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Dominican Republic Mejía succeeded Leonel Fernández Reyna of the PLD (Dominican Liberation Party). The constitution prohibited him from seeking another term this time around, but Fernández has hopes of running again in 2004. This dynamic will be interesting to monitor as the country continues to mature into a more consolidated democracy. At least part of Mejía's success owed to the high degree of party unity that he was able to muster (previously, he served as secretary of state under the Guzmán administration). His opponent in the runoff elections, the PLD's Danilo Medina, failed to capture much public enthusiasm. The new government has implemented short-term austerity measures in an effort to help clear some of the nation's debt. The price of petrol has been raised significantly (as it was during Fernández's term), as have some taxes. Public sector wages, including those of the president and his cabinet, have been frozen for the past several months. Angel Lockward, the country's industry and trade minister, has warned Dominicans to implement more cautious spending practices as the increase in world market oil and commodity prices may hit the Dominican economy hard and lead to a rise in prices. The Dominican Economy In 1999, the Dominican economy was the fastest growing in the hemisphere and one of the fastest growing in the world. This laudable performance was based on sound macroeconomic management with a low fiscal deficit and moderate monetary policy, and was achieved with moderate inflation. The leading sectors of this growth were tourism and the 500 industries in the country's 43 Free Trade Zones, which export drawback (maquila) products such as textiles, apparel, electronics, medical equipment, telecommunications and hardware, and software manufactures. Those sectors open to international competition and markets were the most dynamic, attracting the most investment and generating the most exports. The domestic industrial and agricultural sectors are protected, making them less efficient and resulting in low export and growth rates. National exports decreased from 7% of GDP in 1997 to 5% in 1999. At the same time, imports grew significantly, leading to a deficit in the balance of trade. This was compensated for by inflows on the capital account, primarily family remittances ($1.3 billion) and foreign direct investment ($1.4 billion). The services sector was also strong, led by tourism ($2.5 billion). Table 1. Dominican Republic Economic Statistics
Source: World Bank and
American Chamber of Commerce. In spite of great advances, about 25% of the country's population remains in poverty. Fortunately, the government has excellent relations with international financial institutions. The World Bank has reported an increase in its lending to the Dominican Republic in the past three years, making the country the Bank's largest borrower in the Caribbean. As of May 2000, the ongoing program consisted of eight projects for a net commitment of US$305 million. Three projects approved recently involve telecom reform, water and sanitation in tourism areas, and a global distance learning initiative. Other projects in the portfolio focus on basic education, the environment, highways and health. In addition, the World Bank approved a US$111 million emergency loan to the Dominican Republic in the aftermath of Hurricane Georges, and the country is taking part in a World Bank initiative to develop a comprehensive development framework on economic development goals and policies with the consensus of political parties, business and civil society. In December 1999, a Development Action plan was agreed to by all participants. Florida-Dominican Republic Trade The Dominican Republic is one of Florida's five leading trade partners and the first among CBI countries. The top 20 Florida exports to the Dominican Republic are shown in Table 2 below. Apparel (cloth cut but not sewn) accounts for many of these items (the clothing is sewn in the Dominican Republic and exported back to the US). Other important exports include: electric apparatus for line telephony and radiotelephony; motor cars; water heaters and machinery for temperature change; paper products; computer equipment and accessories; electrical conductors and cables; packing goods; typewriters and parts; electrical switching and circuits; and tableware. Florida's leading product export to the Dominican Republic, men's and boys' suits, jackets, trousers, etc., decreased by $41.7 million (-13.5%) in 1999. Total Florida exports in this category grew by 3.4%, indicating an important drop in market share. The second most important product