The Simple Idea Behind LatAm's Star Economy

By Michael Stott

Investors are "seeking to shift supply chains from Asia to free trade partners closer to the US,'' said AS/COA's Eric Farnsworth to the Financial Times

Tourists love its white sandy beaches and turquoise seas but investors like the Dominican Republic for a different reason. The Caribbean nation of 11.4mn has been an unexpected growth star, bucking Latin America’s generally miserable performance to deliver Asian-style growth averaging 4.9 per cent a year over the past half century.

The long boom has made Dominican Republic Latin America’s seventh biggest economy, overtaking much larger Ecuador and Venezuela. An IMF report last year even suggested that continued reforms “could eventually transform the Dominican Republic into an advanced economy by approximately 2060”. [...]

Money laundering remains a worry. Detractors ask whether many of those gleaming new hotel and luxury condominium developments are funded by drug dollars. Despite steady improvements under the current government, Transparency International ranks the Dominican Republic 108th out of 180 nations on its Corruption Perceptions Index, slightly worse than Ukraine.

Nonetheless, Eric Farnsworth of the Council of the Americas in Washington says that under Abinader the DR “does seem to have turned a corner”. “Investors are definitely having a look, seeking to shift supply chains from Asia to free trade partners closer to the US,” he said. “If he keeps going in the same direction, others will need to take note.”

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