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The United States of America is the main political, social and economic partner of the Dominican Republic. The reality of being geographically so close to the world's largest economy and having a large community (Diaspora) in this country, which is estimated at more than a million people, are important factors that give the Dominican Republic a comparative advantage over other nations. This has certainly contributed to the progressive strengthening of the relations between the two countries.
According to the International Monetary Fund (IMF), in 2000 the GDP (Gross Domestic Product) of the Dominican Republic was US$ 23.66 billion, while the United States’s GDP was US$ 10,289.73 billion. The U.S. economy that year was 435 times bigger than that of the Dominican Republic. However, by 2013, the GDP of the Dominican Republic reached US$ 60.77 billion, while the U.S. grew to US$ 16,799.7 billion, indicating that in real terms, the United States is now 275 times the size of the Dominican economy. This reflects the strong economic growth experienced by the Dominican Republic in the last decade, which has been much higher than the larger developed countries like the United States, and other developing countries (PVD).
In the list of GDP growth of 188 States published by the IMF in 2013, the Dominican Republic was ranked 70th in the world economy. Other States with similar GDP to the Dominican Republic are: Guatemala, Uruguay, Luxembourg, Croatia, Sir Lanka, Libya, Sudan and Belarus.
In 2013, the GDP of the Dominican Republic grew by 4.1%, exceeding the growth rate of the world economy (2.5%) and the average for Latin America and the Caribbean (2.6%). When analyzing the cumulative growth for the full year 2013 by different economic activities, almost all exhibited positive rates of change: Agriculture (4.3%); Mining (156.7%); Local Manufacturing (0.6%); Free Trade Zones (2.6%); Construction (7.5%); Energy and Water (1%); Hotels Bars and Restaurants (7.6%); Transport and Storage (1.8%); Communications (4%); Finances Services (9.9%); Housing (3.1%); Public Administration (2.0 %); Education (3.5%); Health (5.4 %); and Other Service Activities (4.2%).
In 2014 the Dominican economy is projected to grow by 4.5%, while the average growth of the world economy is expected to be 3.0% and the countries of Latin America and the Caribbean 2.5%.
According to the Dominican Central Bank, total exports of goods of the Dominican Republic in 2013 amounted to US$ 9.65 billion, of which US$ 4.62 billion were domestic exports and US$ 5.03 billion were from Free Trade Zones (FTZ). For that period, total imports amounted US$ 16.87 billion, of which US$ 13.88 billion were domestic imports (including US$ 4.36 billion in the oil invoice); and about US$ 2.99 billion were in goods and supplies for the use of FTZ.
With a GDP of US$ 60.77 billion for 2013, the Dominican Republic is the largest economy and market for U.S. exports within the Member States of DR-CAFTA, followed by Guatemala (US$ 54.38 billion), Costa Rica (US$ 49.62 billion), El Salvador (US$ 24.51 billion), Honduras (US$ 18.81 billion), and Nicaragua (US$ 11.27 billion). Excluding the United States, the Dominican Republic represents about 28% of the GDP of the member countries of DR -CAFTA.
The commercial relationship between the Dominican Republic and the United States is of great importance, both with respect to the economic and social development of the Dominican Republic, and proportionally relative to the commerce of the United States and other Member States of DR -CAFTA. According to the United States Census Bureau, in 2013 the Dominican Republic imported goods from the United States worth US$ 7.20 billion, while it exported US$ 4.26 billion, representing a surplus in merchandise trade balance for the United States worth about US$ 2.94 billion. Trade in goods between the two countries in 2013 was about US$ 11.45 billion.
In the first quarter of 2014, exports from Dominican Republic to the United States totaled US$ 1,005.2 million, up from around US$ 963.9 million over the same period in 2013, representing an increase of 4.28%. Similarly, the Dominican Republic imported goods from the United States in the amount of US$ 1,891.7 million, while for the same period of 2013 was US$ 1,859 million, representing an increase of 1.75 %.
Free Trade Zones (FTZ)
A Free Trade Zone (FTZ) is: “A geographic area of the country under special customs and tax controls … in which enterprises will be licensed to devote their production of goods or services to foreign markets through the granting of incentives to stimulate their development”.
The Industrial Free Zones program began its development in the Dominican Republic in 1969, attracting foreign direct investment projects to the country during the last 45 years. Today, the Dominican Republic has one of the most dynamic and successful industrial free zone programs in America.
