Economy of the Dominican Republic

The primary sector

The agricultural sector

The agricultural sector turned over a long period the most important part of the Dominican economy and was almost exclusively focused on exports. Essentially, in addition to cocoa, coffee and bananas is mainly sugar cane was grown. Traditionally made ​​of sugar export an indispensable part of the export value of the land dar. The sugar cane cultivation was characterized as the entire agricultural economy, through a rather low productivity rate. Thus, during the 1960s an average of about 60 % of the working population were employed in this sector, but contributed just under a quarter of the GDP. In the same decade, economic changes began in the wake of the global market, changing the structure of its economy drastically. Unfavourable terms of trade were the importance of the agricultural economy gradually drop from tourism for the benefit of mining and from the late 1980s. The mid-1970s generated the sugar, nearly half of the export value of the country, but this proportion fell to 21% by 1985 from.

One of the main reasons was played by the erosion of the world market prices for sugar, which broke sharply in the first half of the 1980s. 1982, for example, achieved Caribbean sugar only a quarter of the price compared to the year 1980. 1985, that figure was less than one fifth. In particular, the strong reduction of the U.S. - Import quota for Dominican sugar in 1998 meant that the proportion of sugar to the total export performance in just two years plummeted by around 21 % in 1997 to a whopping 4 % in 1999. The fact that in 1994 were still working over a third of the workforce in agriculture, pointing to the still existing low productivity. In addition, the sugar industry is largely dominated by multinational corporations and the state. The withdrawal of foreign investors due to the steadily declining profitability brought strong additional social costs for the Dominican Republic with himself.

It is partially successful attempts to switch to other products, but they still have concentrated on the export. Thus, the Dominican Republic has become the third largest exporter of avocados ( to Israel and South Africa).

Furthermore, to identify the unequal distribution of agricultural land. 1% of farms have more than 50 % of the Nutzbodens, while 75 % of small farms have only a share of 15 %. The domestic demand for agricultural products is adequately addressed by medium-sized enterprises. Because despite some attempts at land reform in favor of small farmers still 85 % of all farms are smaller than 5 ha, will not succeed in need-based subsistence production for national consumption. The necessary food imports, thus contributing to the chronic deficit of the trade balance.

The mining industry

The mining industry has long been completely insignificant, but recorded from the 1970s an exorbitant growth. During this decade the export of < 0.5 % in 1970, the share of this sector rose to 38% in 1980. Besides the reduction of iron nickel were gold, silver, bauxite, and of greater importance. However, only 1 % of the workforce were employed in this segment, which indicates a high level of productivity. On the other side is so clear that this sector hardly created jobs to set large parts of the workforce and to let them participate in the relatively good earning potential.

In addition, foreign corporations dominated in this area as the business what the mid-1980s impacted fatal. Just as in the sugar business in 1984, the Gulf and Western Company, sold the Aluminum Company of America ( Alcoa) in 1982 all of its factories in the bauxite sector due to international price declines and general economic recession. Only iron nickel could account for a significant share of approximately 30% of the total export volume still up in the mid-1990s inside. But even there led to large price drops and low demand, that the end of October 1998, the entire production was stopped for 3 months. In 1999, the export volume is therefore only amounted to just under 5%.

The secondary sector

The industry of the Dominican Republic initially focused mainly on the processing of agricultural products. Above all, the sugar and its by-products. In addition to the beverage and food production, and the manufacture of chemical products, the production of textiles and cement.

Of enormous importance for the Dominican Republic proved in recent years, the so-called "free production zones " ( " zona franca " ), the de facto import outside of the national economy semi- finished goods, process them into finished products and export them again. The meaning of "free production zones " for the Dominican economy can be detected only indirectly for the following reason. Only the wages and salaries of persons working in included in the calculation of GDP with one, but not the profits of the businesses involved. Their number in 1998 was at least 500 and offered around 190,000 people work. Furthermore, the claimed "free production zones " around 37 % of all imports of the country and accounted in 1998 for over 82% of exports from. One reason why this percentage could increase in size to such an extent, is referred to in the previous section fall in commodity prices of the former main exports sugar, bauxite, etc.

Despite this rapidly growing part of the Dominican economy in 1998 recorded from the onset of stagnation. The Dominican Republic took the initiative in this regard and tried along with other Central American States pressure on the U.S. - government exercise to gain with the aim of a parity with the Mexican textile industry.

The tertiary sector

As is clear from the employment figures already mentioned, the majority of the workforce must be employed in this sector inevitably. Their share in that sector amounts to an estimated 40 -. 45 % in 1994, however, must be noted here that this sector also small businesses, shoe shiners, street vendors, etc. are counted. This type of work also serves as a kind of catch-all for the unemployed and put dar. for many urban families in the lowest social class, the only chance of survival

Against all odds, in the other sectors of the economy, the average GDP growth amounted to 7% in the second half of the 1990s. Particularly striking are the growth rates in the field of construction ( 1996-99: Ø 17.1 %), communication ( 1996-99: Ø 17.93 %) and hotels & restaurants ( 1996-99: Ø 11.23 % ). This development is mainly due to tourism, which has expanded dramatically since the late 1980s. This sector has been in a relatively short time to the main foreign exchange earner of the country.

