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Dominican Republic
Chapter 3. Dominican Republic: The Economy
![[GIF]](48_files/do03_00a.gif)
The Plaza del Mercado, Puerto Plata, ca 1873
LONG DEPENDENT ON SUGAR, the Dominican Republic diversified its economy
during the 1970s and the 1980s to include mining, assembly manufacturing, and
tourism. In 1987, the country's gross domestic product (GDP--see
Glossary) was approximately US$5.6 billion, or roughly US$800 per capita, which
made the island nation the third poorest state in Latin America. A lower-middle-
income country by World
Bank (see Glossary) standards, the Dominican Republic depended on imported
oil and, despite diversification, retained its historical vulnerability to price
fluctuations in the world sugar market. Although poverty continued to be acute
for many rural citizens in the 1980s, the economy had progressed significantly
since the 1960s.
Beginning in the late 1960s, the Dominican economy began the arduous task of
diversifying away from sugar. By 1980 the mining industry had become a major
foreign exchange earner; exports of gold, silver, ferronickel, and bauxite
constituted 38 percent of the country's total foreign sales. In the 1980s, the
assembly manufacturing industry, centered in Industrial
Free Zones (see Glossary), began to dominate industrial activity. During
this decade, the number of people employed in assembly manufacturing rose from
16,000 to nearly 100,000, and that sector's share of exports jumped from 11
percent to more than 33 percent. Tourism experienced a similarly dramatic
expansion during the 1980s, when the number of hotel rooms quadrupled. Revenues
from tourism surpassed sugar earnings for the first time in 1984, and by 1989
total foreign exchange earnings from tourism nearly matched earnings from all
merchandise exports.
Despite indisputable advances, by 1990 the country also faced serious
inflation, chronic balance-of-payments deficits, and a large foreign debt. More
important, whereas the Dominican Republic had made great strides since the
dictatorial rule of Rafael Leónidas Trujillo Molina (1930-61), the nation's
political economy continued to be strongly influenced by patronage, graft, and a
lingering lack of political will to confront the traditional institutions that
continued to restrain economic performance.
Data as of December 1989
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