Dominican Republic and Haiti: Country Studies

LONG DEPENDENT ON SUGAR, the Dominican Republic
diversified its economy beginning in the late 1960s to include
mining, assembly manufacturing, and tourism. In 1996 the
country's gross domestic product (GDP—see Glossary) was
approximately US$5.8 billion, or roughly US$716 per capita. A
lower-middle-income country by World Bank (see Glossary)
standards, the Dominican Republic depends on imported oil
and, despite diversification, retained some vulnerability to
price fluctuations in the world sugar market. Although poverty
continued to be acute for many rural citizens in the 1990s, the
economy had progressed significantly since the 1960s.
In the diversification process away from sugar, by 1980 the
Dominican 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
1 1 percent to more than 33 percent. More recently, in the first
half of 1998, free-zone exports increased 19 percent over the
first half of 1997, from US$541 million to US$644 million.
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. By 1995 tourism was the country's largest earner of foreign
exchange, bringing in more than US$1.55 billion. The
industry directly employed 44,000 persons and indirectly
another 110,000.
In a 1997 review of the Dominican Republic's economic
developments and policies, the International Monetary Fund
(IMF—see Glossary) pronounced the country's economic performance
in 1996 "broadly satisfactory." Over the longer
period of 1990-95, the government was given credit for
"strengthening the public finances, tightening credit and wage
policies, and implementing structural reforms." Inflation
plunged from 80 percent in 1990 to 9 percent in 1995. The
external public debt as a share of GDP was more than halved
(to 33 percent) during the same period. After dropping by
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