Historically, the informal dollar part of the informal economy has been minimal, but during the crisis, the number of people using dollars in the informal economy as a form of payment increased sharply.MerengueDutchie said:Live and learn I see.. I always assumed that the illegal economy was mostly run on peso's.. apart from indirect effects...hence the limited influence on the formal economy.. you have any idea how big this informal dollar part is?
In the formal economy, what occured was that businesses posted their prices in US Dollars and at the moment of sale, they would charge you in pesos depeding on where the exchage rate was at that given time, due to the volatility of the exchange rate. Changing the prices of things was bothersome, when exchange rate changed in some cases by the hour.
However, in the informal sector, many people simply used the dollars as forms of payments and the equivalent in peso if dollars were not available to the purchaser.
Leonel made a comment about this problem earlier in his term when he addressed the issue of congress wanting to be paid in US Dollars as oppose to Dominican Pesos.
To make matters more complicated, along the border many communities live on the Haitian Gourde, which is often used as legal tender along with the Peso. This activity is much lower compared to dollars and much lower compared to historical evidence.
In fact, here is a little quick history...
For many years in the beginning of the republic, the currency of choice nationwide was the Mexican Silver Dollar. The first American invasion in the 1920s shifted the legal tender of the republic from Mexican Silver Dollars to American Gold Dollars (this was done in part to facilitate trade with the US since the moment the US took control of the country, the entire economy of the country (sugar and tobacco) was remodelled to serve the American market and from that point forward this country has been closely linked economically to the United States) but also to remove the adverse effect the losing value of Silver in the international markets was having on the economy as a whole.
During those times, the Haitian Gourde was also widely used as if it was legal tender in the informal sectors along the border and south, extending as far east as the province of Azua. In fact, the south was more geared towards Haiti than it was to the DR, with many reports in newspapers of the era raising awarness of what they called "The Haitian extension in Dominican Territory" going as far as stating that "when the people of Azua speak of the Capital, they are speaking of Port-au-Prince, not Santo Domingo".
This was mostly due to the creation of the sugar monoculture in the eastern plains, which was an economic activity created by American and Cuban sugar barons in areas of the country that had no source of labor or population of any significance. Thus, Dominicans from the Cibao, but especially from the south migrated in search of jobs in the east. The flow of southerners to the eastern plantations was so severe, that the governor of Azua Province (which at the time was the entire south stretching from the border almost to Santo Domingo) demanded officials to halt the creation of sugar cane plantations in the east by foreigners and to encourage development in the south. Former peasants who sold their land to the sugar barons later became employed by the sugar plantations, but the demand for cheaper labor was met with resistance from Dominican workers and the most Cuban and American owned sugar cane plantations started the habit of importing foreign cheaper labor from the British West Indies. This habit later switched to importing labor from Haiti at the request of American and Cuban sugar plantation owners who were being affected by the strike to British West Indians had in protest of low wages. In fact, the British West Indians (cocolos) were demanding the samething Dominicans were earlier, but the sugar cane plantation owners (mostly foreigners) demanded cheap labor. Thus, they simply did what they had to to keep wages low and they began the habit of importing Haitians as oppose to British West Indians. During the Trujillo dictatorship, Trujillo reluctantly agree to agreements with Haiti for importation of Haitians into Dominican sugarcane feilds owned by Americans and Cubans, and later, (as Trujillo himself became a Sugar baron) started to import Haitians to his plantations unwillingly, because if he would not had done so, his plantations (which carpeted a huge chunck of the national land) would have failed against the foreign owned plantations who were using the cheaper Haitians labor as oppose to the expensive British West Indian labor or to the even more expensive Dominican labor pool.
The Cibao had always had its economy based primarily on Tobacco and a few manufacturing ventures, except that in the Cibao these economic activities sprung in areas where labor was abundant and readily available and given that the job opportunities in the Cibao paid better than the foreign owned sugar plantations in the east, the Cibao never needed to import labor from any other country or region of the DR.
However, the severe lack of investment in the south, the constant flow of working age workers towards the east, and the ever growing economic connections to Haiti as oppose to the rest of the DR, caused for much concern to officials who could do little, because the country was virtually being controlled from abroad, primarily the United States and the DR (and Cuba) was being used to supply that country with the much needed sugar.
Thus, in the South the habit of using the Haitian Gourde became endemic. As time passed, the south became ever closer to Haiti and Port-au-Prince and less so to the DR and Santo Domingo. All of this changed the moment Trujillo came to power.
But, this is to show that this is nothing new.
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