Economy of Dominican Republic

After a decade of little to no growth in the 1980s, the Dominican Republic's economy boomed in the 1990s, expanding at an average rate of 7.7% per year from 1996 to 2000. Tourism (the leading foreign exchange earner), telecommunications, and free-trade-zone manufacturing are the most important sectors, although agriculture is still a major part of the economy. The Dominican Republic owed much of its success to the adoption of sound macroeconomic policies in the early 1990s and greater opening to foreign investment. Growth turned negative in 2003 (-0.4%) due to the effects of government handling of major bank frauds and to lower U.S. demand for Dominican manufactures. The Mejía administration negotiated an IMF standby agreement in August 2003 but was unable to comply with fiscal targets. The Fernández administration obtained required tax legislation and IMF board approval for the standby in January 2005. The Dominican peso fell to an unprecedented low in exchange markets in 2003-2004 but strengthened dramatically following the election and inauguration of Leonel Fernández. Since late 2004 it has traded at a rate considered to be overvalued on a purchasing power parity basis. Inflation fell sharply in late 2004 and was estimated at 9% for that calendar year. The Fernández administration successfully renegotiated official bilateral debt with Paris Club member governments, commercial bank debt with London Club members, and sovereign debt with a consortium of lenders. It met fiscal and financial targets of the standby agreement but fell short of goals for reforms in the electricity sector and financial markets. The IMF standby agreement ended in January 2008. The global economic crisis, and in particular the U.S. recession, started to impact the Dominican economy in 2008 with remittances, exports, and tourism revenues falling. Economists believe that the full impact has not yet been felt and will worsen in 2009. The Dominican Republic's most important trading partner is the United States (75% of export revenues). Other markets include Canada, Western Europe, and Japan. The country exports free-trade-zone manufactured products (garments, medical devices, etc.), nickel, sugar, coffee, cacao, and tobacco. It imports petroleum, industrial raw materials, capital goods, and foodstuffs. On September 5, 2005, the Dominican Congress ratified a free trade agreement with the U.S. and five Central American countries, known as CAFTA-DR. The CAFTA-DR agreement entered into force for the Dominican Republic on March 1, 2007. Most of the U.S. foreign direct investment (FDI) in the Dominican Republic is directed to the energy and tourism sectors, to free trade zones, and to the telecommunications sector. Remittances were close to $3 billion in 2008. An important aspect of the Dominican economy is the Free Trade Zone industry (FTZ), which made up U.S. $4.55 billion in Dominican exports for 2006 (70% of total exports). Reports show, however, that the FTZs lost approximately 60,000 between 2005 and 2007 and suffered a 4% decrease in total exports in 2006. The textiles sector experienced an approximate 17% drop in exports due in part to the appreciation of the Dominican peso against the dollar, Asian competition following expiration of the quotas of the Multi-Fiber Arrangement, and a government-mandated increase in salaries, which should have occurred in 2005 but was postponed to January 2006. Lost Dominican business was captured by firms in Central America and Asia. The tobacco, jewelry, medical, and pharmaceutical sectors in the FTZs all reported increases for 2006, which somewhat offset textile and garment losses. Industry experts from the FTZs expect that entry into force of the CAFTA-DR agreement will continue to promote substantial growth in the FTZ sector. An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Three regional electricity distribution systems were privatized in 1998 via sale of 50% of shares to foreign operators; the Mejía administration repurchased all foreign-owned shares in two of these systems in late 2003. The Fernandez administration announced in June 2009 that it is negotiating the purchase of the third distributor, which serves the eastern provinces. The World Bank records that electricity distribution losses for 2008 totaled about 36%, a rate of losses exceeded in only two other countries. Due to low collection rates, theft, infrastructure problems, and corruption, distribution losses remain high. Subsidies to the electricity sector exceeded $1 billion in 2008. Congress passed a law in 2007 that criminalizes the act of stealing electricity; it entered into force in February 2009. The electricity sector is highly politicized; the prospect of further effective reforms in the sector is poor. Debts in the sector, including government debt, amount to close to U.S. $600 million. Some generating companies are undercapitalized and at times unable to purchase adequate fuel supplies. Economy (2008) GDP: $45.6 billion. Growth rate (est.): 4.9%. Per capita GDP (est.): $5,122. Non-fuel minerals (1.4% of GDP): Nickel, gold, silver. Agriculture (6.5% of GDP): Products--sugarcane, coffee, cocoa, bananas, tobacco, rice, plantains, beef. Industry (27.4% of GDP): Types--sugar refining, pharmaceuticals, cement, light manufacturing, construction. Services, including tourism and transportation: 58.6% of GDP. Trade: Exports--$6.484 billion (FOB), including processing zones: textiles, sugar, coffee, ferronickel, cacao, tobacco, meats, and medical supplies. Markets--U.S. (75%), Canada, Western Europe, South Korea. Imports--$8.797 billion: foodstuffs, petroleum, industrial raw materials, capital goods. Suppliers--U.S. (48%), Japan, Germany, Venezuela, Mexico, Colombia.

