2017 Index of Economic Freedom

Dominica

overall score63.7
world rank67
Rule of Law

Property Rights43.8

Government Integrity40.9

Judicial Effectiveness67.7

Government Size

Government Spending67.5

Tax Burden73.2

Fiscal Health72.6

Regulatory Efficiency

Business Freedom72.1

Labor Freedom59.0

Monetary Freedom89.5

Open Markets

Trade Freedom72.6

Investment Freedom75.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 0.1 million
  • GDP (PPP):
    • $0.8 billion
    • -4.3% growth
    • -0.2% 5-year compound annual growth
    • $10,788 per capita
  • Unemployment:
  • Inflation (CPI):
    • -0.8%
  • FDI Inflow:
    • $36.0 million
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A process of gradual reform, including simplification of the business start-up process, has helped to improve Dominica’s overall investment framework. The independent legal system generally adjudicates business disputes effectively and encourages a relatively low level of corruption, sustaining judicial effectiveness and government integrity.

However, policies to open markets further have not been advanced, and the lack of access to long-term financing prevents more dynamic economic expansion. Despite some cuts, public spending remains relatively high, a fiscal burden that is exacerbated by budget shortfalls and a rising level of public debt. The efficiency of government services has been poor, undermining overall productivity.

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Background

Dominica has a unicameral parliamentary government with a president and prime minister. Prime Minister Roosevelt Skerrit of the Dominica Labour Party took office in 2004 and was reelected in 2009 and again in 2014. In 2008, Dominica made an ill-advised decision to join the Bolivarian Alliance for the Peoples of Our America (ALBA), a restrictive trade and political organization led by authoritarian socialist Venezuela that aims to undermine free-market democratic institutions and regional trade integration. Deteriorating economic conditions in Venezuela, however, have greatly reduced ALBA’s material benefit and influence. In an effort to diversify the economy, the government of Dominica encourages investments in nontraditional agricultural exports such as coffee, exotic fruits, and cut flowers.

Rule of LawView Methodology

Property Rights 43.8 Create a Graph using this measurement

Government Integrity 40.9 Create a Graph using this measurement

Judicial Effectiveness 67.7 Create a Graph using this measurement

Private property rights are generally respected, although pirated copyrighted material is sold openly. Dominica has an independent but short-staffed judiciary. Public trials are considered fair. Despite the fact that anticorruption statutes are not always implemented effectively, corruption is not a major problem. Nonbank financial institutions are monitored to combat money laundering and the financing of terrorism.

Government SizeView 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 and an environmental tax. The overall tax burden equals 23.6 percent of total domestic income. Government spending has amounted to 32.9 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.9 percent of GDP. Public debt is equivalent to 82.4 percent of GDP.

Regulatory EfficiencyView Methodology

Dominica has made progress in eliminating regulatory bottlenecks and reducing the overall cost of conducting business. The nonsalary cost of employing a worker is moderate, but the labor market lacks flexibility in other areas. An ongoing and comprehensive government restructuring of the economy to meet IMF requirements, including elimination of price controls, has been underway for more than a decade.

Open MarketsView Methodology

Trade is important to Dominica’s economy; the value of exports and imports taken together equals 81 percent of GDP. The average applied tariff rate is 8.7 percent. Foreign investment may be screened by the government. The financial sector remains underdeveloped. Shallow markets and a lack of available financial instruments restrict overall access to credit and undercut prospects for faster economic development.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Canada78.50.5
2Chile76.5-1.2
3United States75.1-0.3
4Colombia69.7-1.1
5Uruguay 69.70.9
6Jamaica 69.52.0
7Peru68.91.5
8Panama 66.31.5
9Saint Vincent and the Grenadines65.2-3.6
10Saint Lucia65-5.0
11Costa Rica 65-2.4
12El Salvador 64.1-1.0
13Dominica63.7-3.3
14Mexico63.6-1.6
15Guatemala 631.2
16Dominican Republic62.91.9
17Paraguay 62.40.9
18Trinidad and Tobago61.2-1.7
19The Bahamas61.1-9.8
20Nicaragua 59.20.6
21Honduras 58.81.1
22Belize58.61.2
23Guyana58.53.1
24Barbados54.5-13.8
25Brazil52.9-3.6
26Argentina50.46.6
27Haiti49.6-1.7
28Ecuador49.30.7
29Suriname48-5.8
30Bolivia47.70.3
31Cuba33.94.1
32Venezuela 27-6.7
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