Of the US$ 5.03 billion exported by the FTZ in 2013, US$ 1.28 billion were textile articles (25.46% of total); medical and surgical equipment were valued at US$ 817 million (16.25%); electrical products at US$ 651 (12.95%); in cigars at US$ 584 million (11.61%); footwear at US$ 421 million (8.37%); pharmaceuticals at US$ 413 million (8.21%); jewelry articles and related at US$ 358 million (7.10%); and other goods at US$ 504 million (10.05%).
By the end of 2013, activity of the FTZ exhibited a positive trend in value added (2.6%), showing a recovery comparing the previous year when the sector experienced a drop of 0.3%. This performance was driven by the increase in the value added of manufacturing of textile products (4.5%), and other goods (1.6%). In 2013 the volume of exports of the Dominican Republic of textiles to the United States grew by 8.7%, the highest growth of the Central American country region, after Haiti (13.3% growth).
During 2013, the National Free Zones Council approved 68 installation permits to new businesses, by which 14,226 jobs were generated with an investment of approximately US$ 77.1 million. The FTZ have a stock of 612 companies, which distribute their operations in the following activities: Textile Manufacturing (17.8%), Services (12.4%), Cigars (10.6%), Call Centers (8.7%), Agro-industrial products (8.5%), Distributors (7.4%) and other activities (34.6%).
After the creation of 10,157 new jobs in 2013, by January 2014 the FTZ were responsible for about 144,383 jobs.
World positioning of the Dominican Republic in exports of selected FTZ products:
- 1st Cigar exporter in the World.
- 2nd Circuit Breakers Supplier to the USA.
- 3rd Latin America Exporter of Medical Devices and, 5th USA Supplier.
- 5th USA supplier of Leather footwear.
Services: tourism and air transport
Tourism
In 2013, Dominican Republic airports received 5,163,682 passengers. The flow of arriving passengers was highest for Punta Cana airport, with 2,597,086 (50.32% of the total), followed by The Americas/Santo Domingo with 1,477,793 passengers (28.60%), CIBAO/Santiago 532,675 passengers (10.30%), Puerto Plata 376,662(7.30%), La Romana 98,894 (1.92%), El Catey/Samana 59,656 (1.16%), and La Isabela 20,916 (0.40%). The income from tourism in 2013 was about US$ 5.12 billion.
Of the total number of visitors in 2013, about 4,689,770 were foreigners or non-resident Dominicans who visited the Dominican Republic on the basis of tourism. Of this total, U.S. citizen visitors totaled 1,587,404 (representing 33.85%), followed by Canada with 684,071 people (14.58%), France with 232,754 (4.94%), Germany 214,151 (4.56%), Russia with 188,110 (4%), Spain 142,207 (3.02%), United Kingdom 108,236 (2.30%), and Argentina 107,305 (2.28%). The total number of Dominicans living abroad (mostly in the U.S.), who visited the country was 625,016 persons (13.33%).
Taking into account all of the above, the Dominican Republic received in 2013 around 2,212,420 nationals and/or residents from the United States (47.17% of total).
According to the Dominican Central Bank, in 2013 the average expenditure of tourists who visited the Dominican Republic was about $1,055 dollars. This implies that the Dominican Republic generated revenues of more than US$ 2.3 billion by offering travel services to nationals and/or residents of the United States.
From January to April 2014, the Dominican Republic received 1,661,463 tourists, while in the same period last year (2013), it received 1,554,354 tourists, representing an increase of 6.89%. Of these, 572,184 tourists were U.S. citizens, while for the same period in 2013 the Dominican Republic received 522,673 U.S. tourists, representing an increase of 9.47%.
Air transport
In addition to the 2,212,420 nationals and/or residents of the United States who visited the country in 2013, over that period 473,912 people living in the Dominican Republic entered the Dominican Republic after a stay abroad, mainly in the United States. Therefore, in 2013 there were about 2.6 million people who entered the Dominican Republic, via air travel from the United States.
Air transport between the two countries, in almost its entirety, is offered by U.S. companies, among which are: American Airlines, Delta, Jet Blue, SpiritAirlines, AirTran, Southwest Airlines, and U.S. Airways.
