2016 Index of Economic Freedom

Dominican Republic

overall score61.0
world rank88
Rule of Law

Property Rights25.0

Freedom From Corruption32.0

Limited Government

Government Spending90.2

Fiscal Freedom84.5

Regulatory Efficiency

Business Freedom56.6

Labor Freedom56.5

Monetary Freedom73.1

Open Markets

Trade Freedom77.2

Investment Freedom75.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 10.6 million
  • GDP (PPP):
    • $138.0 billion
    • 7.3% growth
    • 5.2% 5-year compound annual growth
    • $13,012 per capita
  • Unemployment:
    • 15.0%
  • Inflation (CPI):
    • 3.0%
  • FDI Inflow:
    • $2.2 billion
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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

Revitalizing the political momentum for deeper institutional reform remains critical to long-term economic development. Further progress on structural reform has become challenging, with fiscal adjustments complicated by entrenched interests. Corruption and erratic enforcement of the law continue to reduce commercial confidence and undercut economic dynamism.

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Background

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.

Rule of LawView Methodology

Property Rights 25.0 Create a Graph using this measurement

Freedom From Corruption 32.0 Create a Graph using this measurement

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.

Limited GovernmentView Methodology

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.

Regulatory EfficiencyView Methodology

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.

Open MarketsView Methodology

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.

Country's Score Over Time

Bar Graph of Dominican Republic Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Chile77.7-0.8
2The Bahamas70.92.2
3Colombia70.8-0.9
4Saint Lucia70-0.2
5Saint Vincent and the Grenadines68.80.8
6Uruguay 68.80.2
7Barbados68.30.4
8Jamaica 67.5-0.2
9Peru67.4-0.3
10Costa Rica 67.40.2
11Dominica670.9
12El Salvador 65.1-0.6
13Panama 64.80.7
14Trinidad and Tobago62.9-1.2
15Guatemala 61.81.4
16Paraguay 61.50.4
17Dominican Republic610.0
18Nicaragua 58.61.0
19Honduras 57.70.3
20Belize57.40.6
21Brazil56.5-0.1
22Guyana55.4-0.1
23Suriname53.8-0.4
24Haiti51.30.0
25Ecuador48.6-0.6
26Bolivia47.40.6
27Argentina43.8-0.3
28Venezuela 33.7-0.6
29Cuba29.80.2
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