export, women's and girl's dresses, skirts and suits, decreased by $25.7 million (-21.2%), also meaning a drop in market share for the Dominican Republic (Florida exports of this product grew 4.16%, and US exports grew 1.3%). In third place, electrical apparatus for line telephony and telegraph increased by $39.4 million (77.6%), greatly increasing the Dominican Republic's market share of this export (Florida exports grew by 8.8%, compared to 0.32% for the US). The largest percentage increases in the top 20 exports were: T-shirts, singlets, tank tops (233.2%); made-up clothing accessories (331.2%); and toilet paper and towels (241.6%). Florida imports from the Dominican Republic, shown in Table 3 below, were less volatile. The breakdown for the top three was as follows: men's and boys' suits, jackets, trousers, etc. decreased by only $5.4 million (-0.78%), which means that the Dominican Republic protected its market share in Florida (the state's total imports in this category dropped by 1.32%, and US imports fell by 0.96%); women's and girls' dresses, skirts and suits decreased by $40.4 million (-14.1%), performing worse than Florida total imports of this product, which fell by only 1.38% (compared to -0.53% for US imports); and medical and dental instruments increased by $52.3 million (30.2%), increasing the Dominican Republic's market share in Florida (total Florida imports of this product grew by 1.42% and US imports by 0.43%). Table 3 clearly shows that the drawback apparel industry predominates in the Dominican Republic's exports to Florida. The top 20 exports account for over 88% of the total, and 14 of these are apparel. In 1999, the largest percentage increases among the top 20 Dominican exports to Florida were: men's and boys' underpants, pajamas, gowns (32.7%); and travel goods, binocular, vanity and camera cases, handbags, wallets of specified make (63.3%). Florida total imports of these items from all sources grew by 2.9% and 7.7%, respectively. Table 4 shows the top 10 largest dollar increases in Florida exports to the Dominican Republic. The most notable of these were already mentioned above, but three others-all of which increased market share-are worth noting. Insulated wire, cable, insulated electrical conductors and optical fiber cable increased by $15.3 million, or 140.8% (Florida imports grew by only 8.1% and US imports by 0.32%). Motor cars and other motor vehicles grew by $14.6 million, or 44.7% (Florida imports grew by 4.07% and US imports by 0.08%). Finally, electrical apparatus for switching or protecting electrical circuits increased by $11.4 million, 85.3% (Florida imports grew by 5.8% and US imports by 0.17%). Table 4 also shows the top 10 biggest decreases in export value, of which the most important were: made-up clothing accessories, parts of garment or clothing (decreased by $113.9 million, or 65%); machinery for the treatment of materials by change of temperature and water heaters (down by $67.3 million, 67.5%); and men's or boys' suits, jackets, trousers, blazers and bib overalls (decreased by $41.8 million, or 13.5%). Table 5 shows the top 10 largest dollar increases in Florida imports from the Dominican Republic. Three of these were already mentioned above, but other increases are worth noting. T-shirts, singlets and tank tops grew by $39.5 million, or 30.6%, which means that the Dominican Republic increased its market share (now 15%), as Florida imports went up by only 1.5%. Sweaters, pullovers and sweatshirts increased by $26.1 million, or 31.4%, also signifying an increase in market share (12%), as Florida imports decreased by 1.99%. The three imports into Florida from the Dominican Republic that decreased the most in 1999 were: women's or girls' suits, jackets, skirts and dresses, which decreased by $40.4 million, or 14.1% (US imports of this item also fell by 0.43%, and Florida total imports by 1.38%); cigars, cigarettes and tobacco, which fell by $23.7 million, or 14.3% (US imports also fell by 2.96% and Florida imports by 3.06%); and coffee, both roasted and unroasted, which fell by $19.6 million, or 87.8% (US imports fell by 0.59% and Florida imports by 3.7%). In the larger context of Florida-Caribbean trade, the Dominican Republic has been the most successful of all of the CBI countries in taking advantage of the export opportunities offered by CBI legislation. The enhanced CBI legislation that entered into force on October 1, 2000 should allow it to continue this trend. Sources: World Bank; American Chamber of Commerce-Santo Domingo; Center for Banking and Financial Institutions; US Department of State (Note: If asked
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