. House of Representatives but died in the U.S. Senate. The plebiscite was held in tandem with the 100th anniversary of U.S. rule.

With its mixed economy, Puerto Rico has among the highest per-capita incomes in Latin America but trails the poorest U.S. states. Manufacturing has driven the economy since the days of Operation Bootstrap, a post-war industrialization program that transformed the Island from an agricultural society. More recently, the Island has relied on the tax incentives contained in Section 936 and Section 30-A of the U.S. tax code. Both of these tax breaks are being phased out over 10 years.

Driven by these incentives, manufacturing has thrived, with pharmaceutical, textiles and chemicals among the major products. Increasingly, high-tech production is dominating the sector. Today, manufacturing continues to be the dominant industrial sector, although the administration's New Economic Model strives to diversify the economy. Other important economic sectors include services, commerce, retail and tourism. Agriculture accounts for less than 5 percent of Gross Domestic Product.

In August 1996, Section 936, the federal tax break that has been the island's main industrial incentive for two decades, was eliminated for new firms and phased out over the next 10 years for current beneficiaries. The move follows a cutback in the program in 1993. Manufacturing, while still large, has been stagnant in recent years while other economic sectors have grown more quickly.

Puerto Rico's government aims to make up for the 936 loss by providing new local incentives, cutting taxes and encouraging economic development in other industries. Tourism is also taking on added prominence, with several world class properties, such as the Ritz-Carlton San Juan, the Westin Río Mar Beach Resort and Country Club, the San Juan Marriott Hotel & Stellaris Casino and El Conquistador Resort & Country Club, having opened up in recent years. More on the way. For instance, Spain's Sol Melía is building an all-inclusive resort in Río Grande, and the Four Seasons hotel chain has also located an east coast site to build a resort.

Puerto Rico also hopes to increase its exports, particularly in the professional services sector, where Puerto Rican expertise ranges from engineering to management to financial services to medical services. Puerto Rico's expertise in dealing in both Latin American and U.S. societies and business environments will no doubt serve it well in this endeavor. Emigration remains an important economic avenue, and Puerto Ricans of all socio-economic backgrounds continue to go stateside to earn their livings.