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Friday, May 08, 2009

Dominican Today, May 8, 2009

Dominican Republic: Second-best in CAFTA for business
Dominican Republic: Second-best in CAFTA for business

MIAMI.- The Dominican Republic is the second-best country in CAFTA for business, according to the fourth annual Latin Business Index from Latin Business Chronicle. On the overall ranking of 19 Latin American countries, El Salvador replaced the Dominican Republic as the fifth-best country. The main reason is that the Dominican Republic was worse hit in inflation terms, causing it to drop to sixth place on the ranking. Last year, Dominican inflation ended up at 10.6 percent versus 7.3 percent in El Salvador.

It is far from certain, though, that El Salvador will be able to hold on to its fifth place next year. The country's business outlook is uncertain after the inauguration next month of Mauricio Funes as president. Funes' party, the FMLN, espouses radical policies and closer ties to Venezuela and Chavez, although Funes has said he holds Brazil - led by the moderate leftist Luiz Inacio Lula da Silva - as a model for his future policies.

The index of 19 countries is the broadest measure of business climate in Latin America. Rather than looking at the size of a country's GDP or GDP per capita, it looks at five key categories and 27 subcategories to measure the recent, current and future business environment in a country. They are:

a.. Macro Environment (GDP growth 2006 and 2007, estimated growth this year and forecasted growth next year, inflation 2006 and 2007, estimated inflation this year and forecasted inflation next year).

b.. Corporate Environment (corporate tax rates, access to capital for entrepreneurs, ease of doing business (including starting and closing a business) and economic freedom).

c.. Globalization & Competitiveness (globalization, competitiveness, tariffs, education/ health and security for companies and businessmen).

d.. Technology Level (PC, Internet, broadband, wireless and fixed telephony penetration).

e.. Political Environment (political freedom, political stability, political outlook, business policies of government and corruption).

Brazil, Latin America's largest economy, ends up in 9th place, while Mexico, the second-largest economy in the region, ranks just ahead in 8th place. Mexico dropped two places, largely because of the worsening macro economic climate in the country.

Venezuela ranked last, followed by Haiti. Venezuela kept its dismal spot as the worst country for business thanks to having the worst macro economic and political environments, while ranking third-worst when it came to corporate environment and globalization/competitiveness.

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