Growth Lab

Dominican Republic Project

Project Description

From 2010-2011, a team from the Center for International Development collaborated with the Dominican government to develop a strategy to create a highly-productive, internationally competitive economy. With a vision for 2030, this team of scholars, practitioners, and government agencies hopes to revitalize the Dominican economy, promoting inclusive growth and sustainable human development.

The CID faculty team advised on a growth strategy based on diversification and development of the tradable sector. The five-tiered approach focuses on education, exports, fiscal reform, financial architecture, and development along the Haitian border, culminating in overall economic growth, job creation, demographic transitions, and restructured formal sectors.

Also included in the overall plan are investment promotion, infrastructure development, active scouting of new and innovative goods and services, maximization of the country's tourist potential, improved governance, and a revised tax regime. Specific financial recommendations include encouraging and reorganizing pension fund investment and changing the average savings rate as a benchmark for higher return on those funds.

At a broad level, some highlighted findings include:

Fiscal Policy
Among the team's recommendations are a more lax monetary policy, a competitive real exchange rate, a modified inflation targeting regime, discouraging of short term capital flows, revised subsidies, and the institution of a counter-cyclical policy. Additionally, a primary goal identified is to design a national development bank and create funds for a public inputs provision and inter-ministerial transfers.

Education
The team suggested pilot programs implemented through sequenced reform to increase innovation, an improved curriculum to consistently challenge students, and allowing skilled teachers to participate in a pseudo-lecture circuit.

Regional Engagement
The project report indicated that encouraging regional engagement and integration, particularly with Haiti, Puerto Rico, and the United States, will be paramount. With regard to Haiti in particular, the team suggested that the government solicit the U.S. Congress to change the Help Act to a new Haitian Input Program (HIP) Act based on the Middle Eastern experience of the "Qualified Industrial Zones" in Israel, Egypt, and Jordan. Changes in accordance with the Central American Free Trade Agreement (CAFTA) and World Trade Organization (WTO) requirements for 2015 will also be implemented.

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