Panama’s dollar-based economy has been boosted by the canal’s planned 2016 expansion, further public infrastructure projects, and increased copper exports, despite slowing growth in recent years. More than 75% of GDP is generated by the well-developed services sector.
Is Panama a developing nation?
Panama has one of the world’s fastest-growing economies and has made significant progress in decreasing poverty. However, some have referred to it as a dual economy, in which some metropolitan areas benefit from trade and commerce while others, such as indigenous peoples, do not. The following are ten sobering facts regarding poverty in Panama.
Disturbing Facts About Poverty in Panama
- Panama has Latin America’s second-worst income distribution: Despite the fact that the country’s wealth is continually increasing, not everyone feels prosperous. According to the CIA World Factbook, almost a quarter of the population is poor. The wealthiest 20% of the population controls half of the country’s wealth, while the poorest 20% controls only 12%.
- Panama’s poverty is mostly divided along urban-rural lines, with the Panama Canal and adjacent sectors accounting for more than 30 percent of the country’s annual economic growth. More than 60% of the country’s GDP is made up of internationally focused service sectors. However, agriculture still employs 21% of the population, and many are unaware of the wealth created by internationally focused services. Indigenous peoples primarily live in remote locations because they have limited access to resources and basic amenities. However, the Panamanian government is attempting to enhance access to these places. Panama’s World Bank portfolio is worth $435.59 million dollars, with seven current projects in the areas of social protection, governance, sustainable production, disaster management, wastewater management, and indigenous peoples’ protection.
- Indigenous people have a significantly shorter average life expectancy than the general population, with an 11-year disparity in life expectancy. While the average life expectancy for the general population is 79 years, indigenous men and women who live on their ancestral lands have a life expectancy of 67.75 years.
- Access to health care is partly determined by geography: rural areas frequently lack medical infrastructure, such as access to doctors and hospitals. The health of indigenous peoples is harmed by this, as well as great poverty. Infant mortality is four times greater among indigenous peoples than among urban Latinos, and 75 percent of Panama’s malnourished indigenous and non-indigenous children reside in rural areas. To tackle this, the Panamanian government has implemented its Coverage Extension Strategy, which involves sending out mobile medical units to provide basic treatment to 149,028 people in 47 impoverished rural towns. According to the World Bank, by 2014, 96 percent of children under the age of one had got all of their immunizations, up from 26% in 2010.
- Indigenous women have a substantially higher maternal mortality rate than the national average: indigenous women living in their territories had a maternal mortality rate five times higher than the national average. The maternal death rate in the United States is 80 per 100,000 births, but it is 462 per 100,000 for indigenous mothers. With its mobile units, Panama’s Coverage Extension Strategy has also been delivering maternal health care by improving access to prenatal controls. Only 20% of disadvantaged rural women had access to prenatal testing in 2010. By 2014, 86 percent of pregnant women in these communities were receiving medical attention.
- Rural Panamanians have limited access to education due to a lack of infrastructure, making it difficult for the country’s predominantly indigenous people to obtain a solid education. While approximately 5.5 percent of non-indigenous adults were illiterate in 2000, indigenous adults were illiterate in 37.7% of cases. School attendance is considerably lower, with indigenous students attending 78.7% of the time compared to 96.8% of non-indigenous pupils. However, the CIA World Factbook reports that female attendance in secondary school has increased in rural and indigenous communities, which will likely assist to decrease poverty.
- Access to information and communications technology (ICT) is mostly determined by region: ICT, such as computers and the Internet, can be critical in enhancing education and opportunity. Private enterprises, on the other hand, that see little profit in building the infrastructure that remote and underprivileged regions require frequently overlook rural areas.
- The rights of indigenous peoples are in jeopardy: According to the International Work Group for Indigenous Affairs, Interior Minister Milton Henrquez told the leaders of all of the country’s indigenous congresses and councils in 2016 that the country would only recognize the five original comarcas, or tribal regions, preventing the leaders of 30 indigenous territories from participating in further consultations and negotiations.
- The territory of indigenous tribes are being encroached upon: Without the tribe’s permission, the Barro Blanco hydroelectric facility in the Ngbe-Bugl area is being built. Communities were evicted forcibly from the project area, resulting in flooding of houses, crops, and religious places. In addition, many tribes have started employing drones to keep a watch on their rainforest lands and prevent illicit logging and mining.
