Tourism and the Economy

The Economy

The Dominican Republic has long been viewed primarily as an exporter of sugar, coffee, and tobacco, but in recent years the service sector has overtaken agriculture as the economy’s largest employer, due to growth in construction, tourism, and free trade zones.

Drying tobacco in a plantation outside of Santiago. (Dante Magazine, Neil Geraghty)

Labor Force

In 2014 the labor force by occupation was estimated at 14.4% of the population working in agriculture, 20.8% in industries, and 64.7% in services (CIA World Factbook).

The country suffers from marked income inequality; the poorest half of the population receives less than one-fifth of GDP, while the richest 10% enjoys nearly 40% of GDP. For 2015, the GDP purchasing power parity was estimated at $147.6 billion (CIA World Factbook). This disparity is also due to the high unemployment levels currently estimated at about 15% (Heritage Foundation). With 41.1% of the population living below the poverty line (CIA World Factbook).

To learn more about unemployment throughout the Caribbean click here for an article from the Miami Herald by Jaqueline Charles

To learn more about the DR’s economy and to see how the DR ranks in compared to other countries in the world read more here.

High unemployment, a large informal sector, and underemployment remain important long-term challenges that cannot be addressed if the tourism industry is not reevaluated.


Vulnerability

As I mentioned earlier, the DR had relied on crop exportation for it’s economic sustainability in the past. Similar to having a monocrop economy, an economy too reliant on one industry leaves it’s economy very vulnerable to external markets.  Tourist destinations are susceptible to anything that weakens demand for a destination and can undermine the national economy (Cabezas, Tropical Blues). Circumstances such as the September 11 attacks and the weather can generate a considerable downturn in the tourism economy.

The DR’s economy is highly dependent upon the US, the destination for approximately half of exports. Remittances from the US amount to about 7% of GDP, equivalent to about a third of exports and two-thirds of tourism receipts.

With the acceleration of global climate change and effects on the environment found on this page of my website, the Dominican Republic, for example, is increasingly susceptible to more powerful and frequent hurricanes. Stronger tropical storms and the rise in sea levels could, “cause the disappearance and erosion of beaches⎯the main engine of the economy and a source of livelihood for the nation” (Cabezas, Tropical Blues).


Foreign Exchange “Leakage”

Another concern with economic funding in the tourism industry is “leakage” of foreign exchange earnings for the host country. The money that is supposedly brought into the nation by tourism, does not in fact stay in the host country.

“Much tourist investment in the developing world has in fact been undertaken by large-scale companies based in North American or Western Europe, and the bulk of such tourist expenditure is retained by the transnational companies involved; only 22–25 percent of the retail price remains in the host country.”  -John Urry

Another major problem is the levels of high import content of construction material and equipment as well as the many consumable goods to cater to the needs of tourists. Because such a large scale production is require, it is difficult to bring local suppliers into the supply chain. On top of that, then the goods are in fact produced locally, some tourists tend to reject them (Cabezas, Tropical Blues).