Article on Republic of Panama- An Economic Analysis

8/12/2019 Article on Republic of Panama- An Economic Analysis

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THE REPUBLIC OF PANAMA: AN ECONOMIC ANALYSIS

Authors: Sandeep Suresh, Sourish Saha, Tanya Agarwal, Varun Narayan, Varun S.

[National Law University, Jodhpur, IV Year B.P. Sc.(Hons.) LL.B.(Corporate Law

Hons.)]

ABSTRACT

Panama, officially Republic of Panama, is the southernmost country ofCentral America and the

whole ofNorth America.Situated on theisthmus connecting North and South America, it is

bordered byCosta Rica to the west,Colombia to the southeast, theCaribbean to the north and

the Pacific Ocean to the south. The capital isPanama City.

Explored and settled by the Spanish in the 16th century, Panama broke with Spain in 1821

and joined a union ofNueva Granada,Ecuador,andVenezuela,named the Republic ofGran

Colombia.When Gran Colombia dissolved in 1831, Panama and Nueva Granada remained

joined. Nueva Granada later became the Republic of Colombia. With the backing of the United

States, Panama seceded from Colombia in 1903, allowing the Panama Canal to be built by

theU.S. Army Corps of Engineers between 1904 and 1914. In 1977,an agreement was signed

for the complete transfer of the Canal from the United States to Panama by the end of the 20th

century

Panama's economyis one of the most stable in America. The main economic activities are

financial, tourism and logistics, which represent 75% of the GDP (Gross Domestic Product).

From 2003 to 2009 the GDP doubled, propelled by high foreign and domestic investment,

coupled with the tourism and logistics industries. According to the Bank, the IMF and the UN,

the country has the highest per capita income in Central America, which is about $13,090; it is

also the largest exporter and importer at the regional level, according to ECLAC. The GDP has

enjoyed a sustained growth for more than twenty years in a row (1989). The country is classified

in the category of investment grade by these credit rating companies: Standard and Poor's,

Moody's and Fitch Ratings.
http://en.wikipedia.org/wiki/Central_Americahttp://en.wikipedia.org/wiki/North_Americahttp://en.wikipedia.org/wiki/Isthmushttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Colombiahttp://en.wikipedia.org/wiki/Caribbeanhttp://en.wikipedia.org/wiki/Panama_Cityhttp://en.wikipedia.org/wiki/Viceroyalty_of_New_Granadahttp://en.wikipedia.org/wiki/Ecuadorhttp://en.wikipedia.org/wiki/Venezuelahttp://en.wikipedia.org/wiki/Gran_Colombiahttp://en.wikipedia.org/wiki/Gran_Colombiahttp://en.wikipedia.org/wiki/Panama_Canalhttp://en.wikipedia.org/wiki/U.S._Army_Corps_of_Engineershttp://en.wikipedia.org/wiki/Torrijos%E2%80%93Carter_Treatieshttp://en.wikipedia.org/wiki/Torrijos%E2%80%93Carter_Treatieshttp://en.wikipedia.org/wiki/U.S._Army_Corps_of_Engineershttp://en.wikipedia.org/wiki/Panama_Canalhttp://en.wikipedia.org/wiki/Gran_Colombiahttp://en.wikipedia.org/wiki/Gran_Colombiahttp://en.wikipedia.org/wiki/Venezuelahttp://en.wikipedia.org/wiki/Ecuadorhttp://en.wikipedia.org/wiki/Viceroyalty_of_New_Granadahttp://en.wikipedia.org/wiki/Panama_Cityhttp://en.wikipedia.org/wiki/Caribbeanhttp://en.wikipedia.org/wiki/Colombiahttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Isthmushttp://en.wikipedia.org/wiki/North_Americahttp://en.wikipedia.org/wiki/Central_America


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I. INTRODUCTIONA.Economy of Panama Overview

Theeconomy ofPanama is a fully dollarized1 free market economy with a history

of low inflation. It is based mainly on the services industry, heavily weighted

toward banking, commerce, and tourism. The hand-over of thecanal and military

installations by theUS has given rise to new construction projects.