- The canal’s need for water frequently outweighs the needs of the rural poor: The Panama Canal necessitates the daily release of 52 million gallons of freshwater. The water originates from two reservoirs that also supply the city with water. Prioritizing water for the canal undermines the needs of farmers, who have been considered as risks to the canal rather as partners in watershed management since the 1970s. Despite the need of bettering water management, the poor have received few of the advantages and experienced many of the negative effects of these policies.
Looking Ahead
Despite the fact that Panama is a wealthy country, not everyone enjoys it. People in rural and indigenous communities frequently lack access to education, health care, and political power.
While this list may appear bleak, Panama has made significant progress in the fight against poverty. Poverty in Panama fell from 15.4 percent to 14.1 percent between 2015 and 2017, and extreme poverty fell from 6.7 percent to 6.6 percent. According to the CIA World Factbook, general poverty fell by ten percentage points from 2006 to 2012.
Despite the fact that Panama has made significant progress in terms of poverty reduction, this list demonstrates that there is always room for improvement. Overall, the country has the capacity to close the income gap and become a more fair society for everyone, regardless of class, region, or race.
What is Panama’s primary revenue source?
Panama’s economy is primarily based on the services sector, which accounts for approximately 80% of its GDP and the majority of its foreign earnings. The Panama Canal, banking, trade, the Coln Free Trade Zone, insurance, container ports, and flagship registry, as well as medical and health services, are all available. Aircraft spare parts, cement, beverages, adhesives, and textiles are among the country’s industries. Bananas, shrimp, sugar, coffee, and clothes are among Panama’s other exports. Panama’s economy is completely dollarized, with the US dollar serving as legal money. Panama was the first foreign country to adopt the US dollar as its official currency (1903), after its secession from Colombia (aided by the US) left it without a local currency for a time. Panama is a high-income country with a long history of low inflation.
Is Panama’s economy thriving?
Overview of the Panamanian Economy. Panama’s economy has grown at a rate of 8.4% per year on average between 2004 and 2013, making it one of Latin America’s fastest-growing economies.
Is Panama a Third World country?
Panama is most people’s first introduction to the country, thanks to the well-known and profitable Panama Canal. Toll money from ships going through the canal accounts for a significant component of Panama’s GDP. Panama is classified as a World Bank high-income country due to other key business areas such as banking, commerce, and tourism.
Panama is now ranked 57th in the Human Development Index (HDI), indicating that it has a good level of human development. However, due to educational gaps, living conditions in some areas of the country can be harsh.
Poverty in the country has dropped to 14%, and canal revenues have been used to build Central America’s largest Regional Finance Center (the IFC). Panama’s robust economic and business climates have bolstered the country’s banking sector, which is growing and paying well.
Education
The education system has also improved tremendously, with the country’s literacy rate standing at 95.41 percent as of 2018. All children in Panama must attend school from the age of four to fifteen, and enrolment is increasing at all levels, but especially at the higher ones. Furthermore, all students, including foreigners, are entitled to free tuition at Panama’s public colleges.
Transportation
Tocumen International Airport is Central America’s largest airport and a main hub for Copa Airlines and other airlines, among others. The roads are paved in the larger cities, and there are four-lane highways, particularly near Panama City. Panama City also has Metrobuses and two convenient Metro train lines (with a third planned) to help alleviate the city’s notorious traffic congestion.
Why is Panama so impoverished?
The economic divide between Panama’s urban and rural regions must be highlighted in order to comprehend poverty in the country. Many citizens of Panama’s largest cities are already benefiting financially from one of the world’s fastest-growing economies. This is partly owing to the recently expanded Panama Canal, which has allowed international trade to flourish. Many Panamanians residing outside of these cities, on the other hand, face a very different economic reality. The principal causes of poverty in Panama are a lack of infrastructure and limited opportunities for agricultural growth.
One of the biggest causes of poverty in the country is its poor infrastructure. According to a survey from New York University, “roads in rural sections of the country remain inadequate.” The article goes on to say that “just roughly 34% of the roads are paved in total.”
