To begin with, it should be stated that the business climate in the Dominican Republic is regarded as a country with a relatively favorable business climate compared to the other States of Latin America. Originally, starting a business in Latin America was the double end stick. On the one hand, it means increased opportunities and principally new markets and the target audience. But on the other hand, these opportunities require high responsibility levels and awareness of the specifications of the business area.
Business Climate Analysis. Managerial context
As for the matters of business climate favorability, it should be stated that the Latin Business Chronicles data rank Dominican Republic as the country with the highest indicators of business climate favorability within the Central America Free Trade Agreement (CAFTA). Furthermore, as for the political environment in the context of business and profitability climate, Dominican Republic places fifth place.
From 2002-to 2008, the Dominican economy experienced 7.7 percent growth: this was reasoned by the increased levels of tourism, energy, telecommunications, and free trade zone manufacturing. Nowadays, these are the most critical sectors of the Dominican Economy. From this point of view, it should be stated that the managerial climate has also improved after the ratification of a free trade agreement between the USA and CAFTA. This has reasoned the increase of investment rates (up to $3.3 billion) and provided an important opportunity for the experience exchange between managers of the largest international companies and corporations. The enlisted business spheres (tourism, energy, and communications) gained the most significant part of these advantages. Will Jackson (in Rosario and Grasmuck, 2007, p. 78) emphasizes the following notion on the matters of support and managerial climate in the Dominican Republic: “This supports the efforts of the managerial sphere in educating people on the great business potential of the Dominican. Overseas investment into this emerging market supports the ongoing growth of many industries in the Dominican Republic. The profits made in the CAFTA region are largely affected by the Dominican Republic’s tourism industry”. Managers of the Dominican Republic are aware of the American secrets of running a business, the experience exchange process is considered rather extensive, and the business data, represented in the Country Business Profile, stipulates the fact that the Dominican Republic is the country with the most favorable managerial conditions for starting a new business.
Following this graph, Dominican Republic is one of the most favorable countries for starting and running a business.
As for the issues of the labor market, it should be stated that the population of the Dominican Republic is large enough to recruit new workers if there is a necessity to start a business. However, the extensively growing economy makes the unemployment level relatively low. Thus, it may not be easy to recruit professional workers at once. Therefore, the business sphere is somewhat limited in the labor market context. The labor force is equal to 74 percent of the Dominican population. 3.8 million are economically active citizens. Official unemployment is 26 percent.
Nevertheless, most unemployed people are engaged in the business sphere and run an unregistered business activities (to avoid extensive taxation). Another part of these unemployed is engaged in seasonal works, such as agriculture, tourism, etc. As for the qualified workers, there is an extensive shortage of skilled managers and specialists in the business sphere.
Perez (2008, p. 45) states the following notion: “the business is a limited liability company conducting general commercial activities in the largest business city; it is 100% domestically owned, with a start-up capital of 10 times income per capita. Therefore, a turnover of at least 100 times income per capita and between 10 and 50 employees does not qualify for any special benefits, nor does it own real estate.”
As for the matters of financial viability, it should be stated that the business traditions of the Dominican Republic do not presuppose the recording procedure for the business processes. Thus, the business statistics are approximate for detailed financial viability analyses, profit margin, currency translation, and profit repatriation. Most of the national corporations were privatized, and the sales incorporated 50% of foreign currency operations. On the other hand, the distribution losses stay relatively high due to low collection rates, infrastructure problems, and corruption in the governmental sphere. Consequently, the profit margin remains low due to these factors. The currency translation is high, as the USD is more preferred than the national currency.
In conclusion, it should be stated that despite the favorable managerial climate and the extensive experience exchange process, which allowed this country to increase its favorability for overseas investment, the labor market and financial viability can not be regarded as favorable for starting a new business. On the other hand, the economic analyses place the Dominican Republic as one of the top places in Latin America.
Doing Business (2009) “Country Profile for Dominican Republic” The International Bank for Reconstruction and Development.
Espinal, Rosario, and Sherri Grasmuck. “Entrepreneurship in the Dominican Republic.” Journal of Business Studies 28.1 (2007): 103.
Perez, Donatila German. “Public Personnel Management in the Caribbean: A Comparative Analysis of Trends in the Dominican Republic, Cuba, Puerto Rico, Jamaica, and St. Vincent and Grenada.” Public Personnel Management 30.1 (2008).