2014 Index of Economic Freedom

Dominica

overall score65.2
world rank63
Rule of Law

Property Rights60.0

Freedom From Corruption53.5

Limited Government

Government Spending61.7

Fiscal Freedom72.9

Regulatory Efficiency

Business Freedom75.0

Labor Freedom70.7

Monetary Freedom85.8

Open Markets

Trade Freedom72.7

Investment Freedom70.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 0.1 million
  • GDP (PPP):
    • $1.0 billion
    • 0.4% growth
    • 2.0% 5-year compound annual growth
    • $14,166 per capita
  • Unemployment:
    • 23.0%
  • Inflation (CPI):
    • 2.3%
  • FDI Inflow:
    • $19.7 million
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Dominica’s economic freedom score is 65.2, making its economy the 63rd freest in the 2014 Index. Its overall score is 1.3 points higher than last year, with improvements in half of the 10 economic freedoms, including the control of government spending, labor freedom, and freedom from corruption. Dominica is ranked 12th out of 29 countries in the South and Central America/Caribbean region, and its overall score is above the world average.

Since Dominica’s economic freedom was first assessed in the 2009 Index, it has increased only modestly. Improvements in five of the 10 economic freedoms, including investment freedom and the management of public spending, the scores for which have grown by about 10 points each, have been offset somewhat by declines in freedom from corruption, business freedom, and trade freedom.

Still, Dominica has achieved its highest score ever in the 2014 Index. Recent reform measures, including simplification of the business start-up process and reduction of the corporate tax rate, have helped to improve the overall investment framework.

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Background

Dominica has a unicameral parliamentary government with a president and prime minister. Labour Party Prime Minister Roosevelt Skerrit took office in 2004. In 2008, the government joined the Bolivarian Alliance for the Americas (ALBA), a restrictive trade organization led by socialist Venezuela. ALBA’s interference in the Caribbean Community (CARICOM) threatens to undermine progress in free-market democratic institutions and regional integration. In 2010, Dominica entered into an economic union with other members of the Organization of Eastern Caribbean States. Bananas, citrus, coconuts, coconut soap, and cocoa dominate the economy, and 40 percent of the labor force works in agriculture. The government encourages investments in coffee, patchouli, aloe vera, exotic fruits, and cut flowers. Dominica’s natural beauty inspires eco-tourism, which could further diversify the economy.

Rule of LawView Methodology

Property Rights 60.0 Create a Graph using this measurement

Freedom From Corruption 53.5 Create a Graph using this measurement

Dominica does not have a major corruption problem, although anti-corruption statutes are sometimes not implemented effectively. The country has an independent judiciary based on English common law, and private property rights are generally respected. Public trials are considered fair. Pirated copyrighted material is sold openly. Non-bank financial institutions are monitored to combat money laundering and the financing of terrorism.

Limited GovernmentView Methodology

The top individual income tax rate is 35 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT) and an environmental tax. The overall tax burden is 24.2 percent of GDP. Government spending is 36 percent of the domestic economy. Fiscal stimulus has accelerated debt pressures in recent years, and public debt has reached almost 73 percent of GDP.

Regulatory EfficiencyView Methodology

Launching a business takes only five procedures, and no minimum capital is required. Obtaining necessary permits costs less than 10 percent of the level of average annual income. The non-salary cost of employing a worker is moderate, but the labor market lacks flexibility in other areas. Ongoing and comprehensive government attempts to restructure the economy include the elimination of price controls.

Open MarketsView Methodology

Dominica’s average tariff rate is 8.6 percent. New investment is screened by the government, but in general, foreign and domestic investors are treated equally under the law. Administration of the investment regime remains bureaucratic. The financial sector remains underdeveloped. Shallow markets and a lack of available financial instruments restrict overall access to credit.

Country's Score Over Time

Bar Graph of Dominica Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Dominica to other economic country groups

Regional Ranking

rank country overall change
1Chile78.7-0.3
2Saint Lucia70.70.3
3Colombia70.71.1
4The Bahamas69.8-0.3
5Uruguay 69.3-0.4
6Barbados68.3-1.0
7Peru67.4-0.8
8Saint Vincent and the Grenadines670.3
9Costa Rica 66.9-0.1
10Jamaica 66.7-0.1
11El Salvador 66.2-0.5
12Dominica65.21.3
13Panama 63.40.9
14Trinidad and Tobago62.70.4
15Paraguay 620.9
16Dominican Republic61.31.6
17Guatemala 61.21.2
18Nicaragua 58.41.8
19Honduras 57.1-1.3
20Brazil56.9-0.8
21Belize56.7-0.6
22Guyana55.71.9
23Suriname54.22.2
24Haiti48.90.8
25Bolivia48.40.5
26Ecuador481.1
27Argentina44.6-2.1
28Venezuela 36.30.2
29Cuba28.70.2
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