* * * * * * * Term Project * Global Business Analysis Report of the Dominican Republic * Janay Johnson * Monroe College * * * * * * * * * * * * * The Dominican Republic is a beautiful tourist spot with tropical maritime and little seasonal temperature variation. It is hot with tropical temperatures all year round, with coastal areas being warmer than central regions. There are two rainy seasons: May to August (the heaviest) and the other is from November to December. Hurricanes may sometimes occur during these periods. * As of 2015, the Dominican Republic has an estimated population of 10.6 million, which ranks 65th in the world. Santo Domingo is it's largest city and has a population of 970,000, with a metropolitan population of almost three million. "Other major cities include Santiago de los Caballeros (750,000), La Romana (215,000) and San Pedro de Macoris (190,0000)." In the next two decades the population of the Dominican Republic is expected to increase largely. In 15 years the population will reach 12.1 million, with Santo Domingo alone reaching 4 million. * The country has a racially mixed population: 16% white, 11% black and 73% mixed. "The most common ethnic immigrant groups are West Indians. Many immigrants have moved to the Dominican Republic in search of better opportunities. There are tens of thousands of Jamaicans in the country and more than 700,000 of Haitian descent. There are about 10,000 Puerto Ricans immigrants around greater Santo Domingo." (World Population Review, 2015) * The official language for the Dominican Republic is Spanish. The island of Hispaniola, of which the Dominican Republic forms the eastern two- thirds and Haiti is the remainder, was originally occupied by Tainos, an Arawak- speaking people. In 1492, during Christopher Columbus first voyage the Tainos welcomed him. After a crushed revolt in 1495, the native population died off rapidly from disease, exhaustion, starvation and mistreatment. It is generally agreed that the number of Tainos in Hispaniola was reduced to 60,000 by 1507, and to 600 by 1531. * The Spanish brought African slaves to the island beginning in 1503 in order to ensure adequate labor for plantations. Some theorize that African slaves intermingled with natives of the island before the latter entirely died off. The two groups may have intermarried, or at any rate there might have been an opportunity for the Native Americans to transmit some of their cultural traditions to the people arriving from Africa. But, aside from this speculative survival of some prehistoric folkways, Hispaniola's original inhabitants vanished without a trace Roman Catholicism makes up 95% of the state religion, although all religions are tolerated. (Youngblood Coleman, D. (2014). Dominican Republic. Dominican Republic Country Review, 3-242) * In 1697, Spain recognized French dominion over the western third of the island, which in 1804 became Haiti. The Haitians conquered the whole island in 1822 until an 1844 revolution drove the Haitians out and established the Dominican Republic as an independent state. In 1861, with the country plagued by political chaos and an extremely poor economy, the Dominicans voluntarily returned to the Spanish Empire, but independence was restored in 1865. Following independence, the country experienced periods of instability, with tight political control, military coups, and United States military intervention. Since 1996, the Dominican electoral process has been seen as generally free and fair. Former President (1996-2000) Leonel Fernández Reyna was elected to a second term in 2004 following a constitutional amendment allowing presidents to serve more than one term, and he won his third term in May 2008. The Dominican Republic is one of the poorest countries in the Caribbean, and there is a huge gap between the rich and the poor. The global recession starting in 2008 had a significant impact on the country's economy, particularly on tourism and remittances, two of its most important economic contributors. (Youngblood Coleman, D. (2014). Dominican Republic. Dominican Republic Country Review, 3-242) * In December 1996, incoming President Fernandez presented a bold reform package for this Caribbean economy — including the devaluation of the peso, income tax cuts, a 50% increase in sales taxes, reduced import tariffs, and increased gasoline prices — in an attempt to create a market-oriented economy that can compete internationally. Even though most reforms are stalled in the legislature — including the intellectual property rights bill, social security reform, and a new electricity law first submitted in 1993 — the economy has grown vigorously under Fernandez's administration. Construction, tourism and telecommunications are leading the advance. The government is working to increase electric generating capacity, a key to continued economic growth; the state electricity company was finally privatized following numerous delays. The continuation of this vigorous growth in 2000 will depend on the policies adopted by the new administration. ( CIA: The World Factbook 2000: Dominican Republic. (2002). CIA World Fact Book, 534.) * The Dominican Republic has long been viewed primarily as an exporter of sugar, coca, coffee, and tobacco, but in recent years the service sector has overtaken agriculture as the economy's largest employer, due to growth in telecommunications, tourism, and free trade zones. Sugarcane has been the leading cash crop produced for export, but has seen a decline in recent years. The mining sector has also played a greater role in the