Geography of Dominican Republic

Location: Caribbean, eastern two-thirds of the island of Hispaniola, between the Caribbean Sea and the North Atlantic Ocean, east of Haiti Geographic coordinates: 19 00 N, 70 40 W Map references: Central America and the Caribbean Area: total: 48,730 sq km land: 48,380 sq km water: 350 sq km Area-comparative: slightly more than twice the size of New Hampshire Land boundaries: total: 275 km border countries: Haiti 275 km Coastline: 1,288 km Maritime claims: contiguous zone: 24 nm continental shelf: 200 nm or to the edge of the continental margin exclusive economic zone: 200 nm territorial sea: 6 nm Climate: tropical maritime; little seasonal temperature variation; seasonal variation in rainfall Terrain: rugged highlands and mountains with fertile valleys interspersed Elevation extremes: lowest point: Lago Enriquillo -46 m highest point: Pico Duarte 3,175 m Natural resources: nickel, bauxite, gold, silver Land use: arable land: 21% permanent crops: 9% permanent pastures: 43% forests and woodland: 12% other: 15% (1993 est.) Irrigated land: 2,300 sq km (1993 est.) Natural hazards: lies in the middle of the hurricane belt and subject to severe storms from June to October; occasional flooding; periodic droughts Environment-current issues: water shortages; soil eroding into the sea damages coral reefs; deforestation; Hurricane Georges damage Environment-international agreements: party to: Biodiversity, Climate Change, Desertification, Endangered Species, Marine Dumping, Marine Life Conservation, Nuclear Test Ban, Ozone Layer Protection signed, but not ratified: Law of the Sea Geography-note: shares island of Hispaniola with Haiti (eastern two-thirds is the Dominican Republic, western one-third is Haiti)

