International Development Group (IDG) implemented the United States Government’s (USG) Activity on Advancing Global Supply Chain Realignment in the Dominican Republic, to support US economic and geopolitical interests and facilitate US businesses active in the Dominican Republic. The activity strengthened the Dominican Republic’s role as a key ally in regional supply chains. The last several years have exposed vulnerabilities in the global supply chain, such as over-reliance on distant suppliers and delays in critical goods. As a response, many US companies embarked on major efforts of “reshoring” – bringing business operations back to the United States. “Nearshoring” is an important complement to reshoring. Nearshoring means moving some distant supply chains not only back to the United States when that is possible but also moving some supply operations that can’t profitably be operated inside the US at least back to the nearby region, to friendly allies (such as the Dominican Republic), rather than keeping overseas operations far away in unfriendly countries (such as the People’s Republic of China). The Activity also enabled US business relations in the country. US business activity amounted to $1.9 billion in FDI in 2023. The DR has one of the largest free trade zone networks in Latin America; more than half of the companies are owned by US businesses. US businesses are an important counterweight to PRC interventions in the DR. (The PRC has invested $370 million in railways in the DR and $120 million in construction, according to the American Enterprise Institute.) This Activity worked with the Government of the Dominican Republic (GODR) through the Ministry of Industry, Commerce and Micro, Small and Medium-sized Enterprises (MICM) on developing policies and promoting platforms that reduced dependency on distant suppliers and attract targeted investments.
This is achieved through four key Components:
- Industrial Policy Plan Formulation: Formulation of an industrial policy focused on target industries, incentives, and aftercare, across key industrial sectors. This included developing a comprehensive plan to build resilient supply chains through the development of a competitive, market-driven ecosystem with local sourcing and the designing of a supplier development program to strengthen downstream capabilities.
- Investment Promotion Program Design: Positioned the Dominican Republic as an attractive destination for global investment in complementary industrial sub-sectors that enhanced supply chain resilience without competing with U.S. reshoring efforts.
- Workforce Development: Built a skilled workforce capable of meeting private sector demands in complementary industrial sub-sectors such as light manufacturing, logistics, and assembly, enhancing human capital availability through reskilling and repositioning existing workforce in the labor market.
- Microcities Model to Support Industrial Parks Planning and Design: Designed a new model of microcities that integrated industrial parks with communities including development of planning protocols, and establishing cooperation mechanisms to ensure infrastructure availability in industrial parks.
This activity offered a strategic opportunity for the DR to capitalize on the global supply chain realignment. By focusing on building more resilient supply chains, and developing a skilled workforce, the DR can now attract significant investment and enhance its economic competitiveness as a trading partner with the US and in the region.
Deliverables: The activity delivered several key outputs across its four components:
- Industrial Policy Plan: A comprehensive industrial policy plan, including a centralized investment structure focused on supply chains in the region, mapping of import substitution opportunities, a supplier development program, and specific incentives for investment.
- Investment Promotion Program: A strategic investment promotion framework that emphasized connecting U.S. investors with opportunities in complementary sub-sectors, fostering trade and economic collaboration, while building Dominican capacity for long-term sustainability.
- Supplier development program: Focused in developing local industry capabilities to decouple from Asia in low cost, low capital, low complexity, and support regional supply chain.
- Microcities Model: A microcities model design, including best practices, planning protocols, and an implementation roadmap for a pilot test.
- Workforce Development Curricula: Upgraded and developed technical curricula aligned with industry needs, along with identified partners for implementation.
Activities: The activity involves a range of activities, including:
- Research and Analysis: Conducted trade balance analyses, identified product substitution potential, and assessed local industry capabilities.
- Stakeholder Engagement: Engaging with government agencies (MICM), global corporations, local industry players, and business associations.
- Program Design and Implementation: Designed supplier development programs, investment promotion programs, and microcities models.
- Curriculum Development: Updated and developed technical curricula in collaboration with educational institutions.
- Capacity Building: Supported the GODR in implementing the industrial policy and attracting regional and US investments.
The Technical Assistance Project for Economic Growth (TAP EG)
This activity in the DR was part of a larger USG project, the Technical Assistance Project for Economic Growth (TAP EG). TAP EG was a global project that provided technical leadership, advisory support, data collection and analysis support, evaluations and assessments, while delivering knowledge management and capacity-building services to design and implement USG programs, projects, and activities. In many countries around the world, TAP EG worked to strengthen the private sector, improve the business enabling environment for everyone (including for US businesses), support deregulation, and improve government spending efficiency — all of which were intended to counter PRC efforts aimed at making inroads in these countries for the benefit of Chinese firms and PRC foreign policy objectives.