export market since late 2012 with the commencement of the extraction phase of the Pueblo Viejo Gold and Silver mine. (CIA: The World Factbook 2000: Dominican Republic. (2002). CIA World Fact Book, 534.) * The economy is highly dependent upon the US, the destination for approximately 60% of exports. Remittances from the US amount to about 7% of GDP, equivalent to about a third of exports and two-thirds of tourism receipts. The country suffers from marked income inequality; the poorest half of the population receives less than one-fifth of GDP, while the richest 10% enjoys nearly 40% of GDP. High unemployment and underemployment remains an important long-term challenge. The Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) came into force in March 2007, boosting investment and exports and reducing losses to the Asian garment industry. * The Dominican Republic's economy rebounded from the global recession in 2010-14, and the fiscal situation is improving. A tax reform package passed in November 2012 and a reduction in government spending helped to narrow the central government budget deficit from 6.6% of GDP in 2012 to 2.7% in 2014. A successful government bond placement in 2013 and 2014 helped finance the deficit. A liability management operation in January 2015, in which the government paid down over $4 billion of the country’s Petrocaribe debt, at a discount of 52% with proceeds from the sale of $2.5 billion in global bonds, reduced the country’s debt load by approximately by 3.3% of GDP. * The Dominican Republic welcomes all foreign investment. In December of 1995 a foreign investment law was put into place allowing unlimited foreign investment in nearly all sectors. "Under the foreign investment law, foreign investment is permitted in all sectors except the following: * • Disposal and storage of toxic, hazardous or radioactive waste not produced in the country; * • Activities affecting public health and the ecological equilibrium of the country; * • The production of materials and equipment directly linked to national security without authorization from the president." * These laws make foreign investments easier to obtain and also encourages other large companies to open factories and large operational plants in their country. * Prior to research I would've thought that the Dominican Republic would depend on a larger variety of natural resources, and after doing research and seeing that they depend highly on outside countries for most of everything except cash crops, I would choose not to do business in this country. Here's why. * Firstly D.R. is a country which is highly dependent on cash flow from sugar. Although for a long time sugar has been the leading export, other countries like Brazil, Venezuela, and even the U.S.. have been leaders in the sugar market ahead of DR. which gives me far better options in the crop department. Secondly, the garment business has declined greatly. The garment business is the second highest export in the country and the fact that Asian markets have provided everything from silk, satin, and cotton, at a price which on average is 15% percent cheaper in nearly every cloth per yard. Although D.R. isn't at the bottom of the barrel in these categories, their country simply does not have the size nor resources, to facilitate high quality for lowest price something business owners like myself, value more than anything as an consumer. * Unfortunately the biggest problem with the economy of this country is competition. D.R. simply doesn't have the national capacity to be a world provider of almost anything. Although the gold and mining industry has grown substantially in recent years, the risk reward factor in that field is far too high for my liking. Mines are one of the most expensive things to invest in and most mines dry or, as luck would have it you just don't hit the mother load like you hope to while mining. Asian markets have taken almost the whole world out of competition for almost anything plastic, cloth, and mass produced. The population and reliability on natural resources have allowed Asian markets to thrive in today's global economy thus. putting D.R. in a position where its just hard for them to compete. * All in all, business aside I would love to visit the country. The country is visually stunning. The white sand and clear water on the beaches sound good right about now! Having Dominican friends I would tell any weary travelers to try their best to stay in tourist destinations and if need be to travel out of these locations travel in large groups. Being their most popular language is spanish I would recommend that any tourist brush up on their spanish skills before visiting the country. * * * * * * * * * References * * CIA: The World Factbook 2000: Dominican Republic. (2002). CIA World Fact Book, 534. * * Dominican Republic. (2015). In The Columbia Encyclopedia. New York, NY: Columbia University Press. Retrieved from http://search. credoreference.com/content/entry/columency/dominican_republic/0 * * * Dominican Republic 2015 Country Review. (2015). Dominican Republic Country Review, 1-231. * * The Dominican Republic Population 2015. (2015) * Retrieved from http://www.worldpopulationreview.com * * Mathews, T. G. (2015). Dominican Republic. Grolier Multimedia Encyclopedia. Retrieved November 8, 2015, from Grolier Online http://gme.grolier.com/article? assetid=0087940-0 * * White, R. (2015). Dominican Republic. New Internationalist, (479), 34-35. * * * Youngblood Coleman, D. (2014). Dominican Republic. Dominican Republic Country Review, 3-242 * * * * * * *