Panama's economy is based primarily on a well-developed services sector that

accounts for nearly 80% of itsGDP.Services include thePanama Canal,banking,

theColn Free Trade Zone, insurance, container ports, and flagship registry,

medical and health, and other business. The country's industry includes,

manufacturing of aircraft spare parts, cements, drinks, adhesives, and textiles. Also

the leading exports for Panama are bananas, shrimp, sugar, coffee, and clothing.

i. Economic SectorsPanama's economy, because of its key geographic location, is mainly based on a

well developed service sector heavily weighted towards banking, commerce,

tourism, and trading. The handover of the Canal and military installations by the

United States has given rise to large construction projects. A referendum regarding

the building of a third set of locks for the Panama Canal was approved

overwhelmingly (with low voter turnout, however) on October 22, 2006.

The official estimated cost of the building of the third set of locks is US$5.25

billion. The canal is of major economic importance since it pumps millions of

dollars from toll revenue to the national economy and provides massive

employment. The United States had a monopoly over the Panama Canal for 85

years but the TorrijosCarter Treaties signed in 1977 began the process of handing

over the canal to the Panamanian government by 1999.

1 Berg, Andrew; Borensztein, Eduardo (2008-12-01),"Full Dollarization The Pros and Cons", International

Monetary Fund.
http://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Panamahttp://en.wikipedia.org/wiki/Panama_Canalhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/GDPhttp://en.wikipedia.org/wiki/Panama_Canalhttp://en.wikipedia.org/wiki/Col%C3%B3n_Free_Trade_Zonehttp://www.imf.org/external/pubs/ft/issues/issues24/index.htmhttp://www.imf.org/external/pubs/ft/issues/issues24/index.htmhttp://www.imf.org/external/pubs/ft/issues/issues24/index.htmhttp://en.wikipedia.org/wiki/International_Monetary_Fundhttp://en.wikipedia.org/wiki/International_Monetary_Fundhttp://en.wikipedia.org/wiki/International_Monetary_Fundhttp://en.wikipedia.org/wiki/International_Monetary_Fundhttp://en.wikipedia.org/wiki/International_Monetary_Fundhttp://en.wikipedia.org/wiki/International_Monetary_Fundhttp://www.imf.org/external/pubs/ft/issues/issues24/index.htmhttp://en.wikipedia.org/wiki/Col%C3%B3n_Free_Trade_Zonehttp://en.wikipedia.org/wiki/Panama_Canalhttp://en.wikipedia.org/wiki/GDPhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Panama_Canalhttp://en.wikipedia.org/wiki/Panamahttp://en.wikipedia.org/wiki/Economy


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Copper and gold deposits are being developed by foreign investors, to the dismay

of some environmental groups, as all of the projects are located within protected

areas.2

ii. TourismTourism in the Republic of Panama is rapidly growing. Tourism in Panama kept its

growth during the past 5 years due to the government offering tax and price

discounts to foreign guests and retirees. These economic incentives caused Panama

to be regarded as a relatively good place to retire in the world. Real estate

developers in Panama have increased the amount of tourism destinations in thepast five years because of the interest for these visitor incentives. The amount of

tourists that arrived in 2012 totaled 2,200,000.

The arrival of tourists from Europe to Panama grew by 23.1% during the first nine

months of 2008. According to the Tourism Authority of Panama (ATP), between

January and September, 71,154 tourists from the Old Continent entered the

country that is 13,373 more than figures for same period last year. Most of theEuropeans who have visited Panama were Spaniards (14,820), followed by Italians

(13,216), French (10,174) and British (8,833). From Germany, the most populous

country in the European Union, 6997 tourists arrived. Europe has become one of

the key markets to promote Panama as a tourist destination.

In 2012, 4.345.5 million entered into the Panamanian economy as a result of

tourism. This accounted for 9.5% of gross domestic product in the country,

surpassing other productive sectors.

Panama's Law No. 9 is still the most modern and comprehensive law for the

promotion of tourism investment in Latin America and the Caribbean. In so-called

Special Tourism Zones, Law 8 offers incentives such as 100% exemption from

income tax, real estate tax, import duties for construction materials and equipment,

2Oancea, Dan (January 2009), Mining in Central America, magazine.mining.com,pp. 1012.
https://web.archive.org/web/20110516031334/http:/magazine.mining.com/Issues/0901/MiningCentralAmerica.pdfhttps://web.archive.org/web/20110516031334/http:/magazine.mining.com/Issues/0901/MiningCentralAmerica.pdfhttps://web.archive.org/web/20110516031334/http:/magazine.mining.com/Issues/0901/MiningCentralAmerica.pdfhttps://web.archive.org/web/20110516031334/http:/magazine.mining.com/Issues/0901/MiningCentralAmerica.pdf


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and other taxes. Panama has declared different parts of the country as Special

Tourism Zones which are benefited with multiple tax exemptions and tax holidays.

iii. CurrencyThe Panamanian currency is officially thebalboa,fixed at parity with the United

States dollar since independence in 1903. In practice, however, the country

isdollarized; Panama has its own coinage but uses U.S. dollars for all its paper

currency. According to the Economic Commission for Latin American and the

Caribbean, Panama's inflation as measured by weightCPIwas 2.0% in 2006.3

Panama has traditionally experienced low inflation, as it shares currencies with theU.S.

