Economist, historian and businessman, Bernardo Vega, writes in today’s El Caribe that he likes the new accounting system recently instituted by the Central Bank. He says that the Dominican Republic will now calculate its GDP based on 31 activities rather than the 13 that were previously used. Both national and international economists have been insisting on this for some time.
According to Vega, the new calculations show two important conclusions. The first, which results from changing the base year from 1970 to 1991, shows that for many years the Dominican Republic has stopped being an agricultural country and has become a service and manufacturing country. Agriculture now provides slightly more than 7% of the GDP, and sugar, upon which the Dominican economy depended for much of the twentieth century, now accounts for an “insignificant” 1% of GDP, a common phenomenon in the Caribbean, with tourism also replacing sugar in places like Cuba. Vega says that the era of Caribbean plantations, which began in the eighteenth century, has come to an end.
The second conclusion provided by the new numbers is that under both the new and the old methodology, the growth rates do not vary much, and for 2005, the difference was zero. The year with the greatest difference between the two systems was 1993 when it would have been 6.5% instead of 3% if the new methodology had been used. This reality, according to the economist, knocks the footing from arguments by some other economists, members of the opposition parties, who have alleged that growth in 2004 and 2005 was not real. As a transitional measure the Central Bank will publish figures for the coming years using both systems, that based on 1970 and the other one that uses new variables and is based on a base year of 1991. Vega ends today’s editorial by remembering his days at the Central Bank, commenting that “those were days of a simpler economy and days of innocence.”