Dollarizing or pegging the a country's currency to the dollar does not work. It did not work in Argentina and it is not working in Ecuador (it takes several years for the effect to take hold).
Lets say for example that we DID dollarize the Dr economy. These are the steps that the government needs to take:
1) Acquire roughly US$1billion to put in circulation. This lead to the question: where is that money coming from? The answer is: loans.
2) In order to grow the DR economy, the US$ supply in the DR has to grow. Where is this growth in US$ coming from? If Argentina and Ecuador are any indication, it will come from more loans. You can aslo sell out the national utilities....but the DR has already done that.
3) As with the DR now, many of these loans come with the proviso that a large part of the money be used to purchase goods from the lender.
4) In order to finance these loans and to finance GDP growth in the DR, the DR trade balance would have to be positive. What this means is that the DR export more than it imports. This has the implication that the DR be just as efficient as the USA and other exporting countries.
The bottom line is that when you dollarize, you invariably take out loans with the hope that your economy will outperform that of the USA. These excessive loans push up interest rates significantly and this leads to a poor local economy. A poor local economy cannot pay its loans.....and thus you have a downward spiral.....it aint good....Ecuador is in the process of going down now.
Thes people that are advocating dollarization are doing it for political pruposes only. I cannot believe that grown men and women with advanced Economics degrees would make such an irrelevant suggestion.
http://www.latin-focus.com/countries/argentina/argtrade.htm
This is a great link for looking at economic graphs of Latin American countries. You will clearly see what happened in Argentina and what is starting to happen in Ecuador.