Government of Dominican Republic

The Dominican Republic is a representative democracy with national powers divided among independent executive, legislative, and judicial branches. The president appoints the cabinet, executes laws passed by the legislative branch, and is commander in chief of the armed forces. The president and vice president run for office on the same ticket and are elected by direct vote for 4-year terms. Legislative power is exercised by a bicameral Congress--the Senate (32 members) and the House of Representatives (178 members). The Dominican Republic has a multi-party political system with national elections every 2 years (alternating between presidential elections and congressional/municipal elections). Presidential elections are held in years evenly divisible by four. Congressional and municipal elections are held in even numbered years not divisible by four. International observers have found that presidential and congressional elections since 1996 have been generally free and fair. Elections are supervised by a Central Elections Board (JCE) of 9 members chosen for a four-year term by the newly elected Senate. JCE decisions on electoral matters are final. Under the constitutional reforms negotiated after the 1994 elections, the 16-member Supreme Court of Justice is appointed by a National Judicial Council, which is comprised of the President, the leaders of both houses of Congress, the President of the Supreme Court, and an opposition or non-governing-party member. One other Supreme Court Justice acts as secretary of the Council, a non-voting position. The Supreme Court has sole authority over managing the court system and in hearing actions against the president, designated members of his cabinet, and members of Congress when the legislature is in session. The Supreme Court hears appeals from lower courts and chooses members of lower courts. Each of the 31 provinces is headed by a presidentially appointed governor. Mayors and municipal councils to administer the 124 municipal districts and the National District (Santo Domingo) are elected at the same time as congressional representatives. Principal Government Officials President--Leonel Fernández Reyna Foreign Minister--Carlos Morales Troncoso Ambassador to the United States--Roberto Saladin Ambassador to the United Nations--Erasmo Lara Peña Ambassador to the Organization of American States--Roberto Alvarez The Dominican Republic maintains an embassy in the United States at 1715 22d Street NW, Washington, DC 20008 (tel. 202-332-6280. Type: Representative democracy. Independence: February 27, 1844. Restoration of independence, August 16, 1863. Constitution: November 28, 1966: amended July 25, 2002 Branches: Executive--president (chief of state and head of government), vice president, cabinet. Legislative--bicameral Congress (Senate and Chamber of Deputies). Judicial--Supreme Court of Justice. Subdivisions: 31 provinces and the National District of Santo Domingo. Political parties: Social Christian Reformist Party (PRSC), Dominican Revolutionary Party (PRD), Dominican Liberation Party (PLD), and several others. Suffrage: Universal and compulsory, over 18 or married.

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History of Dominican Republic