Foreign Direct Investment (FDI)
According to the Dominican Central Bank, the FDI received by the country in 2012 was US$ 3.14 billion. Of this amount, FDI from the United States was about US$ 580 million. Also, FDI stock from 1998 to 2012 amounted US$ 24.06 billion. Of this total, FDI from the United States was about US$ 6.17 billion (25.63% of the total), followed by Canada with US$ 4.99 billion (20.8%), Spain with US$ 3.52 billion (14.6%), Mexico with US$ 1.48 billion (6.2%), Brazil with US$ 1.30 billion (5.4%), and the United Kingdom with US$ 991 million (4.1%). In 2013, the country received FDI worth US$ 1.99 billion.
Why invest in the Dominican Republic?
Political and Economic Stability: 50 years of continued democratic progress, peace, and institutional development. The country is among the developing countries with the lowest political risk. According to ECLAC, in 2012 the DR was again the top recipient of FDI inflows in the Central America and Caribbean Region. It also led inflows to the region in 2000-2012.
Favorable Legal Framework and Incentives – International Market Access: Preferential Markets: USA (DR-CAFTA), European Union (EPA), Caribbean Community (FTA), Central America (FTA), Panama (FTA), Canada (GSP), Switzerland (GSP), Norway (GSP), and Japan (GSP). Incentives: for example, the Free Zone Law.
Availability of Young Qualified Human Resources. Labor Force: 4.9 Million and 47% of the population is under 24 years old.
Competitive Labor Cost: The Dominican Republic has one of the most competitive wages in the Americas, and especially in the Mexico, Central America and Caribbean Region, which hosts an important US supplier base.
Competitive Labor Cost and Productivity: According to the Boston Consulting Group, when considering manufacturing costs of all export industries (capital and labor intensive) the DR FTZ are at cost parity with China.
Modern Infrastructure: 11 ports with excellent facilities and container terminals ready for post panamax ships; 9 International Airports; and modern network of roads integrated by more than 19,000 kilometers.
Strategic Location and Market Proximity - Regional Hub: one hour difference with EST (US East Coast), but same Time Zone from March to November. The DR receives approximately 80 weekly ships, with direct routes to North and Central America, Europe, the Caribbean, Asia and South America; and more than 60 daily flights, with strong connectivity to the United States, Europe, and Central America. Approximate flight durations: Miami: 1:50 hours; New York: 3:00 hours; Panama: 2:00 hours; Madrid: 8:00 hours.
Telecommunications – Connectivity: The System is based on Digital Switching, Optical Fiber and Submarine Cable. Since 2008, the country hosts the Network Access Point (NAP) of the Caribbean (the most important connectivity center for the Caribbean and Central America region) linking the country with the ARCOS and LIME fiber optic submarine cables.
Doing Business: Doing Business Report 2014 ranked the Dominican Republic 2ndin Trading Across Borders in Latin America, and 33rdglobally out of 189 countries. In Time to Export, the country was ranked 1st in Latin America. Opening a new company in the DR is fast and cost-effective, especially compared to neighboring countries.
Source: National Free Zones Council (CNZFE, in Spanish)
Remittances
In 2013, the Dominican Republic received US$ 3.33 billion in transfers from the Dominican diaspora. It is estimated that about 80% the remittances received by the country come from the United States. Therefore, in 2013 the Dominican Republic received about US$ 2.65 billion in remittances from the United States.
- Population (million): 10.42 (2013)
- Area (sq. km): 48,730
- GDP (US$ billion): 60.77 (2013)
- GDP Growth (annual %): 4.1% (2013)
- GDP per capita (US$): 6,438 (2013)
- GDP composition (%):
- Agriculture 7.6% (2013)
- Industry 25.8% (2013)
- Service 52.2% (2013)
- Others 14.4% (2013)
- Exchange Rate (DR$/US$): 43.12 (April 2014)
- Inflation (annual %): 3.88% (2013)
- Unemployment rate: 15% (2013)
- Exports of goods F.O.B (US$ million): 9,651.1 (2013)
- Exports Growth (annual %): 6.4% (2013)
- Income fromtourism (US$ million): 5,118.4 (2013)
- Tourism: 4.69 millions of tourists visited the Dominican Republic (2013)
- Income fromtourism Growth (annual %): 8.1% (2013)
- Remittances sent by the Dominican Diaspora(US$ million): 3,333.3 (2013)
- Imports of goods F.O.B (US$ million): 16,873 (2013)
- Imports Growth (annual %): -4.9 % (2013)
- Foreign Direct Investment (US$ million): 1,990.5 (2013)
- International reserves (US$ million): 3,887.8 (March 2014)
External debt (US$ million): 13,864.9 (2014) (22.81% of GDP).
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