NO, I don’t think we can talk about the Caribbean without mentioning the Dominican
Republic.
It’s major tourist destination with the largest economy and even the highest mountain
of all the island countries in the Caribbean.
The Dominican Republic is a very, very special place in Latin America.
And I’m not only saying this because we can find amazing places such as Punta Cana,
Bayahibe or Puerto Plata here, among many others.
But also because this was the first place where Christopher Columbus’s men settled
when America was discovered in 1492.
Yes, it’s true.
For good or ill, everything started here, this is where Latin America, as we know it,
began.
Its capital, Santo Domingo was the first modern city on the entire American continent.
Here the first cathedral, the first university and the first hospital were built.
But... yes, it's true, if we associate the Dominican Republic with anything, it's tourism.
(THE SUN REVOLUTION)
This is by far this country’s best face.
And not for nothing.
Folks, the Dominican Republic is trendy.
Thanks to its 1,000 miles of coastline, more than 250 miles of amazing Caribbean beaches,
its golf courses and huge all-inclusive resorts, the country is experiencing an impressive
tourist boom.
Of course... this story has been developing for a while.
See, during the 40s, the then plenipotentiary dictator of the island, General Rafael Trujillo
, gave the order to encourage tourism.
Probably, with the intention of filling up his pockets.
That’s how the Malecón de Santo Domingo and the first luxury hotel in the city, the
Hotel Jaragua, opened in 1944.
Years later, in 1968, the first legislation that considered tourism development to be
of national interest was approved.
So as you can see, an emphasis on tourism isn’t new here.
But...
In recent years, it has completely taken off.
In 2017, the Dominican Republic, a country with just over 10 million inhabitants, managed
to attract more than 7 million tourists.
It grew so quickly that the country is expected to overcome the 10 million international tourists
barrier in no more than 3 years.
And of course, as you can imagine all this has consequences:
See, in the last 5 years direct foreign investment in the tourism sector has grown by more than
500%, that is, it has multiplied by 6.
Nowadays, the Dominican Republic has more than 80,000 hotel rooms... and this number
won’t stop growing.
(“To give you an idea, to accommodate all these visitors, in 2017 Dominican hotels opened
8,366 new rooms and an additional 15,000 are under construction.”
Danilo Medina, President of the Dominican Republic.)
The result?
Tourism is already the island’s main economic activity, and if we take both the wealth this
generates directly and indirectly into account... it means 1 out of every 4 pesos generated
by the economy.
25%!
We could say that the Dominican Republic has discovered and is beginning to exploit its
peculiar oil.
And the truth is that, in this area, almost all news is good.
Check out one of their latest achievements... which happened in exchange for breaking with
Taiwan.
("The People’s Republic of China is opening up to Dominican tourism.
The Chinese authorities declare the Dominican Republic as a tourist destination for its
citizens” El Día.)
Of course... just a moment… because that’s not it.
Folks, the Dominican Republic has a different face.
Because here, in this country, we can find a lot of light, yes… but also a lot of the
shadows that we commonly see today in Latin America.
Let’s take a look.
(THE OTHER FACE)
The Dominican Republic has achieved one of the highest growth rates in Latin America
and the Caribbean in the last 25 years.
This strong performance has actually meant achieving a higher purchasing power parity,
as well as one of the 10 highest per capita incomes in all of Latin America.
At almost $17,000, the Dominican Republic is paired with Costa Rica and well above countries
such as Peru, Colombia or Ecuador.
But wait a second because that’s not the whole story.
In spite of everything, 32% of all Dominicans, that is, one in three people, live below the
poverty line; the average life expectancy barely exceeds 70 and infant mortality is
almost 5 times higher than in the developed countries.
That may explain why we can find one and a half million Dominicans in the United States...
and why after tourism, remittances are the second largest source of wealth.
But... having said that, I think the question we can all ask ourselves is, how can such
a paradise not take off?
Well folks… the answer is that this Caribbean land has many of the "evils" that unfortunately
are all over Latin American.
Yes, the continent’s modern history began here in 1492.
Now, 526 years later, we can find a good reflection of the best and worst in Latin America in
this exact same place.
But... delving into the matter, the first great point of darkness we can find is the
stubborn persistence in keeping policies that have repeatedly been shown not to work--an
issue that seems to reign in this region.
For example, in matters of informal work-- irregular employment-- which is a serious
problem that has spread throughout the region.
See, the workers who are exposed to this situation, to informality, work under more precarious
conditions, with greater instability, problems obtaining financing – be it to buy a house,
invest in a business or to properly educate their children – and of course lower wages.
Because… obviously… a company will invest much less money in an employee who’s hired
irregularly.
And this is also a problem for the government, for example, when it comes to collecting taxes.
Well, in the Dominican Republic, informal employment affects 6 out of every 10 workers.
Because in this country, not only is that number not decreasing, it’s growing.
In 2017, for example, formal jobs were only created in the public sector.