The balboa replaced theColombian peso in 1904 following the country's

independence. The balboa has been tied to the United States dollar (which is legal

tender in Panama) at an exchange rate of 1:1 since its introduction and has always

circulated alongside dollars.

Panamanian banknotes, denominated in Balboas, were printed in 1941 by

President Arnulfo Arias. They were recalled several days later, giving them the

name "The Seven Day Dollar." The notes were burned after the seven days but

occasionally balboa notes can be found with collectors. These were the only

banknotes issued by Panama and U.S. notes have circulated both before and since.

iv.

International trade

The high levels of Panamanian trade are in large part from theColn Free Trade

Zone, the largest free trade zone in theWestern Hemisphere.Last year the zone

accounted for 92% of Panama's exports and 64% of its imports, according to an

analysis of figures from the Colon zone management and estimates of Panama's

trade by the United Nations Economic Commission for Latin America and the

3"CEPAL.org",retrieved March 04, 2014.
http://en.wikipedia.org/wiki/Panamanian_balboahttp://en.wikipedia.org/wiki/Fixed_exchange_ratehttp://en.wikipedia.org/wiki/Dollarizationhttp://en.wikipedia.org/wiki/Consumer_Price_Indexhttp://en.wikipedia.org/wiki/Colombian_pesohttp://en.wikipedia.org/wiki/Col%C3%B3n_Free_Trade_Zonehttp://en.wikipedia.org/wiki/Col%C3%B3n_Free_Trade_Zonehttp://en.wikipedia.org/wiki/Western_Hemispherehttp://en.wikipedia.org/wiki/United_Nations_Economic_Commission_for_Latin_America_and_the_Caribbeanhttp://www.cepal.org/publicaciones/xml/2/27542/Anexo_estadistico.pdfhttp://www.cepal.org/publicaciones/xml/2/27542/Anexo_estadistico.pdfhttp://www.cepal.org/publicaciones/xml/2/27542/Anexo_estadistico.pdfhttp://www.cepal.org/publicaciones/xml/2/27542/Anexo_estadistico.pdfhttp://en.wikipedia.org/wiki/United_Nations_Economic_Commission_for_Latin_America_and_the_Caribbeanhttp://en.wikipedia.org/wiki/Western_Hemispherehttp://en.wikipedia.org/wiki/Col%C3%B3n_Free_Trade_Zonehttp://en.wikipedia.org/wiki/Col%C3%B3n_Free_Trade_Zonehttp://en.wikipedia.org/wiki/Colombian_pesohttp://en.wikipedia.org/wiki/Consumer_Price_Indexhttp://en.wikipedia.org/wiki/Dollarizationhttp://en.wikipedia.org/wiki/Fixed_exchange_ratehttp://en.wikipedia.org/wiki/Panamanian_balboa


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Caribbean. Panama's economy is also very much supported by the trade and

exportation of coffee and other agricultural products.

The Bilateral Investment Treaty (BIT) between the governments of the United

States and Panama was signed on October 27, 1982. The treaty protects U.S.

investment and assists Panama in its efforts to develop its economy by creating

conditions more favorable for U.S. private investment and thereby strengthening

the development of its private sector. The BIT with Panama was the first such

treaty signed by the U.S. in the Western Hemisphere.[34]A Trade Promotion

Agreement (TPA) between the United States and Panama was signed by both

governments in 2007. Panama approved the TPA on July 11, 2007. President

Obama signed the trade agreement with Panama on October 21, 2011 and the

agreement entered into force on October 31, 2012.4

v. Taxes in PanamaAccording to Act 8 of March 15, 2010, which amended the Fiscal Code, the air, sea

and land transportation companies, as well as passengers, shall pay ITBMS tax. In

Panama, 7% of ITBMS is charged on public entertainment, events, seminars,

conferences, lectures and artistic, professional and sport presentations in general

that are not free and whose annual incomes are over $36,000. The importation and

sale of alcoholic beverages, as well as hotel or lodging services, jewelry and

weapons will pay 10 percent of ITBMS. Tobacco derivatives (such as cigarettes,

cigars, and snuff) will pay 15% of ITBMS. Cable TV, microwave, satellite andmobile phones will pay 5% of ITMBS.

