Pichardo, if the DR economy is so dynamic, why does it need the charity of the world to pay it's bills?
The WB and IMF continually bail it out.
I love the DR, but see a strong disconnect between the one I see and deal with and the one you chat about. And many folks think I have on rose colored glasses...
The DR economy is much more dynamic than most people think.
First and foremost, the DR
rarely asks for help from the IMF and/or World Bank. From the 1930s to 1960s the country was not dependent on foreign loans or grants for any of its functions. Trujillo took control of everything and he ensured that he was truly in control. Since the 1970s, the DR has gone to the IMF only two times. The first time was in the 1980s under Balaguer's term and that was due to complications that were created once Mexico declared a moratorium on its own debt, unfairly condemning every single Latin American country since banks the world over refused to lend a single dime to Latin American countries after that.
The second time was during the financial crisis earlier this decade due to the collapse of a few banks. That's pretty much it.
In both instances, it was the Dominican government that requested such help, much in the way the U.S. government borrowed over $700 billion a few weeks ago to save its own economy from collapse. I don't think the US economy is any less dynamic because of that and neither is the DR economy.
Second, the DR is an economic aid recipient, but far from having its bills paid by the international community. The fiscal budget for the government in 2007 was a little over $7 billion dollars. $77 million of those was from the economic aid, yes $77 million or a paltry 1%. That's hardly enough to pay any bills, well maybe one or two.
Third, lets do a quick analysis of the composition of the Dominican economy.
In the eastern region the economy is dominated by the two overwhelmingly export sectors of agriculture (mostly sugar) and tourism. To a lesser extent the free trade zones are important, but even these are export oriented. The only sectors of the economy that are internally focused is also in agriculture, mostly the cattle grazing industry and the orange plantations in Hig?ey, which are geared mostly for local consumption. Everything else is export oriented and local commerce is relatively insignificant.
In the southern region the economy is dominated by one industry that is agriculture, most of it export oriented. Every other economic sector is relatively insignificant and free trade zones practically don't exist in this part of the country. In fact, the economy is so poor here that even the largest towns pale in comparison to towns elsewhere in the country in terms of economic activity, the size of the middle class, or even activity in general.
In the northern region is where the economy is the most diversified, mostly concentrated in the Cibao Valley triangle of Santiago-San Francisco-Bonao. In that triangle there is a very strong manufacturing base, mostly export oriented Free Trade Zones. Mining is very strong here as well, almost completely in Bonao and almost completely export oriented. Agriculture is dominated by the export oriented tobacco plantations around Santiago and the cacao plantations scattered all over the places, especially near the mountains. Other agricultural activities are focused on the local market as is the case with the banana/platano plantations, the strawberries, lettuce, apples, and other non-traditional farms in Constanza, the rice farms in the vicinity of San Francisco, etc. Also, the cattle, pigs, and poultry sectors are overwhelmingly focused on the local market. The export oriented tourism industries are focused in the Puerto Plata-Sosua area, as should be well known with everyone in this website and Samana is on the verge of taking off. Commerce is very strong, mostly concentrated in Santiago. That's pretty much it.
Then there is the Valdesia region with is the Santo Domingo metro area and that is the only part of the country where manufacturing dominates, followed by commerce. Much of the manufacturing is export oriented (especially the Free Trade Zones, metallurgical, and cement industries), but a higher proportion of the manufacturing sector here is focused on the local economy such as the processing of foodstuffs and manufacturing of locally consumed products like toothpastes, shampoo, soap, detergents, etc). Commerce is the strongest here than anywhere else in the country and its locally maintained. Agriculture is not very important, mostly limited to sugar production on the edges of the metropolis.
In a nutshell, that's the Dominican economy. As can be seen, its mostly export oriented.
However, here is where the dynamic of the Dominican economy comes into play.
The Dominican economy has been export oriented since the island was discovered by Columbus. For the first time in the history of the country, a parallel economy focused on the local market began to develop as a new middle class emerged in the 1970s.
Hence, from the 1970s onward, the local market began to develop to such proportions that it formed an ever larger share of the economy as a whole.
In the 1980s this processed slowed a little due to the effects of the global crisis, but in the 1990s it took off. More businesses oriented on the local economy began to appear in the mid to late 1990s than ever in the history of the country. The fast growth of the middle class created a sizable local market that emulated the high consumption lifestyle prevalent in the U.S. and Europe. This market became so large that while its demands were being satisfied via importation, a good number of locally established businesses began to focus on cost-cutting practices to tailor to the local middle class. This is when large discount chain stores like La Sirena, Jumbo, Plaza Lama, etc. began to vigorously expand, first in Santo Domingo and as the middle class grew in other locales, the expanded to Santiago, San Francisco, La Romana, San Pedro, and now even Puerto Plata is getting in the action with its own La Sirena under construction.
And that's where the dynamism of the Dominican economy comes from.
This is an economy that is not only growing at its export-oriented level, but its also growing at its local-oriented level as well and nowhere else in the Caribbean or Central America, for that matter, has such growth at both levels have been as strong and sustained over such long periods of times as it has in the DR.
You can search left or right anywhere in the region to see the dynamism that is seen in the Dominican economy and quite frankly, you will not find it.
And now we have an interesting panorama that is unfolding at this very moment. The world is in a crisis and for the first time in the history of the world, its not dragging the DR down with it. Sure, things are a little slower than maybe a year ago, but the country is doing better than most other countries in Latin America right now and that is due to its dynamism.
-NALs
