DOMINICAN REPUBLIC
Economy
Economy
Cities in DOMINICAN REPUBLIC
| Puerto plata | Punta cana |
Economy
General
The Dominican Republic has long been one of the fastest growing economies in the world. Since 1992, the country has experienced economic growth of more than 5% per year. During this period, inflation could be kept in check. After 2001, economic growth clearly slowed down due to the recession in the US, high oil prices and falling prices for its export products.
The Dominican Republic depends mainly on the export of agricultural products, especially sugar. When sugar prices fell sharply in the first half of the 1980s, successive Dominican governments pursued policies to strengthen the shaky economic base.
In 2017, the share of the different sectors in the gross national product was as follows: agriculture and fisheries 5.5%, industry 33.81%, trade, transport, finance, communication and other services 60.8%. Economic growth has stagnated recently due to the credit crisis. In the years 2010 to 2013, the economy grew by an average of 2%. In 2017, growth will be around 5%. Tourism and free trade areas generate the most income. The average GDP per capita in 2017 was $16,900.
Despite this relatively high income, 30.5% of Dominicans (2017) live below the subsistence minimum, which represents malnutrition and not enough money for decent clothes, housing and schooling for children. Most of these households are also not connected to electricity and water supply. Health care for these people is also minimal and most children do not even receive the badly needed vaccinations. Unemployment is 5.5% in 2017 according to official figures. In reality, these figures are much higher.
There are still more than 500 companies operating in the approximately 50 'Zonas Francas', duty-free zones in the Dominican Republic. Companies in these zones are exempted from various taxes for a period of 15 years. These zones are mainly set up for export production. About half of the companies are active in the production of textiles and clothing for the US market. Almost half of the companies are of American origin.
Agriculture, livestock and fisheries
Agriculture accounted for 5.5% of gross national product in 2017 and employs 14.4% of the workforce. The main crop is sugar and the Dominican Republic continues to be among the largest sugar producers in the world. The sugar industry is largely state-owned and concentrated in the south and southeast. Illegal and disenfranchised Haitian guest workers make up a significant proportion of the workforce on the sugar plantations. These Haitian sugarcane cutters live in so-called "bateyes", camps at the edge of the sugarcane fields.
The crisis in the sugar market in the 1980s is at the root of the country's economic recession. The glory days of sugar production seem to be over. However, sugar cane is the raw material for the production of rum, which is increasing all the time. From the molasses, which is released during sugar cane production, the pungent 'aguardiente' is prepared. This product undergoes further processing to become rum or 'rón'. True rum lovers drink the seven- or five-year old rum pure. The one- or three-year-old rum is used for cocktails.
The greatest variety of agricultural activities takes place in the Cibao Valley, the country's 'granary'. Coffee and cocoa are important agricultural exports grown there. In contrast to sugar, coffee is a product of mainly small farmers. The Dominican "arabica" is largely intended for export. The cultivation of cocoa has grown in importance in recent years and is now of about the same magnitude as coffee production.
The Dominican Republic can provide itself with the most necessary food products. The main product for local consumption is rice.
Livestock farming has traditionally been an important business and has grown considerably in recent years, partly thanks to government support. Beef, of very good quality, for export comes from the large cattle farms in the centre of the country.
The fishing industry is mainly of local importance. The restaurants serve sea bass, snapper, squid, tarpon, mackerel, swordfish and crayfish, among others.
Mining and energy
Mining contributes only 2% to the gross national product: the main products are ferronickel, gold and silver. Bauxite production ceased in early 1984 with the withdrawal of the Aluminum Company of America (Alcoa).
Mining is an important foreign exchange earner, although this sector represents only 1.4% of GDP.
Energy supply is largely dependent on imported oil. Own oil reserves are hardly exploited yet. Hydropower plants supply one third of domestic energy needs. Electricity production is currently provided by two foreign companies: AES from the United States and Unión Fenosa from Spain. The generators in Itabo and Haina have also passed into private hands.
Industry
About half of the industrial production is sugar cane processing. Other industrial products are textiles, footwear and leather, paper, glass, tobacco and food. Employment in the industrial sector is 20% of the labour force. The food processing industry is the main manufacturing industry for the domestic market in the Dominican Republic. This sector has, of course, been boosted by the development of mass tourism.
Most companies are relatively small, family-owned businesses, and the main industries are owned by the state and foreign companies.
The government has been very successful in encouraging the establishment of large foreign companies, including by establishing six industrial free zones and offering 15-year 'tax holidays'.
Trade
By far the Dominican Republic's most important trading partner is the United States, which accounts for half of the Republic's exports and imports. The European Union comes second.
The main exports are sugar products, coffee, gold, ferro-nickel and cocoa. More than 80% of export revenues come from the "Zonas Francas", the Dominican Republic's duty-free zones, which mainly produce clothing for the US market.
The main imports are oil and industrial products and foodstuffs. There is a chronic trade deficit, mainly due to oil imports.
Traffic
The Dominican Republic has a good and extensive road network of approximately 18,000 km (1986). Connecting roads between the larger cities have a total length of about 5,000 km.
The total length of the railway network is about 1600 km, of which 142 km are in the hands of the state. These are the lines from La Vega to Sánchez and from Guayubin to Pepillo, which serve mainly for the transport of export goods. More than 1,000 km of narrow gauge is in use on the sugar plantations. Santa Domingo has a metro connection.
Domestic air traffic has access to a dozen small airports; scheduled international flights use the 'Las Americas' airport near Santo Domingo.
The main airports for charter flights are Puerto Plata and Punta Cana.
The main port of the Dominican Republic is Puerto Rio Haina, the port of the capital Santo Domingo. The container capacity of this port is now 14,000 units, and should be increased to 25,000 units. Approximately 2,700 ships enter this port annually.
Sources
Bayer, M. / Dominicaanse Republiek
Gottmer/Becht
Creed, A. / Dominican Republic
Chelsea House Publishers
Dominicaanse Republiek
Het Spectrum
Foley, E. / Dominican Republic
Times Books International
Froese, G. / Dominicaanse Republiek
Van Reemst
Langenbrinck, U. / Dominicaanse Republiek
ANWB
Latzel, M. / Dominicaanse Republiek
Elmar
Stow, L. K. / Dominicaanse Republiek
Kosmo
CIA - World Factbook
BBC - Country Profiles
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