Dominican Republic - Economy

Economy

Main article: Economy of the Dominican Republic See also: Dominican Peso

The Dominican Republic has the second largest economy (the largest, according to the U.S. State Department) in Central America and the Caribbean. It is an upper middle-income developing country, with a 2007 GDP per capita of $9,208, in PPP terms, which is relatively high in Latin America. In the trimester of January–March 2007 it experienced an exceptional growth of 9.1% in its GDP, which was actually below the previous year's 10.9% in the same period. Growth was led by imports, followed by exports, with finance and foreign investment the next largest factors.

The Dominican Republic is primarily dependent on natural resources and government services. Although the service sector has recently overtaken agriculture as the leading employer of Dominicans (due principally to growth in tourism and Free Trade Zones), agriculture remains the most important sector in terms of domestic consumption and is in second place, behind mining, in terms of export earnings. The service sector in general has experienced growth in recent years, as has construction. Free Trade Zone earnings and tourism are the fastest-growing export sectors. Real estate tourism alone accounted for $1.5 billion in earnings for 2007. Remittances from Dominicans living abroad amounted to nearly $3.2 billion in 2007.

Economic growth takes place in spite of a chronic energy shortage, which causes frequent blackouts and very high prices. Despite a widening merchandise trade deficit, tourism earnings and remittances have helped build foreign exchange reserves. The Dominican Republic is current on foreign private debt.

Following economic turmoil in the late 1980s and 1990, during which the gross domestic product (GDP) fell by up to 5% and consumer price inflation reached an unprecedented 100%, the Dominican Republic entered a period of growth and declining inflation until 2002, after which the economy entered a recession.

This recession followed the collapse of the second-largest commercial bank in the country, Baninter, linked to a major incident of fraud valued at $3.5 billion, during the administration of President Hipólito Mejía (2000–2004). The Baninter fraud had a devastating effect on the Dominican economy, with GDP dropping by 1% in 2003 as inflation ballooned by over 27%. All defendants, including the star of the trial, Ramon Baez Figueroa, were convicted. One subpoena was not delivered because the United States denied extradition.

According to the 2005 Annual Report of the United Nations Subcommittee on Human Development in the Dominican Republic, the country is ranked No. 71 in the world for resource availability, No. 79 for human development, and No. 14 in the world for resource mismanagement. These statistics emphasize national government corruption, foreign economic interference in the country, and the rift between the rich and poor.

The country has a noted problem of child labor in its coffee, rice, sugarcane, and tomato industries. The labor injustices in the sugarcane industry extends to forced labor according to the U.S. Department of Labor

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Famous quotes containing the word economy:

    “I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the Government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar that we prudently save means that their life will be so much the more abundant. Economy is idealism in its most practical terms.”
    —Calvin Coolidge (1872–1933)

    “It enhances our sense of the grand security and serenity of nature to observe the still undisturbed economy and content of the fishes of this century, their happiness a regular fruit of the summer.”
    —Henry David Thoreau (1817–1862)

    “The counting-room maxims liberally expounded are laws of the Universe. The merchant’s economy is a coarse symbol of the soul’s economy. It is, to spend for power, and not for pleasure.”
    —Ralph Waldo Emerson (1803–1882)