B.KEY ECONOMIC STATISTICSRank12th(2012 PPP)

GDP- ^ $57.079 Billion

4"The United States-Panama Trade Promotion Agreement (TPA)",trade.gov, retrieved March 04, 2014.
http://en.wikipedia.org/wiki/Panama#cite_note-34http://en.wikipedia.org/wiki/Panama#cite_note-34http://en.wikipedia.org/wiki/Panama#cite_note-34http://en.wikipedia.org/wiki/Panama_-_United_States_Trade_Promotion_Agreementhttp://en.wikipedia.org/wiki/Panama_-_United_States_Trade_Promotion_Agreementhttp://trade.gov/mas/ian/tradeagreements/fta/tg_ian_002427.asphttp://trade.gov/mas/ian/tradeagreements/fta/tg_ian_002427.asphttp://trade.gov/mas/ian/tradeagreements/fta/tg_ian_002427.asphttp://trade.gov/mas/ian/tradeagreements/fta/tg_ian_002427.asphttp://en.wikipedia.org/wiki/Panama_-_United_States_Trade_Promotion_Agreementhttp://en.wikipedia.org/wiki/Panama_-_United_States_Trade_Promotion_Agreementhttp://en.wikipedia.org/wiki/Panama#cite_note-34


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GDP Growth^ 10.6%

GDP Per Capita- ^ $15,300

Inflation^ 5.4%

Unemployment4.4%

Main Industries - Construction,Brewing,Cement and otherconstruction

materials,Sugar Milling

Ease of Doing Business Rank - 61st

II. STRENGTHS &WEAKNESSES OF THE ECONOMY OF REPUBLIC OFPANAMA

A.Economic Strengths and Advantages of the Republic of PanamaTo begin with, it is noteworthy that Panama hasthe third- or fourth-largesteconomy in Central America and it is also the fastest growing economy and the

largest per capita consumer in Central America5. In 2013, Panama ranked 4th

among Latin American countries,in terms of the Human Development Index, and

59th in the world. Since 2010, Panama remains as the second most competitive

economy in Latin America according to the Global Competitiveness Index from

theWorld Economic Forum.

In recent years, Panama's economy has experienced an economic boom, with

growth in real gross domestic product (GDP) averaging over 10.4% from 2006

2008. The Panamanian economy has been among the fastest growing and best

managed in Latin America. Latin Business Chronicle has predicted that Panama

5

CIAThe World Factbook, See also:IMF.org
http://en.wikipedia.org/wiki/Constructionhttp://en.wikipedia.org/wiki/Brewinghttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Construction_materialshttp://en.wikipedia.org/wiki/Construction_materialshttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_HDIhttp://en.wikipedia.org/wiki/List_of_countries_by_HDIhttp://en.wikipedia.org/wiki/World_Economic_Forumhttp://en.wikipedia.org/wiki/Latin_Business_Chroniclehttps://www.cia.gov/library/publications/the-world-factbook/fields/2195.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2195.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2195.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2195.htmlhttp://www.imf.org/external/pubs/ft/weo/2008/02/weodata/weorept.aspx?sy=2008&ey=2008&scsm=1&ssd=1&sort=country&ds=.&br=1&c=336%2C213%2C263%2C268%2C343%2C273%2C218%2C278%2C223%2C283%2C228%2C288%C233%2C293%2C238%2C243%2C248%2C366%2C253%2C369%2C298%2C258%2C299&s=PPPGDP&grp=0&a=&pr1.x=19&pr1.y=6http://www.imf.org/external/pubs/ft/weo/2008/02/weodata/weorept.aspx?sy=2008&ey=2008&scsm=1&ssd=1&sort=country&ds=.&br=1&c=336%2C213%2C263%2C268%2C343%2C273%2C218%2C278%2C223%2C283%2C228%2C288%C233%2C293%2C238%2C243%2C248%2C366%2C253%2C369%2C298%2C258%2C299&s=PPPGDP&grp=0&a=&pr1.x=19&pr1.y=6https://www.cia.gov/library/publications/the-world-factbook/fields/2195.htmlhttp://en.wikipedia.org/wiki/Latin_Business_Chroniclehttp://en.wikipedia.org/wiki/World_Economic_Forumhttp://en.wikipedia.org/wiki/List_of_countries_by_HDIhttp://en.wikipedia.org/wiki/List_of_countries_by_HDIhttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/Construction_materialshttp://en.wikipedia.org/wiki/Construction_materialshttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Brewinghttp://en.wikipedia.org/wiki/Construction


