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Dominican Republic, the second largest country in the Caribbean, after Cuba, is one of the 15 largest economies in Latin America. It is the largest in Central America and the Caribbean. Essentially, the country has always been characterized by its production of sugarcane, but in recent years, services and other export products like precious metals have become an increasingly important source of income for the local population. Its current export market is oriented toward the gold sector. In the last five years, gold has consistently represented a sustained 14.5% market share of the country’s total exports in US dollars. Gold exports are followed by medical, surgical and veterinarian instruments and devices, which account for approximately 10% of exports. Sectors that are showing considerable export potential year to year are cigars, apparel and footwear. They are interesting sectors with high potential for export development, even more so if one considers that in the last three years, these sectors’ shipments abroad have grown in a sustained manner, consolidating the products’ acceptance in the international market. Little by little, they have come to represent alternative export sectors for the Dominican economy. Furthermore, there are strategic areas within the country for the undertaking of these types of industries with important tax benefits. As of 206, there were 68 free trade zones in the country, with the participation of 645 companies, according official government figures.
Free trade zones are specific geographic areas within the country subject to special customs and tax controls established by law, where companies whose production or services are geared toward export markets can setup and operate, enjoying tax incentives that encourage their development. These benefits should be analyzed when promoting specific industries given that a reduction in fiscal pressure directly impacts export prices making products and services more competitive internationally.
With respect to sales to foreign destinations, there is a great dependence on the United States, where over half of all Dominican exports (52%) are shipped. The main products exported to the United States are medical instruments and devices; cigars; electrical circuit breakers; raw gold; and cotton shirts. To avoid a direct dependency on the United States, keeping in mind that this country is known for applying certain restrictions on its trading partners, exporters in the Dominican Republic should look for new markets for its products. An interesting starting point are non-traditional markets with rising import trends, such as Cuba, Colombia Mexico, Panama, and CARICOM member countries, although current destinations, they have an interesting development potential that is truly justified thanks to certain tariff preferences, cultural ties and short shipping distances.