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Dominican Republic Traditional Manufacturing
During the Trujillo era, manufacturing grew more slowly
than
it did in other Latin American and Caribbean countries
because of
the dictatorship's disproportionate emphasis on sugar
production.
In 1968 the Balaguer government introduced the Industrial
Incentive Law (Law 299). For the first time, domestic
manufacturers received substantial tariff protection from
foreign
competition. In the same year, the government signalled
the
beginning of industrial diversification in the
post-Trujillo era
by establishing the Industrial Development Board to
oversee
industrial policy. Although these incentives stimulated an
array
of domestic industries, created jobs, and helped to
diversify the
country's industrial base, Dominican industries failed to
develop
a capacity to compete internationally. Although envisioned
largely in terms of import substitution, most Dominican
industries depended heavily on foreign inputs. In
addition,
because they were generally capital-intensive, these
industries
failed to provide adequate employment for a burgeoning
population.
Local manufacturing was both inefficient and
inequitable. The
application of tariff and income tax exemptions became a
politicized process whereby benefits accrued to individual
firms
rather than to specific industries. The Jorge government,
which
itself manipulated incentives regulations to its political
advantage, introduced in 1983 the Democratizing Law 299,
purportedly to standardize industrial incentives for all
producers.
In the late 1980s, more than 5,000 traditional
manufacturing
firms existed in the republic. Food-processing activities
were
dominant, representing over 50 percent of manufacturing
activity;
followed by chemicals, 12 percent; textiles, 9 percent;
and
nonmetallic minerals, 6 percent. Some 3 percent of all
firms
accounted for nearly 50 percent of all industrial output;
these
firms, however, employed only 23 percent of the
manufacturing
labor force, indicating the capital-intensive nature of
larger
companies. By contrast, 85 percent of the smallest firms
registered only 30 percent of industrial production, while
employing 50 percent of Dominican workers.
The Dominican government generally abstained from
involvement
in new manufacturing operations, but twenty-five
industrial
enterprises, part of the Trujillo "legacy," remained in
the
government's portfolio in the late 1980s. Most of these
parastatals were under the control of a state holding
company,
the Dominican State Enterprises Corporation (Corporación
Dominicana de Empresas Estatales--Corde). Initially
converted
into state-owned enterprises as the "inheritance of the
people,"
Dominican parastatals endured in the late 1980s because of
their
role in the political patronage system
(see Dominican Republic - Public Administration
, ch. 4). Corde's holdings were diverse,
ranging
from a five-man auto parts firm to a 1,600-employee
cigarette
factory. Although the Balaguer administration considered
privatizing some state-owned enterprises to improve its
fiscal
position, that prospect remained unlikely because of the
political value of such firms.
Data as of December 1989
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