The construction industry had a major effect on the economy during the 1970s and the 1980s, as government-funded public works provided thousands of jobs and improved the physical infrastructure. In 1987 the sector contributed nearly 9 percent of GDP, a relatively high figure for a developing country. Construction activity boomed in the early 1970s, increasing at a rate of 16 percent annually from 1970 to 1975, faster than any other sector during that period, with the exception of mining. Public-works projects such as dams, roads, bridges, hospitals, low-income housing, and schools transformed the national infrastructure during the 1970s. The sector's rapid growth continued in the 1980s, but it was very uneven because of fluctuations in annual government spending. Private-sector construction, particularly of free-zone facilities and hotels, also boosted industry performance.
Construction firms, like many other Dominican businesses, relied heavily on personal contacts. For example, in the late 1980s the government awarded only about 15 percent of its construction contracts through a competitive bidding process. Government authorities, up to and including the president, negotiated or offered the remaining contracts as if they were personal spoils. The Balaguer administration's emphasis on construction in the late 1980s focused primarily on renovations in Santo Domingo, and it included the construction of museums, a lighthouse, and a new suburb, all in preparation for 1992's observance of the five-hundredth anniversary of Columbus's arrival in the New World.
The construction sector generally was self-sufficient; less than one-third of all construction materials was imported. Domestically produced materials included gravel, sand, clay, tiles, cables, piping, metals, paint, and cement. Although the main indicators of construction materials output generally rose in the 1980s, the rapid expansion of activity during the decade caused a serious shortage of cement that slowed the progress of some projects. The Dominican government built cement factories in Santiago and San Pedro de Macorís in 1977 in joint ventures, with private investors, to complement its major plant in Santo Domingo, but the new capacity quickly became insufficient, and the country was forced to begin importing cement by the mid1980s . By the late 1980s, cement factories were operating at full capacity, a rarity among developing countries such as the Dominican Republic. Besides materials, the industry encompassed ten major construction firms as well as several design and civil engineering companies, which handled all but the most complex projects. The construction sector was a major employer of unskilled labor, which constituted 65 percent of that industry's work force.
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