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2010/01/26

Economy in Dominican Republic

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The Dominican Republic is a developing middle income, depending mainly on agriculture, commerce, services and especially tourism.

Although the service sector has surpassed agriculture as the main provider of jobs (due mainly to the rise and growth of tourism and Free Trade Zones), agriculture still remains the largest sector in terms of domestic consumption and is in second place (behind mining) in terms of exports.

Tourism contributes more than U.S. $ 3,000 million a year. Export processing zones and tourism are the fastest growing sectors. Remittances from Dominicans living in the United States are estimated at about U.S. $ 2,000 million per year.

The Dominican Republic is the eighth largest economy in Latin America after Brazil, Mexico, Argentina, Venezuela, Colombia, Chile and Peru.

The national currency is the Dominican peso. The real value of the Dominican peso fluctuates against the U.S. dollar and its value is subject to the laws of supply and demand. The Central Bank of the DR is responsible for conducting monetary policy.

The Dominican economy has four pillars: agriculture, mining, tourism and export processing zones.

Today the Dominican economy rests mainly on tourism, although at times the largest sector was agriculture, which remains of great importance to the domestic economy.

The main agricultural products are sugar cane, rice, cocoa, coffee, snuff, banana, citrus, beans, tomatoes, cotton, among others. The main agricultural export products are coffee, cocoa, sugar cane, pineapples, oranges, bananas, flowers, vegetables, tobacco. Accounts for 10% of GDP.

Mining production is concentrated in the Cibao, where large deposits of iron-nickel mine and open the continent's largest. Also exported salt, gypsum and marble.

Industrial production is limited and focuses mainly on the food industry: Processing of sugar, snuff, ferronickel and gold mining, textiles, cement, etc. The industrial sector, together with the mining accounts for 31% of GDP.

The service sector is the most important, accounting for 58% of GDP, but is oversized for the importance of tourism and international trade. In general services for the population and Dominican companies are weak, making it difficult to take the initiative.

One route of entry of major foreign currencies are the dollar remittances sent home by Dominicans living abroad. This is money that reaches the targeted families with which they can create small businesses that drive the local economy.

After economic crisis affecting all of Latin America in the late 1980s and early 1990s the Dominican Republic has entered a period of moderate growth, but between 2000 and 2004, there was a deep banking crisis that brought down economy's entire sectors, and it is estimated that between 12 to 15% of the population went from being poor to very poor or indigent. Today the growth is more stable and sustained, and is based on the construction, telecommunications and turism.

Like most countries around the Dominican Republic has a dual economy, one that meets domestic demand and other, stronger, to satisfy the demand of international markets. This is seen in the structure whose development does not affect significantly the local economy.

A key area is the production of electricity, obtained mainly through hydropower.

Despite being a predominantly exporting country's balance of payments is clearly negative, since it must import all the oil and industrial goods produced. The main trading partner is the U.S., followed by Caribbean countries (Venezuela, Mexico, Colombia) and the European Union.

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