2018 Index of Economic Freedom

Dominican Republic

overall score61.6
world rank89
Rule of Law

Property Rights51.7

Government Integrity26.2

Judicial Effectiveness23.1

Government Size

Government Spending90.6

Tax Burden84.6

Fiscal Health90.5

Regulatory Efficiency

Business Freedom53.2

Labor Freedom54.3

Monetary Freedom77.1

Open Markets

Trade Freedom72.4

Investment Freedom75.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 10.1 million
  • GDP (PPP):
    • $161.8 billion
    • 7.0% growth
    • 5.8% 5-year compound annual growth
    • $16,050 per capita
  • Unemployment:
    • 14.4%
  • Inflation (CPI):
    • 1.6%
  • FDI Inflow:
    • $2.4 billion
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The Dominican Republic’s economic freedom score is 61.6, making its economy the 89th freest in the 2018 Index. Its overall score has decreased by 1.3 points, pulled down by lower scores for government integrity, trade freedom, and property rights. The Dominican Republic is ranked 18th among 32 countries in the Americas region, and its overall score is above the regional and world averages.

Gradual economic diversification has strengthened resilience to external shocks, and reforms have led to some progress in regulatory efficiency. Relatively high openness to global trade has aided the transition to a modern and competitive economic system. Strong economic growth has also supported the business climate. While modest tax rates have encouraged competitiveness, nontransparency and institutional weaknesses have undermined it. The rule of law is not strongly sustained by the judicial system. Corruption and political patronage are the main complicating factors in doing business.

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Background

The Dominican Republic occupies the more verdant and arable eastern side of the island of Hispaniola. After the two principal parties agreed to cooperate and support common candidates, President Danilo Medina of the center-right Dominican Liberation Party (PLD) won a second four-year term in 2016, and his party retained majority control of Congress. The PLD’s dominance of government for well over a decade supports political stability but also risks undermining checks and balances and weakening the country’s multiparty democracy. Long viewed primarily as an exporter of sugar, coffee, and tobacco, the economy has been the Caribbean’s most vibrant in recent years, driven by mining activity and strong growth in such service-based sectors as tourism and finance.

Rule of LawView Methodology

Property Rights 51.7 Create a Graph using this measurement

Government Integrity 26.2 Create a Graph using this measurement

Judicial Effectiveness 23.1 Create a Graph using this measurement

The Dominican Republic does a poor job of protecting property rights. Although land registration is mandatory, the rights of landowners are frequently usurped. Enforcement of intellectual property rights is also poor. Despite the judiciary’s increasing independence, political influence is still evident. Corruption is a serious systemic problem at all levels of government and is linked to significant levels of narco-trafficking.

Government SizeView Methodology

The top individual income tax rate is 25 percent, and the top corporate tax rate is 27 percent. Other taxes include value-added, estate, and net wealth taxes. The overall tax burden equals 13.7 percent of total domestic income. Over the past three years, government spending has amounted to 17.7 percent of total output (GDP), and budget deficits have averaged 2.1 percent of GDP. Public debt is equivalent to 34.4 percent of GDP.

Regulatory EfficiencyView Methodology

The Dominican authorities have carried out some reforms to improve transparency, but corruption and arbitrary implementation of existing laws are often cited as grievances by business owners. The Dominican Labor Code creates a relatively inflexible labor market. Although the Medina government talks about reforms to reduce fuel and electricity subsidies, it has not taken any steps to implement them.

Open MarketsView Methodology

Trade is significant for the Dominican Republic’s economy; the combined value of exports and imports equals 54 percent of GDP. The average applied tariff rate is 6.3 percent. Nontariff barriers impede trade. In general, government policies do not significantly interfere with foreign investment. The small financial sector remains relatively stable and continues to evolve. A range of credit instruments is available to the private sector.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Canada77.7-0.8
2United States75.70.6
3Chile75.2-1.3
4Uruguay 69.2-0.5
5Jamaica 69.1-0.4
6Colombia68.9-0.8
7Peru68.7-0.2
8Saint Vincent and the Grenadines67.72.5
9Saint Lucia67.62.6
10Panama 670.7
11Costa Rica 65.60.6
12Mexico64.81.2
13Dominica64.50.8
14Guatemala 63.40.4
15The Bahamas63.32.2
16El Salvador 63.2-0.9
17Paraguay 62.1-0.3
18Dominican Republic61.6-1.3
19Honduras 60.61.8
20Nicaragua 58.9-0.3
21Guyana58.70.2
22Trinidad and Tobago57.7-3.5
23Belize57.1-1.5
24Barbados572.5
25Haiti55.86.2
26Argentina52.31.9
27Brazil51.4-1.5
28Ecuador48.5-0.8
29Suriname48.10.1
30Bolivia44.1-3.6
31Cuba31.9-2.0
32Venezuela 25.2-1.8
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