For the past two decades, the Dominican Republic has been one of the fastest growing economies, with GDP growth averaging around 5.5 percent annually between 1991 and 2013. Despite this exceptional performance, poverty is higher today than in 2000. Poverty soared from 32 percent in 2000 to almost 50 percent in 2004 following the 2003 financial and economic crisis, before gradually declining to 41 percent in 2011.
According to the World Bank Group’s Doing Business 2015 [http://www.doingbusiness.org/data/exploreeconomies/dominican-republic/], the Dominican Republic along with Jamaica and Trinidad and Tobago featured among the countries that implemented the most reforms in Latin America making it easier for local entrepreneurs to do business.
In recent decades, the country has also transformed its economic base and has diversified its exports. Improvements to the business climate have facilitated international trade and boosted export growth. However, the country still ranks below other Caribbean countries and needs to carry out further reforms to maintain its competitiveness in the region.
Challenges for inclusive growth
Improve the business climate to boost investment and jobs creation while strengthening access of the poor to labor markets: Traditional job-intensive sectors such as manufacturing are growing at a slower pace than telecommunications and mining, which tend to generate fewer jobs. Since 2000, a large share of the jobs created has been in low-skilled industries in the informal sector. As a result of the 2003 crisis and the slower growth of the textile industry, real wages have declined by 27 percent since 2000, even as labor productivity rose. Improving competitiveness policy and the investment climate, in addition to implementing job training policies, could help create more and better jobs.
Promote equitable, efficient and sustainable fiscal policy: The current tax system is hampered by low revenue collection and relies heavily on indirect taxes. Making the tax system more progressive would allow for more redistribution, as well as more investments in basic public services such as water and sanitation, quality education and health, especially for the most vulnerable.
Improve public service delivery to reach people living in poverty: Despite significant improvements in service delivery coverage, access to basic public services remains unequal and of low quality, particularly for people living in poverty. Better program targeting, monitoring and evaluation, along with incentives such as results-based budgeting, could help improve service delivery.
Last Updated: Mar 30, 2015