A not to be despised disadvantage of this approach is the structural dependence on foreign economic activity includes amounts Almost all tourists in the country are from western industrialized nations and remain logically from just when the economic situation deteriorated in their home countries. Especially after the attacks of 11 September 2001 and the onset of the international economic downturn was initially a slight slump in the tourism business. Thus, the number of tourists in 2002 decreased compared to 2001 by as much as 146,000, or approximately 5%. This was mainly to lack of tourists from the United States.

In the first half of 2006, average length of stay of tourists was 9.5 days, ie there are relatively many short trips from the USA and Canada ( 52%). The Europeans (39% of tourists) usually stay two weeks or longer. The Dominican Republic is actually already no longer a cheap destination: A tourist is currently (as of 1st half of 2006 ) per day, about 107, - U.S. $ from. The price level for goods in supermarkets is almost at European level.

The employment structure and social situation

The economic structure of the country has changed significantly in the last 40 years and also had an impact on the population. While working today still many people in employment in the agricultural sector, but its significance to promote tourism, also from the standpoint of quantity of jobs, far back. Today a variety of jobs, more than ever, directly or indirectly dependent on tourism. In the course of this development, hence a middle class could emerge, which was at the beginning of the 1960s, not to be found, and increasingly gained importance.

However, this circumstance can not be fooled about the social reality of the country away. This can be particularly well seen in the distribution of income. In 1998 the richest fifth of the population more than 53% of all income, whereas only distributed to the poorest fifth less than 5 % of all income. Even clearer is this inequality in the distribution of income, if you look at the share of the richest decile, which accounts for 37.9% whole. So led the stately growth of per capita GDP of approx. 1,040 U.S. $ ( 1990) to U.S. $ 2,110 (1999 ) does not mean that lower income groups could benefit from it. Since the early 1990s, income concentration increased slightly but steadily to the top 30 % of the population. Accordingly, the income situation for the poorer and poorest layers deteriorated. Many people make their money in the "informal sector " - there are many, especially for the unskilled, no formalization of labor relations (ie, orally pronounced short-term contracts, no labor laws, no sick pay, no social security ), and to (typical for work in the informal sector ) the work of low-income Dominican is very unproductive.

Why, however, due to this situation of the population, the political system did not begin to destabilized, is attributed, inter alia, to two factors. On the one hand half a million illegal immigrants from Haiti to serve as stylized scapegoats and were up to the present day victims of violence, discrimination and exploitation. The basis for this is the time of the Haitian occupation of the country 1822-44 and the consequential hatred and racism that is characteristic of the Dominican Republic. This fact has always been a popular used propaganda element of politics. On the other hand, the mostly illegal labor migration is especially popular in the United States for relief of the state labor market and is used with restrictions, to improve the living conditions of the people concerned and - through money transfers - even the relatives they leave behind. According to a study by the Inter-American Development Bank 's 2004 annual remittances from Dominicans in the United States amounted to around 1.6 billion U.S. dollars.

CAFTA free trade

The Dominican Republic is economically seen in international comparison is not competitive. The agreements between the CAFTA free trade zone by 2010, gradually decreasing tariffs on trade with the United States will therefore lead to a larger volume of imports from the U.S., but not to a significantly higher volume of exports. Since the tariffs on imports from the EU can not be reduced, it becomes increasingly difficult to export goods cheap in the Dominican Republic for European companies.

Structural problems

• Power grid: are regarded as problems that 85 % of energy from thermal power plants originate and also 69 % of the fuels have to be imported, which is a large dependence on non- renewable sources of energy and fuel costs. One must include serious difficulties of a safe and efficient power supply, caused not least by high losses in the distribution (2012: 31.6 %) due to " theft of electricity " and technical deficiencies. Another problem is the high dependence on public subsidies, the state had from 2005 to 2010 U.S. $ 4.7 billion or 1.8% of GDP repay. However, this is sometimes not enough to pay the producers, leading to regular shutdowns. Another issue is the meager use of existing resources such as solar, wind and hydropower, which together contributed only 13.2% in 2012 to produce energy.
• The Dominican Republic has a poor health care in an international comparison.
• The Dominican Republic has an international comparison a weak education system.

Exchange rate dirigisme

The exchange rate for the Dominican Peso ( RD $ ) to U.S. dollars ( U.S. $ ) often does not follow any reasonable economic considerations but seems arbitrary. This results in an uncertainty in planning for individuals and for businesses. Particularly serious were the fluctuations in the time of President Hipólito Mejía (2000-2004), as the price rose in a short time of about 1:16 to 1:60 to just, during the Pan American Games in Santo Domingo ( 2003), or on other occasions but at about 1:25 declined sharply again. Since the re-election of Leonel Fernández ' is the peso significantly more stable.