Caribbean Region: Review of Economic Growth and ... - USITC

Dominica: Selected social development indicatorsMRY(2000–07)Middleincomeaverage,2006Population (thousands, 2006) 72 32,183Population below poverty line(%, 2002)30 naPoverty headcount ratio at $1per day (PPP, % of population)nanaLife expectancy at birth, 2002 77 70Literacy rate, total (%, 2003) 94 90Population with access toimproved sanitation facilities(%, 2004)Population with access toimproved water source (%,2000)84 6297 83Sources: World Development Indicators; CIA World Factbook.See appendix D for sources and definitions.Note: MRY=most recent year for which data are available; na= “not available.”Source: World Development Indicators. See appendix D forsources and definitions.Note: MIA = Middle income average for 2005.The World Bank classifies Dominica as an upper-middle-income economy. Dominica is a small islandeconomy that is dependent on agriculture. Its economy is vulnerable to natural disasters (for example,Hurricane Dean destroyed much of the infrastructure and banana crop in August 2007), as well as changesin the international economic environment, such as fluctuating international commodity prices. In recentyears, however, the Dominican government has been encouraging a transition from an agriculture-based toa services-based economy.After more than a decade of poor economic performance, negative economic growth from 2001 to 2002, anda near financial crisis, the government began a three-year IMF structural adjustment program in 2003. Theprogram, which it completed in December 2006, included elimination of price controls, privatization of stateassets (including the banana company), and tax increases. Dominica experienced positive GDP growth in2003–2006 driven by growth in the tourism and construction sectors and a recovery in banana production.A recent IMF report lauded the country’s implementation of the program and successful macroeconomicreform. Remaining challenges for the government include reduction of the public debt, increased financialsector regulation, and increased market diversification.Dominica ranked 71st out of 177 countries in the United Nations 2007–08 human development index, 2placing Dominica in the “medium human development” category. Dominica experienced a 9 percent declinein per capita income between 2000 and 2002 and a 12 percent increase in the unemployment rate between2001 and 2003. A 2003 assessment found that poverty in Dominica was high compared with other Caribbeancountries, at almost 30 percent of households and 40 percent of the population. Approximately 75 percentof the poor were located in rural areas. The shrinking economy in the early 2000s led to increasedunemployment, underemployment, and an increase in the informal sector; a 2007 IMF study estimated that2See app. D for a definition of the human development index.4-46