World Bank report proposes reforms needed in the Dominican Republic

Santo Domingo.- A World Bank study states that the Dominican Republic must increase its productivity by implementing reforms to strengthen human capital, competitiveness, innovation, efficiency in public spending, and resilience to climate events.

In recent years the country has experienced low productivity growth, as pending structural reforms have not been implemented and this has contributed to the stagnation of real wages.

The report, “Rethinking Productivity to Boost Growth Leaving No One Behind, DR Economic Memorandum,” highlights that economic growth in the DR averaged 5.8% per year between 2005 and 2019, more than double the average for Latin America and the Caribbean.

However, the drivers of this exceptional growth are reaching their limit due to low productivity growth in recent years, hampered by insufficient human capital to meet the needs of the business sector, the occurrence of climate change-related disasters, and distortions in key markets, including the inefficient allocation of tax exemptions.

“The model that has generated so many social and economic benefits for the country can be revitalized to become a more dynamic, inclusive and sustainable growth, which allows to continue reducing income gaps, especially for women, and that promotes better jobs and more opportunities for more households and regions in the country,” said Alexandra Valerio, resident representative of the World Bank.

The structural reforms proposed in the report are: Strengthening human capital; first, adapting the education system to the needs of the market, through the modernization of secondary studies, continuing education for adults. Second, reducing inequality of opportunities between genders and between rural and urban areas.

For the Promotion of competition: reducing barriers to entry and expansion of companies in key economic sectors, revision of sectoral protection provisions for established companies, production and export quotas, and price controls, among others.

To incentivize innovation: technological extension services, improvement of management capabilities, development of basic infrastructure for innovation, and implementation of subsidies for small and medium-sized enterprises that have not benefited from tax incentives.

Another reform is improvements in the efficiency of public spending and the tax system, among which the elimination of tax exemptions and the broadening of the tax base continue to be priorities.
And another is increasing resilience to external shocks and weather events: developing fiscal risk strategies to reduce budget uncertainty.