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- GDP (PPP):
- $138.0 billion
- 7.3% growth
- 5.2% 5-year compound annual growth
- $13,012 per capita
- Inflation (CPI):
- FDI Inflow:
The Dominican Republic has implemented a number of regulatory reforms. With licensing requirements cut, business start-ups are less time-consuming. In 2015, a streamlined bankruptcy law was adopted. A liberalized investment regime has facilitated growth around free trade zones and contributed to economic expansion of about 5 percent annually over the past five years.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 61.0 (no change)
- Economic Freedom Status: Moderately Free
- Global Ranking: 88th
- Regional Ranking: 17th in the South and Central America/Caribbean Region
- Notable Successes: Business Freedom, Trade Freedom, and Investment Freedom
- Concerns: Property Rights and Corruption
- Overall Score Change Since 2012: +0.8
Danilo Medina of the center-left Dominican Liberation Party won the presidency in August 2012. Corruption remains a serious systemic problem at all levels of government. Journalists face intimidation and violence when investigating such issues as drug trafficking and corruption. A 2013 Supreme Court ruling that limited the rights of hundreds of thousands of unlawfully present Haitians (and their Dominican-born children) to obtain citizenship triggered international criticism. In 2014, the Dominican Republic’s economy grew at the fastest rate in Latin America, driven by a continuing expansion of mining activity and strong growth in service-based sectors such as tourism and finance.
Corruption is a serious problem at all levels of government, including the judiciary and the security forces, and in the private sector. Institutionalized graft is tied to a sharp increase in drug trafficking. Freedom House reports that drug cartels make monthly payments to police officers. The judiciary is corrupt, politicized, and stacked against those who lack money or influence. Enforcement of intellectual property rights is poor.
The top individual income tax rate is 25 percent, and the top corporate tax rate is 27 percent. Other taxes include a value-added tax, an estate tax, and a net wealth tax. The overall tax burden equals 13.9 percent of total domestic income. Government spending amounts to 18.1 percent of total domestic output. The deficit is still over 2.5 percent of GDP, and public debt equals about 35 percent of GDP.
The cost of completing licensing requirements has been reduced, and launching a business takes only seven procedures. The non-salary cost of employing a worker is moderate, but restrictions on work hours are rigid. Before the 2016 presidential election, a much-needed increase in electricity rates is likely to be avoided for political reasons, in which case fiscal transfers to the power sector to help cover its losses will remain large.
The Dominican Republic’s average tariff rate is 6.4 percent. Imports of agricultural products require a permit. There is no general screening of foreign investment, and there are no limits on foreign investment in most sectors. The small financial sector has been modernized and consolidated, but confidence in banking has been shaky. Capital markets are underdeveloped, and long-term financing is hard to obtain.