And what does this info tell us?
Well, that formal hiring involves many barriers and burdens: bureaucracy, taxes, outdated
regulations, that anyone setting up a business has to pay taxes even before they make a single
dollar, etc, etc...
And all that, logically, makes it difficult for private economies to create quality jobs...
So with this data in hand...
I think it would make sense to say… hey… if we need to boost formal hiring, let’s
just change what isn’t working, right?
Well, no, it doesn’t work like that.
The same goes for commercial policy.
See in a country with a small local market, as is, precisely, the Dominican Republic’s
case, the foreign sector is essential.
Obvious, right?
Well, in this country we can basically find two different situations.
On one hand, there’s the free zones, where the companies installed have favorable conditions,
both regulatory and fiscal, which they provide in exchange for basically only working in
exports, while meeting certain criteria and being approved by the government.
On the other hand, there are the more normal companies... which are the vast majority.
Well, more than half of all exports come from the free zones...
And, additionally, in recent years exports from these places have grown an average of
more than 5% every year.
But exports from common Dominican companies...
Well... check out this chart.
So upon seeing this... the question I ask myself is... if the free zones work…
Why not extend their benefits to the rest of the country so that Dominican companies
can become more competitive?
Well, no, that won’t happen either.
And then... there’s the issue of deficit, public spending and debt.... which in spite
of the great number of bad experiences, continues to be a vice of many Latin American governors.
Here, the Dominican Republic isn’t the exception either.
Since 1990, public spending in the Dominican Republic has multiplied... listen up… by
18.
Here, public deficit is almost a tradition.
Now, just a moment...
You may be wondering.. but…
Simon... we’re talking about a country that’s coming out of poverty... there’s lots to
do… infrastructure needs to be created, like ports, airports, roads, etc, etc... so
that the country can grow.
Well...
Do you know what type of expenditure grows the most?
No, sorry, it isn’t public investment, it’s current expenditure!
Which has multiplied by almost 30 since 1990.
And of course... expenses have to be paid… partly with more taxes, which slows down the
creation of formal jobs and investment, and partly with debt.
Check out what’s happening with the Dominican debt... with debt and interests... because
of course... debt has interests.
Listen up.
Indeed.
Almost one in four euros that the government spends goes towards interests....
It’s the third largest figure in all of Latin America and it won’t stop growing.
What a crazy business!
Well, despite the tourism sector’s takeoff, this constant stubbornness with policies that
don’t work explains why Dominicans have so many problems and why there’s still so
much poverty in the country.
Check out how this country ranks in the Global Competitiveness Index.
But...
What about politicians?
Are they involved in other things?
Listen up, because the shadows don’t end here... there’s more.
(SUSPICIONS)
Folks, the Dominican Republic is a fantastic country and it probably has a promising future...
And when it manages to take that big step… it really will be like paradise...
Think about it: Good weather, good beaches and money.
Who could resist?
However, today the Dominican Republic has two other very important problems that may
be stopping the country from taking off: the first one is corruption.
(“Dominican Republic, among the 50 most corrupt countries, according to Transparency
International” DiarioLibre)
You heard that right… the Dominican Republic is considered one of the most corrupt countries
in the world.
According to Transparency International's ranking, only Venezuela, Haiti, Guatemala
and Nicaragua are in a worse situation in Latin America.
Here, corruption at all levels is very common...
Suspects range from the current socialist president, Danilo Medina, who is accused of
having financed his electoral campaign with bribes, to the police itself.
In fact, it was in the Dominican Republic that the construction company Odebrecht installed
its coordination center for the bribes it paid internationally in exchange for contracts.
And of course... many of these bribes remained there, almost 100 million dollars.
As far as we know, these were received by politicians and officials in exchange for
concessions, work awards and public contracts.
But unfortunately, that’s not all, the other problem, which is growing... is drug trafficking.
The Dominican Republic is considered one of the most important bridge counties and narcotics
distribution centers by the United States.
( “Drug traffickers have a problem exporting drugs from Venezuela.
There are few commercial flights, little container shipping, no tourists and a collapsed fishing
sector.
But the Dominican Republic, 1,400 kilometers away, has it all”.
InSight Crime)
In fact, according to the DEA and the European intelligence services, nowadays the Dominican
Republic is one of the main transit countries for narcotics that go to the United States
and the most frequent for cocaine shipments going to Europe.
And obviously this is an important issue... but we'll talk about that some other day.
In any case, my friends, let's be clear.
These are problems that, unfortunately, are common in almost the entire region.
The Dominican Republic has achieved a lot in recent decades, it’s a fantastic place
and its future is promising.
In this video we wanted to show you some of the reasons why this country isn’t doing
as well as it should.
So I really hope you enjoyed this video, please hit like if you did, and don’t forget to
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Don’t forget to check out our friends at the Reconsider Media Podcast - they provided
the vocals in this episode that were not mine.
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And as always, I’ll see you in the next video.