Dominican Republic and Haiti: Country Studies

Dominican Republic: The Economy
Nickel is another Dominican export that contributed to the
mining prosperity of the 1970s. From 1918 to 1956, the United
States Geological Survey performed a series of mineral studies
in the country. These studies encouraged the Canadian firm
Falconbridge of Toronto to undertake its own nickel testing
starting at the end of that period. Falconbridge successfully
opened a pilot nickel plant in 1968, and by 1972 the company
had begun full-scale ferronickel mining in the town of Bonao.
In the late 1980s, the Bonao ferronickel mine was the second
largest in the world. Buoyed by high international prices,
nickel exports rose from 11 percent of total exports in 1975 to
14 percent by 1979. Although nickel exports, as a percentage
of total exports, continued to climb in the 1980s, reaching 16
percent by 1987, lower world prices for nickel and a lengthy
dispute between the government and Falconbridge over tax
payments hampered output throughout the decade.
Nonetheless, nickel remains one of the Dominican Republic's
main traditional exports, generating between US$220 million
and US$240 million a year in the late 1990s. Low export
prices, however, compelled Falconbridge Dominicana, which is
majority-owned by the Toronto company, to suspend production
for three months in 1993, reducing output to approximately
13,445 tons in that year. Production rose steadily
thereafter, reaching 33,000 tons in 1997. Falconbridge Dominicana
experienced difficulties that resulted in a 6.8 percent fall
in nickel output in 1998 and caused the company to suspend
operations during the last three months of 1998 because of low
international prices. The firm indicated, however, that it would
use the time to revamp and upgrade plant facilities. The combination
of gold, silver, and nickel has made the Dominican
Republic's mining sector the largest export earner, with the
exception of the free zones, since the 1980s.
Construction
The construction industry had a major effect on the economy
during the 1970s and the 1980s because governmentfunded
public works provided thousands ofjobs and improved
the physical infrastructure. Construction activity boomed in
the early 1970s, increasing at a rate of 16 percent annually from
1970 to 1975, faster than any other sector during that period,
with the exception of mining. Public-works projects such as
dams, roads, bridges, hospitals, low-income housing, and
schools transformed the national infrastructure during the
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