Dominican Republic and Haiti: Country Studies

Dominican Republic: The Economy
edged that it lacks the means to enforce them and has suggested
that they be used only as a reference point for prices.
The Dominican government's approach of imposing restrictive
monetary measures dates back to the 1970s and 1980s,
reflecting its concern over the rising cost of basic consumer
goods. Many prices were set by the government's National
Price Stabilization Institute (Instituto Nacional de Estabilizacion
de Precios—Inespre). Despite Inespre's efforts, food
prices rose faster than all other prices during the 1980s. Inespre's
pricing policies responded more to political concerns
than to economic realities. Prices of basic foodstuffs were maintained
at unrealistically low levels, in part because urban violence
often resulted from efforts to bring these prices more in
line with the free market. Keeping urban consumer prices low
necessitated the purchase of staple crops from Dominican
farmers at less than fair value, a practice that depressed the
income and the living standard of rural Dominicans.
Privatization
In the late 1990s, the government showed no evidence of
relaxing its rigid hold on the country's economy. Although in
March 1998 it had initiated the qualification process for firms
interested in bidding for the distribution and marketing operations
of the state-owned electricity enterprise, strong opposition
in some government circles together with the impact of
Hurricane Georges have slowed the process. Similarly, plans to
privatize the generating operations of the CDE have been contradicted
by the administration's decision in late 1997 to purchase
new electric generators. Further proof that the
government was extending the same approach to other public
enterprises came in 1997, when it imported 600 buses for a new
state corporation assigned to provide public transportation in
the Santo Domingo area. The state sugar company, CEA, is also
on the privatization list, but parcels of its land have been distributed,
at questionably low prices in some cases, as part of the
government's agrarian reform program. All these actions cast
doubts on the administration's commitment to the concept of
privatization. They may also reflect a strong difference of views
within the administration, with some members—including the
new director of the CDE, named in 1998—favoring the
strengthening of state-owned enterprises rather than their
privatization or capitalization.
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