Economy

In 2003, a major banking scandal tipped the economy on its ear, ending in the collapse of the bank Baninter. Confidence in the government’s ability to handle the economy plummeted, hitting rock bottom along with the peso. As the peso lay cold on the economic floor, then-president Mejía’s spending and borrowing habits (US$1.1 billion) added even more insult to injury and brought the inflation rate to around 25 percent—prices rose and wages didn’t—and the poor got even poorer.

The Dominican Republic [1] has long been dependent on agriculture (especially sugar) for the economy, but it is no longer a one-trick pony as the cigar production industry has stepped up its game.

But for exporting, mining (gold, silver, ferronickel, and bauxite) is number one, with agriculture behind it. Dominicans living abroad—sending money home—are huge supporters of the economy, offering about US$3 billion a year.

Perhaps more controversial are the manufacturing plants called industrial free zones (like the one in San Pedro de Macorís [2]) that were set up to specifically make goods for the U.S. market. These plants offer tax concessions and supply extremely cheap labor under harsh conditions. In 2005, under the Bush administration, the CAFTA-DR agreement was signed between the United States and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic, in the hopes of strengthening and developing economic relations and encouraging trade between the countries by reducing and eliminating barriers of trade in goods and services. Major opponents to this bill say that the supposed benefits of globalization don’t make it down to the citizens (doing the work) with proper work environment guidelines and benefits.

A huge boom in tourism helped what seemed to be an ongoing economic sinkhole. Since the 1960s, tourism had been gaining on sugar, which was the main provider for the nation’s economy. But now, tourism brings in the most foreign currency (about US$2 billion each year) and has created many jobs (about 150,000), but not nearly enough. About half of the Dominican Republic [1]’s population lives in poverty and about a third of the people don’t have secure jobs. The inequality between rich and poor is obtrusive. And so it goes; the middle class (what little one there is left after the recent economic turbulence) holds on feebly.

Tourism

It’s unclear why the Dominican Republic arrived so late to the tourism game. Perhaps it was a controlling dictator who didn’t like foreigners in his own backyard, or perhaps it was the political and civil unrest of the 1960s. Whatever the reason, tourism did begin to take hold later on, but then 9/11 happened in the United States and people stopped traveling for a little while. As tourists started arriving again, it was the American contingent that picked up because of the United States’ proximity to the Dominican Republic. Vacationing closer to home became very desirable to Americans, and the Dominican Republic was benefiting and continues to do so.

The Dominican Republic tourist industry has traditionally focused on budget travel, with special attention to the all-inclusive scene. Tourism is highly concentrated in the complexes along the coasts, which are mostly foreign owned. This type of vacation caters to the sun-worshipping visitors who rarely leave the confines of the resort’s walls. When they do, it is most often only to go to the metropolitan area of Santo Domingo [3]. For a very long time, budget travel was the only game in town, but in 2008, the tourism industry’s tides turned toward courting a new batch of travelers with high demands for Shangri-La-type resorts. These resorts have high-style decor, butlers, non-buffet restaurants, private pools, and VIP areas. But with the struggling U.S. economy affecting the world economy, it remains to be seen just how successful that switch will be. No matter what the fad du jour, the Dominican Republic [1] is still the budget travel capital of the Caribbean, relying on its excellent geographic location—proximity to the United States and Canada—and plenty of options for savings and fun.

The potential for ecotourism has risen dramatically over the years. Born to oppose the practices of mega-resort complexes (which mistreat the environment with their pesticides to kill mosquitoes and their blind eye toward the ecosystem), ecotourism, with its emphasis on environmental sensitivity, has inadvertently shined a spotlight on the center of the country, where adventure sports are really taking off and becoming a viable competitor for the “best-kept secret in the Caribbean.”

Agriculture

The real face of the Dominican Republic is the one of its countryside, where the produce grows and where the sugarcane waves through the breeze in magnificent green fields. Agriculture was the supporting structure of Dominican economy for centuries. In the 1960s, it encompassed about 60 percent of the labor force and yielded about 80 percent of exports. By the 1980s those numbers dramatically dropped. Even sugar production dropped down the list of important economic producers. In large part, the transformation paralleled the trend of the population moving to more urban areas. At the same time, the United States reduced its call for sugar quotas, thereby depressing the production of the crop, which was the backbone of the economy for a very long time.