Trade liberalisation and trade performance in the Dominican Republic

Abstract

This paper analyses the evolution of trade policy reforms in the Dominican Republic (DR). It also evaluates the impact of trade liberalisation on exports, imports, and the trade account of the balance of payments. The study shows that the DR has made significant progress towards a more open trade regime, particularly through the elimination of non-tariff barriers and through the simplification of the tariff structure and the reduction in the rates of duties. In addition, the process of liberalisation has affected export and import growth, almost by the same magnitude, although the export response is somewhat higher. The trade account shows a positive reaction to trade liberalisation, that is, an improvement in the ratio of the trade balance to GDP of one percentage point. This is an indication of the higher export growth in comparison to import growth following liberalisation. Keywords: trade liberalisation, import growth, export growth, balance of payments, developing countries.