Dominican Republic Economy Essay

The Potential of the Economic Informal Sector in the Dominican Republic

During the last two decades, sustainable economic growth has been observed in the Dominican Republic. While the annual GDP per capita was increasing by only 1.8 per cent in the whole Latin American region, the Dominican Republic has experienced the annual 4 per cent rise in the GDP per capita (ILO 1). In the past twenty years of economic success, the labour market of the Dominican Republic has expanded, keeping up with the growth of total working age population, but that did not make it less informal (ILO 5). According to the data presented by the Central Bank, informal employment comprised about 50 per cent of the total employment in the Dominican Republic between 2000

The significant informalization of the Dominican Republic’s economy has its roots in the economic decline of the 1980s and tied to the fall in the revenues from the sugar exports. The Dominican Republic is a country with the legacy of colonial rule and plantation slavery. Its economic, political, and social sphere were formed under the influence of colonizers that ruled the island with the goal to exploit to the fullest the wealth produced by plantations. The harmful consequences of the plantation economy were persistent in the course of the twentieth century: the sustainable development of the Dominican Republic’s economy was still directly connected to and determined by the sugar trade. Therefore, when the economic crisis of the 1980s began and the price on sugar plummeted worldwide it had damaging economic consequences: unemployment rate grew and inflation rose (Sanchez Taylor 1). The crisis of the 1980s also contributed to the stagnation of the import substitution industrialization (ISI) in the Dominican Republic. As a response to the economic turmoil, the state government decided to abandon the interventionist policies in the economic sphere, cut spending in the social sphere and switch to the alternative model of participation in the global market based on the cheap labour, tourism, and export of services. The new economic reality created by these government

Amber jewelers belong to the families in which this kind of crafts has been a principal income-earning activity for at least a couple of generations. Amber, the main input for jewelry production, is bought from amber suppliers, while the final goods produced in the amber workshops are sold in the souvenir stores in the capital, Santa Domingo, or other tourist areas of the country. The size of amber enterprises is usually small, with no more than five permanent employees, and the organization of work dictated by an artisanal ethos (Lozano 171-173). On the contrary, the organization of the production process in the garment workshops replicates the structure of large garment enterprises. The garment workshops also less bound to family ties and more often established on social networks. Informal entrepreneurs in the garment production business may try to “break into retail sales”, however, it is more often the case that the garment formal-sector enterprises outsource part of their production to the small-scale informal firms and determine the pace of work, the quantity and the price of the final product (Lozano 174). It is obvious that these two types of informal enterprises, the amber workshops and the garment workshops, are taken a subordinate