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Dominican Republic

 
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Dominican Republic

Foreign Assistance

The IMF, the World Bank, and the IDB were the major multilateral donors in the Dominican Republic. The IMF, the lender of last resort and for purposes of economic stabilization, had a long and controversial history in the country. The Jorge government had signed agreements with the IMF in 1983 and 1985, but both ended prematurely because of disagreements over the pace and the extent of economic reforms. Austerity measures mandated under the 1985 IMF agreement were met with widespread rioting and other violence. The Balaguer administration (1986-90) had yet to sign an IMF agreement as of 1989, and it often lambasted the international institution over its unpopular economic remedies. In the absence of an IMF agreement, World Bank lending was limited to about US$15 million a year, mainly in support of road construction, energy, financial sector reform, and other technical assistance. The IDB had assisted the island since the early 1960s; in the 1980s it provided funding for projects in irrigation, education, hurricane assistance, and highways.

The United States was the major bilateral donor in the Dominican Republic, furnishing between one-quarter and one-half of bilateral assistance. The level of United States assistance since the 1940s had fluctuated widely in response to economic and political trends. The Dominican Republic became one of the top recipients of United States aid in 1966, when US$100 million in economic assistance was provided in the aftermath of the United States occupation. Assistance slowed during the 1970s, averaging only US$21 million a year. The United States Agency for International Development (AID) strengthened its presence in the 1980s, and from 1984 to 1987, United States assistance averaged US$115 million a year, the highest level since 1966. The composition of United States assistance changed markedly during the 1980s, from an emphasis on development assistance--which constituted 56 percent of total aid in 1979 but only 25 percent in 1987--to greater use of Economic Support Funds (mainly balance-of-payments support), which, although they had not existed in 1979, accounted for approximately 55 percent of aid in 1985. The level of food aid under the Public Law 480 (Food for Peace) program remained fairly constant, about 45 percent of total aid. The focus of AID's interventions in the republic also shifted dramatically, from basic human needs--education, health, and family planning in the 1970s--to short-term economic stabilization, privatization, export promotion, economic policy reform, natural resource management, and small business development. Besides AID, other United States bilateral agencies, such as the Peace Corps and the Overseas Private Investment Corporation actively assisted development. Japanese, European, and Canadian bilateral development agencies also had representatives on the island. Private nongovernmental development groups, both local and international, were numerous in the Dominican Republic; they provided hurricane relief, food donations, and project support to multilateral and bilateral donors.

Although privation and poverty persisted, especially in rural areas, the economy appeared in the late 1980s to be moving toward a new phase of development, based on export promotion and new, innovative service industries. Reliance on the United States as a customer, supplier, and aid donor was crucial to this process. Long-term prospects for diversification and growth were encouraging, providing the government was able to deal effectively with negative trends in trade and the balance of payments. The problem of the foreign debt appeared intractable, partially for political reasons. As in other areas, however, the Dominican economy in 1989 contrasted dramatically with the sugardominated fiefdom left behind by Trujillo in 1961.

***

The works that best describe the Dominican economy in the 1980s include Claudio Vedovato's Politics, Foreign Trade, and Economic Development. A Study of the Dominican Republic, Howard J. Wiarda and Michael J. Kryzanek's The Politics of External Influence in the Dominican Republic, and Jan Knippers Black's The Dominican Republic: Politics and Development in an Unsovereign State. The annual Dominican Republic: Investors Handbook, published by the American Chamber of Commerce of the Dominican Republic, provides a useful guide to economic developments. As of 1989, however, there was no definitive book-length study detailing the economy's shift from sugar toward free-zone manufacturing, tourism, and other nontraditional activities. The World Bank, the International Monetary Fund, the United States Agency for International Development, and the United States Department of Agriculture issue the most important field-based studies on the Dominican Republic available on a regular basis. The United Nations Economic Commission for Latin America and the Caribbean and the Economist Intelligence Unit also publish helpful annual reports on the Dominican economy. On the island, the Dominican Central Bank, the Technical Secretariat of State of the Presidency, the Investment Promotion Council, the State Sugar Council, and the Dominican Center for the Promotion of Exports, all generate essential data and studies on local economic activity. (For further information and complete citations, see Dominican Republic - Bibliography.)

Data as of December 1989


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