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Government and Economy

Dominican Republic - Government and Economy


The Dominican Republic is a representative democracy. The president appoints the cabinet, executes laws passed by the legislative branch, and is commander in chief of the armed forces. The president and vice president run for office on the same ticket and are elected by direct vote for four year terms. There is a Senate with 32 members – one for each region and one for the capital and a House of Representatives with 178 members. There are two main parties – the PLD, Partido de la Liberacion Dominicana (Dominican Freedom Party) and the PRD, Partido de la Revolucion Domincana (Dominican Revolutionary Party). In addition there are a host of smaller parties. There is not a clear left or right political difference between the parties, both have slightly different policies and it is said that the PRD supports the poorer elements of the society and the PLD the rich.

Elections for the President, Senators and Deputies, and municipal and city mayors are held every four years. They used to be held in different years but 2012 will be the last time the Presidential election will be held on its own. In 2016 there will be elections for everyone and every four years thereafter. Expatriates are not allowed to vote unless they are Dominican citizens. Politics in the Dominican Republic is marked by favours. Those who support a particular party will be given employment when that party comes to power – even if they have no knowledge of or ability to carry out the particular role. There is no Civil Service which stays in place even though the ruling party changes. Every time the ruling party changes then all those who worked in any government controlled departments lose their jobs and a new group takes over. This would include customs, immigration, etc. Those who do not have jobs but who are known government supporters are given botellas, which is a wage for a job which does not exist.

The Dominican Republic's economy took off under Fernández, expanding at an average rate of 7.7% per year from 1996 to 2000. Tourism, telecommunications, and manufacturing within the Free Trade Zones have taken over from agriculture as the most important sectors. The Dominican Republic is now one of the Caribbean's most popular tourist destinations, specialising in all-inclusive resorts. Tourist arrivals are now at almost two million annually with annual spending by tourists averaging over US$2 billion. The Free Trade Zones are foreign owned factories, usually American, but also other nationalities, which use Dominican labour to produce goods for export. They have significant tax breaks, which together with cheap labour makes them attractive to foreign companies. Some 500 companies are based in 50 free zones, mostly involved in assembling clothing, electrical components and jewellery for the U.S. market. Agriculture, although less than before, is also a major part of the economy exporting bananas, coffee, cocoa, avocados, mangos to name but a few. The once booming sugar industry is a shadow of its former self, although when travelling through the country several sugar cane plantations can be seen. However, the global economic crisis, and the U.S. recession, started to impact the Dominican economy in 2008 with both exports, and tourism revenues falling. Exports within the Free Trade Zones have also declined with the rise of China and other countries who manufacture at low cost. The Dominican Republic's most important trading partner is the United States, followed by Canada, Western Europe, and Japan.

Interest rates are high compared to the UK and USA but have decreased dramatically since Mejía was in power when a Certificate of Deposit could earn as much as 46% a year in the Central Bank. Many expats moved to retire here, living off this interest, and they have seen their income reduce dramatically as the interest rates on CDs have fallen to as low as 7 or 8%. One of the most important aspects of the Dominican economy is that, whatever the growth figures show, the Dominican Republic is one of the poorest countries in the Caribbean. The wealth is totally skewed towards the small percentage of rich people, who are, in the main, the white descendants of Spanish settlers. Over 40% of Dominicans are deemed as living in poverty with another 40% only just over the poverty level, making the Dominican Republic more of a third world country rather than a glitzy Caribbean island.

This guide was compiled with the help of Lindsay de Feliz, a British expat blogger living in the Dominican Republic. Visit her blog at yoursaucepans.blogspot.com.


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