The island of Hispaniola, of which the Dominican Republic forms the eastern two-thirds and Haiti the remainder, was originally occupied by Tainos, an Arawak-speaking people. The Tainos welcomed Columbus in his first voyage in 1492, but subsequent colonizers were brutal, reducing the Taino population from about 1 million to about 500 in 50 years. To ensure adequate labor for plantations, the Spanish brought African slaves to the island beginning in 1503. In the next century, French settlers occupied the western end of the island, which Spain ceded to France in 1697, and which, in 1804, became the Republic of Haiti. The Haitians conquered the whole island in 1822 and held it until 1844, when forces led by Juan Pablo Duarte, the hero of Dominican independence, drove them out and established the Dominican Republic as an independent state. In 1861, the Dominicans voluntarily returned to the Spanish Empire; in 1865, independence was restored. Economic difficulties, the threat of European intervention, and ongoing internal disorders led to a U.S. occupation in 1916 and the establishment of a military government in the Dominican Republic. The occupation ended in 1924, with a democratically elected Dominican Government. In 1930, Rafael L. Trujillo, a prominent army commander, established absolute political control. Trujillo promoted economic development--from which he and his supporters benefited--and severe repression of domestic human rights. Mismanagement and corruption resulted in major economic problems. In August 1960, the Organization of American States (OAS) imposed diplomatic sanctions against the Dominican Republic as a result of Trujillo's complicity in an attempt to assassinate President Romulo Betancourt of Venezuela. These sanctions remained in force after Trujillo's death by assassination in May 1961. In November 1961, the Trujillo family was forced into exile. In January 1962, a council of state that included moderate opposition elements with legislative and executive powers was formed. OAS sanctions were lifted January 4, and, after the resignation of President Joaquin Balaguer on January 16, the council under President Rafael E. Bonnelly headed the Dominican government. In 1963, Juan Bosch was inaugurated President. Bosch was overthrown in a military coup in September 1963. Another military coup, on April 24, 1965, led to violence between military elements favoring the return to government by Bosch and those who proposed a military junta committed to early general elections. On April 28, U.S. military forces landed to protect U.S. citizens and to evacuate U.S. and other foreign nationals. Additional U.S. forces subsequently established order. In June 1966, President Balaguer, leader of the Reformist Party (now called the Social Christian Reformist Party--PRSC), was elected and then re-elected to office in May 1970 and May 1974, both times after the major opposition parties withdrew late in the campaign. In the May 1978 election, Balaguer was defeated in his bid for a fourth successive term by Antonio Guzman of the Dominican Revolutionary Party (PRD). Guzman's inauguration on August 16 marked the country's first peaceful transfer of power from one freely elected president to another. The PRD's presidential candidate, Salvador Jorge Blanco, won the 1982 elections, and the PRD gained a majority in both houses of Congress. In an attempt to cure the ailing economy, the Jorge administration began to implement economic adjustment and recovery policies, including an austerity program in cooperation with the International Monetary Fund (IMF). In April 1984, rising prices of basic foodstuffs and uncertainty about austerity measures led to riots. Balaguer was returned to the presidency with electoral victories in 1986 and 1990. Upon taking office in 1986, Balaguer tried to reactivate the economy through a public works construction program. Nonetheless, by 1988 the country slid into a 2-year economic depression, characterized by high inflation and currency devaluation. Economic difficulties, coupled with problems in the delivery of basic services--e.g., electricity, water, transportation--generated popular discontent that resulted in frequent protests, occasionally violent, including a paralyzing nationwide strike in June 1989. In 1990, Balaguer instituted a second set of economic reforms. After concluding an IMF agreement, balancing the budget, and curtailing inflation, the Dominican Republic experienced a period of economic growth marked by moderate inflation, a balance in external accounts, and a steadily increasing GDP that lasted through 2000. The voting process in 1986 and 1990 was generally seen as fair, but allegations of electoral board fraud tainted both victories. The elections of 1994 were again marred by charges of fraud. Following a compromise calling for constitutional and electoral reform, President Balaguer assumed office for an abbreviated term and Congress amended the Constitution to bar presidential succession. In June 1996, Leonel Fernández Reyna of the Dominican Liberation Party (PLD) was elected to a 4-year term as president. Fernández's political agenda was one of economic and judicial reform. He helped enhance Dominican participation in hemispheric affairs, such as the OAS and the follow up to the Miami Summit. On May 16, 2000, Hipolito Mejía, the PRD candidate, was elected president in another free and fair election, soundly defeating PLD candidate Danilo Medina and Former President Balaguer. Mejía championed the cause of free trade and Central American and Caribbean economic integration. The Dominican Republic signed a free trade agreement with the United States and five Central American countries (DR-CAFTA) in August 2004. During this administration, the government enacted anti-trafficking and anti-money-laundering legislation, sent troops to Iraq in support of the fight against terrorism, and ratified the Article 98 agreement it had signed in 2002. Mejía faced mounting domestic problems as a deteriorating economy--caused in part by massive bank fraud--and constant power shortages plagued the latter part of his administration. During the Mejía administration, the Constitution was amended to permit an incumbent president to seek a second successive term, and Mejía ran for re-election. On May 16, 2004, Leonel Fernández was elected president, defeating Mejía 57.11% to 33.65%. Eduardo Estrella of the PRSC received 8.65% of the vote. Fernández took office on August 16, 2004, promising in his inaugural speech to promote fiscal austerity, to fight corruption and to support social concerns. Fernández said the Dominican Republic would support policies favoring international peace and security through multilateral mechanisms in conformity with the United Nations and the OAS. The Fernández administration works closely with the United States on law enforcement and immigration and counter-terrorism matters. In 2006 elections, Fernández' PLD won 60% of seats in the House of Representatives and 22 of 32 Senate seats, as well as a plurality of mayoral seats. On May 16, 2008, President Fernández was reelected President with 53.8% of the vote. His new term runs until 2012.

People of Dominican Republic

About half of Dominicans live in rural areas; many are small landholders. Haitians form the largest foreign minority group. All religions are tolerated; the state religion is Roman Catholicism. Nationality: Noun and adjective--Dominican(s). Population (2009): 9.65 million. Annual growth rate (2007): 1.5%. Ethnic groups: Mixed 73%, European 16%, African origin 11%. Religion: Roman Catholic 95%. Language: Spanish. Education: Years compulsory--6. Attendance--70%. Literacy--84.7%. Health: Infant mortality rate--28.3/1,000. Life expectancy--70.2 years for men, 73.3 years for women. Work force: 60.2% services (tourism, transportation, communications, finances, others), 15.5% industry (manufacturing), 11.5% construction, 11.3% agriculture, 1.5% mining.

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