Dominican Republic Economy

Dominican Republic Economy

ECONOMY: GENERAL INFORMATION

Affected by a recent economic transformation, which has seen the progressive decline of traditional agricultural activities in the face of the growth of the tertiary sector, encouraged above all thanks to tourism, the country experienced a particularly intense development during the nineties, which made it a model for the economies of neighboring countries. The national GDP grew, in those years, at the rate of 5% per year, to settle, in 2008, at about 10% (45,597 mln US $, with a per capita GDP in net growth, equal to US $ 5,122). However, the first years of the new millennium were characterized by a rather significant economic downturn, fueled in large part by the deep crisis of 2001 and the consequent international tensions. The tourism and energy sectors were affected in the first place. Forced to drastic containment measures due to rising inflation, unemployment and the devaluation of the currency, the government has committed itself, vis-à-vis international organizations, to the promotion of appropriate economic policies, in order to stabilize the currency and improve the structural conditions of finance and political-economic institutions. Thanks to the measures taken (starting with a restrictive monetary policy and more flexible exchange rates) it was possible to revalue the currency and contain the debt to foreign countries; not only that, but inflation and unemployment also suffered a significant setback, stabilizing, respectively, at around 7.6% and 16% (2006). However, the heavy dependence on the United States still represents a serious obstacle for an authentic development of the country’s economy: on the one hand, this link has hindered the real restructuring of the agricultural sector (in which the primacy of the monoculture of sugar cane remains, one of the main productions aimed at exporting to US markets, to the detriment of other products destined for the internal consumption of the population) and, on the other hand, continues to unbalance the balance of the sector due to the massive presence on the territory of multinational companies, which in fact represent the real economic levers of the country.

ECONOMY: AGRICULTURE, FORESTRY, LIVESTOCK AND FISHING

Although it is the backbone of the economy, agriculture is in many ways not very profitable: poorly mechanized and particularly vulnerable to natural phenomena, it has undergone a progressive impoverishment over time. Practiced on a third of the territory, this practice has known, as in all countries with a prevalently neo-colonial economy, two types of territorial and development organization. On the one hand, the large plantations, where products destined for export are grown with modern techniques and a large use of capital: sugar cane (whose cultivation is widespread in the southern coastal plain, from Barahona to La Romana, and in the northern one in the province of Puerto), coffee, cocoa, tobacco, bananas, which are affected by the trend in international prices. On the other hand, products intended for internal consumption, grown in small and medium-sized properties, among which cereals (rice and corn), cassava, sweet potato (batata) and various vegetables stand out. Coconuts, peanuts, citrus fruits, cotton, agave sisalana and sesame also have some local importance.. § The forestry patrimony is substantial, extending over about a quarter of the national territory; the forests provide valuable essences (mahogany, cedar), which feed a high annual production of timber; coloring substances are also obtained. § Although the country has rich pastures (40% of the territory is covered with meadows), farming is not very developed, just as fishing is little practiced and completely insufficient. The primary sector occupies, overall, an ever smaller share of the active population, which fell to 14.9% in 2006, and participates for less than a tenth in the formation of GDP.

ECONOMY: INDUSTRY AND MINERAL RESOURCES

The very high costs of oil imports have made the expansion of the energy sector and consequently of industrial activities particularly difficult. Medium and small companies prevail, often at the artisan level: the basic sectors are completely absent. According to allcountrylist, the manufacturing activity is almost exclusively limited to the transformation of local agricultural products, thus including sugar refineries, alcohol and rum distilleries, tobacco factories, cotton mills, oil mills, breweries; there are also some cement factories, small chemical factories and foundries, furniture factories, shoe factories etc.; the opening of about forty “free zones”, in which trade shows greater dynamism, has achieved a certain success. § Various and often abundant are the mineral resources, rock salt. The sector entered into crisis following the closure of the ALCOA (Aluminum Corporation of America) plants, which until 1984 held the monopoly on the extraction of bauxite, the country’s first mineral resource. Overall, the secondary sector employs just over one fifth of the population and one third participates in the formation of national wealth.

Dominican Republic Economy