Promising economic growth has resulted in a $120 billion GDP for the Dominican Republic, but worries have spiked in the nation regarding the slowing down of its economy. Sectors are unable to provide quality jobs; small to medium-sized business owners could be cast aside, leaving the potential for the 22% living in poverty in the Dominican Republic to be a figure that grows. The $1.4 million pledge offered by the EDGE Fund Initiative arrives at a vital moment for the Dominican Republic’s economy. 

Emerging Market

While the most popular tourist destination in the Caribbean and a hotspot for American holiday travelers, the Dominican Republic has become an important emerging market for the U.S. American goods account for 70% of the Dominican Republic’s consumer market and U.S. brands and television shows are also popular in the Caribbean nation.

The Dominican Republic’s economy grew by 2.5% in 2023, further cementing the nation’s position as the leading Latin American country in GDP growth. Accordingly, the consumer market in the Dominican Republic has grown by 5% annually since 2020, with the sector’s value now nearly achieving $100 billion. 

The Dominican Republic relies significantly on American investments, with the U.S. being the leading foreign investor. This has resulted in the Caribbean nation’s growing consumer market favoring American produce. Some of the leading U.S. exports are air conditioning systems, refrigeration equipment, medical utensils and automobile parts and services.

Economic Ties: US and the Dominican Republic

The growing market in the Dominican Republic is contributing to the development of businesses in the country and has been profitable for the U.S., too. However, its newfound reliance on U.S. exports poses some worry. Fluctuations in the U.S. economy will also result in fluctuations in the Dominican Republic. This connection has been forecasted to impact the Latin American country’s growth in 2024.

Fostering independent purchasing power for the average Dominican is on the U.S. agenda and the continuation of the $400 million fuel subsidy works to this effect. However, the nation faces challenges such as slowly rising inflation, insufficient electricity supply and a growing disparity between the business sector and the human capital necessary to sustain it. These factors contribute to difficulties in administering purchasing power for all in the nation.

Poverty in DR

Inequality persists in the Dominican Republic and is reflected by what is close to a quarter of the population living in poverty. Along with a poverty rate that is dependent on location due to discrepancies between rural and urban areas, 1.6 million out of the 11 million population suffer from multidimensional poverty. The United Nations Development Programme (UNDP) has offered assistance through support of the Dominican Republic’s Social Security Program and by tackling the issue of persistent poverty in line with the United Nations’ END 2030 goals. However, the causes of poverty in the Dominican Republic reveal themselves as being deep-seated and gendered. 

Female Educational Poverty in the DR

For a nation with a well-developed economy, the educational outcomes in the Dominican Republic fall short of expectations. A higher prevalence of this issue is observed among female students as compared to male students. Female stigmatization, based on cultural norms regarding education, dissuades young women from adopting a positive approach to learning attitude. Consequently, Dominican women of working age are forced to face lower rates of employment.

Female-Owned Business in the DR

In an empowering fashion, however, Dominican women constitute the majority of micro-entrepreneurs in the nation, with their presence mostly felt in agricultural areas. Effective programs have allowed this female entrepreneurship to bloom in the Dominican Republic. For instance, the UNDP encouraged the female workforce in Valverde’s banana industry by training more than 700 women on how to start, manage and promote their small enterprises and the International Trade Centre (ITC) introduced SheTrades workshops to enhance the business skills of women in the Latin American region.

The EDGE Fund Initiative 

On December 12, 2023, an agreement between the EDGE Fund Initiative and the Global Alliance for Trade Facilitation (GTAF) showed continued global support for boosting business in the Dominican Republic. The new U.S. policy targets areas such as women-owned businesses, small and medium-sized enterprises and trade as areas that will be offered support. 

Aside from the potential economic growth that the new U.S. agreement provides, there is the potential for the policy to reduce poverty in the Dominican Republic by lowering the barriers to employment. Taken in hand with how the policy tightens the bond connecting the U.S. and the Dominican Republic, the December agreement lifts the spirits of many Dominicans uneasy with employment entering 2024. 

– Joseph Wray
Photo: Flickr