Rural farmers find it difficult to carry their commodities to market due to poor and unsafe roads. As a result, many of these families will have a far harder time selling goods and services to a larger market than those that have access to proper infrastructure. This has resulted in a crisis in Panamanian agricultural output, which now accounts for just over 2% of the country’s GDP, a low figure for a country that has historically relied largely on this type of commerce. This is one of the main causes of poverty in Panama, and it is primarily found in the country’s rural areas, where agriculture is the main source of income.
Drought is yet another major source of poverty in Panama. Growing food in rural Panama is often a matter of life and death, as well as a requirement for feeding one’s family. Panamanians in rural areas not only sell agricultural products, but they also eat what they raise. This is known as subsistence farming, which is feeding oneself exclusively from food produced by oneself. Unfortunately, since 2014, much of Central America has been suffering from a drought, which has resulted in a drop in food output.
“The lack of rain since the middle of 2014 has led in the loss of staple grain harvests and the death of thousands of livestock in El Salvador, Guatemala, Honduras, and, to a lesser extent, in portions of Nicaragua, Costa Rica, and Panama,” according to a United Nations report.
A proper educational system implemented in rural Panama, according to the World Bank, might alleviate most of the country’s poverty. According to the World Bank analysis, households with at least one member who has completed some form of school are less likely to be poor than those who have not. The introduction of educational systems to rural Panama has the potential to improve the social mobility of the ignorant. Perhaps projects like this could help to bridge the financial divide between urban and rural Panama, as well as lessen poverty in the country as a whole.
What is Panama’s most serious issue?
Panama’s major problem is corruption. In the 2020 Transparency International Corruption Perceptions Index, Panama was placed 111th out of 180 nations. Concerns have been expressed by the United States and other international investors regarding corruption and inconsistent treatment of investors and enterprises. Investors from the United States have been impacted by instances of questionable government behavior in Panama. Bidding procedures, land titling, contract adherence, lack of payments, and a delayed and ineffective legal system are among them. The US continues to emphasize the importance of increasing openness and accountability in the judicial system and government procurements. The Panamanian government’s history of delaying payments to vendors and contractors is still a risk for American and Panamanian businesses doing business with the government. We advise American businesses interested in bidding on public contracts in Panama to request for assistance through the US Department of Commerce’s Advocacy Center. We recommend that U.S. citizens interested in purchasing property in Panama speak with a knowledgeable lawyer, whom the Embassy’s American Citizens Services division can offer a list of. According to the World Bank’s Doing Business 2020 report, Panama has risen to 87th place out of 190 nations in terms of property registration, while it still ranks 141st in terms of contract enforcement.
The Cortizo government modified the public procurement process and signed a new public-private partnership (PPP) law, which entered into effect in December 2020, in response to business concerns and in an attempt to provide a level playing field for businesses.
The PPP statute applies to projects worth more than $10 million in construction, maintenance, and operations.
The inflexibility of Panama’s labor rules is a cause of concern for potential investors.
Firing methods are too controlled, limiting labor mobility and making it difficult to hire.
Panama’s minimum wage, while low in global terms, is quite high in a Central American setting, with annual increases varying depending on the sector.
Furthermore, qualified technical staff who are fluent in English can be difficult to come by.
Panama has higher-than-average unit manufacturing costs due to labor concerns and unusually high electricity expenses. Panama has two regimes to encourage more foreign investment: EMMA, which facilitates the development and operation of manufacturing multinational businesses, and SEM, which is Panama’s Multinational Company Headquarters program (SEM).
Is Panama a tax-free jurisdiction?
- Panama has no income, corporate, capital gains, or estate taxes for offshore companies that only do business outside the country. Offshore firms can do business locally, which is an unique benefit, but they must pay local taxes as a result.
- Panama has tight banking secrecy rules in place to protect account holders’ privacy.
- Panama also has no tax treaties with foreign countries and no regulations governing currency transactions.
Who is Panama’s wealthiest citizen?
Franois Pinault, a French luxury goods magnate with a net worth of $50 billion, is a multibillionaire. In recent years, his net worth has skyrocketed.
Is Panama a safe place to live?
Panama is a wonderful area to live or retire, with easy residence laws, friendly people, and a large expat population. There are numerous areas to visit, whether you wish to live on the beach in Bocas del Toro or need to reside in Panama City for job and school. Expats in Panama have diverse views on healthcare.