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Thread: Recession of 2008 and impact on the DR

  1. #4791
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    Quote Originally Posted by the gorgon View Post
    this is the point where playa gets to explain the effects of an increase in Total Factor Productivity, and the effects on an economy when there is no elasticity of demand for the products of that country.
    How about you explain it, as you see it, rather than trying to get into a ****ing contest.

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  3. #4792
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    Quote Originally Posted by playacaribe2 View Post
    You have a valid point.

    Many countries, including the US and the DR, have had debt fueled growth that must be paid back. And as the interest rates on that debt rise (a likely March 15 rate hike on fed funds in the US which will also ripple through the global economy) more and more of a countries annual budget goes to pay debt service.....leaving less and less to grow the economy....which in turn forces countries like the DR to either sell more debt or raise taxes, or both.

    One of the ways to breaking that cycle, particularly valid in third world economies, is to increase productivity growth. That is best done as Expat 13 pointed out above by raising the education levels/skills of a countries population.

    When that is done, for example, a factory worker in a free trade zone earning minimum wage then raises his/her education/training level to become a skilled worker such as a welder, raises his/her ability to earn higher rates of pay, which in turn also helps raise gdp and real growth.......not the false and eventually unsustainable debt fueled kind.

    To be sure, real growth is also subject to the business cycle, but debt fueled growth, a lot of which the DR currently has, needs to reigned in......or market forces will eventually do the job for them.

    They cannot borrow and/or tax their way to prosperity without real productivity growth.....and real productivity growth is vital in third world economies such as the DR.....lest they become another Argentina or Venezuela....both fueled by heavy debt growth...due to mismanagement in their economies.


    Respectfully,
    Playacaribe2
    There in lies a BIG problem. Most Dominicans have been taught to borrow beyond their means and to the most part never even consider paying it back. Since the gubmint does it, it trickles down to the people. The best way to describe it is;
    "Un préstamo es un regalo". That you learn quickly here.

  4. #4793
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    Quote Originally Posted by bob saunders View Post
    How about you explain it, as you see it, rather than trying to get into a ****ing contest.
    i don't feel like...

  5. #4794
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    Quote Originally Posted by Expat13 View Post
    There in lies a BIG problem. Most Dominicans have been taught to borrow beyond their means and to the most part never even consider paying it back.
    prestamo business is a tough one. very few of the regular folks get away without paying back. prestamistas cannot afford many losses and will go after non payers at full force. i know people who owed relatively little, thought they were the smart ones, stopped paying. a while later they lost everything they owned because of the accumulation of interest.

    many of those who borrow from small prestamistas end up paying their debt few times over. many prestamistas lend at exorbitant rates because they know they can.
    North Coast Moderator


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