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will be the fastest growing economy in Latin America in the five-year period 2010

14, matching Brazil's 10% rate6.

Geographically, Panama is located in Central America, bordering both the

Caribbean Sea and the Pacific Ocean, between Colombia and Costa Rica. By 2000,

Panama controlled thePanama Canalwhich connects the Atlantic Ocean and the

Caribbean Sea to the North of the Pacific Ocean. The canal project can be said to

be the basis of Panamas economy. The handover of the Canal and military

installations by the United States has given rise to large construction projects.

Panama's economy, because of its key geographic location, is mainly based on a

well developed service sector heavily weighted towards banking, commerce,

tourism, and trading.

Tourism has also been an additional attraction for the economy. In Panama,

tourism sector kept its growth during the past 5 years due to the government

offering tax and price discounts to foreign guests and retirees. These economic

incentives caused Panama to be regarded as a relatively good place to retire in the

world. Real estate developers in Panama have increased the amount of tourism

destinations in the past five years because of the interest for these visitor

incentives. The amount of tourists that arrived in 2012 totaled 2,200,000. The

arrival of tourists from Europe to Panama grew by 23.1% during the first nine

months of 2008. According to the Tourism Authority of Panama (ATP), between

January and September, 71,154 tourists from the Old Continent entered the

country that is 13,373 more than figures for same period last year. In 2012, 4.345.5million entered into the Panamanian economy as a result of tourism. This

accounted for 9.5% of gross domestic product in the country, surpassing other

productive sectors. Panama has declared different parts of the country as Special

Tourism Zones which are benefited with multiple tax exemptions and tax holidays.

6Latin Business Chronicle, October 7, 2009
http://en.wikipedia.org/wiki/Panama_Canalhttp://en.wikipedia.org/wiki/Panama_Canal


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The driving force in Panama has been investment in public works, widening the

Panama Canal and expanding services. This progress was duly noted by the World

Bank, the International Monetary Fund and the United Nations, all of which report

that the country has the highest per capita income in Central America. 7 In 2009

Panamas GDP was USD 24,711,000 million, and its per capita GDP was USD

6,570 while the Economic Commission on Latin America and the Caribbean

(ECLAC) reported that Panama is the regions largest exporter and importer.8

Panama Economy Insight forecasts that Panama's economy will grow 9.2% in

2011. In subsequent years, the economy will return to the levels that existed before

the world economic crisis, growing 13% and 11% in 2012 and 2013 respectively.9

This growth of 9.2% in 2011 will lead to decrease of one percentage point of

unemployment rate, placing it at 5.5% in August 2011. By 2012 and 2013,

unemployment rate will drop to 4.6% and 4.2% respectively because double-digit

economic growth during those years. Panama's labor force, measured by

economically active population, will grow by 3.3% average annual during 2011-

2014.10

Private enterprise participation on employed population will expand due tostrong growth of formal jobs.

In political scene, a economic growth as high as projected by we, together to

reduction of unemployment rate, creation of formal jobs, high public investment

and improvement in public finances, will incentive to President Martinelli to think

in your re-election. In fact, his party (Cambio Democrtico) seeks to reform the

Panama Political Constitution to eliminate obstacles to re-election. However, in

first attempt, Legislative Assembly filed the project of re-election law. Lack of

persons with political leadership within party of President Martinelli, get ahead to

political opposition in 2014 election, especially Democratic Revolutionary Party

7World Bank, Panama,

8ABC.es,Panam: Crecimiento econmico del 7% en el 2010, (16 December 2010),

.9Seehttp://www.panamaeconomyinsight.com.pa/0215011101.html,visited on 7 March 2013

10Ibid.
http://www.socialwatch.org/node/www.centralamericadata.com/es/article/home/Panama_Crecimiento_economico_del_7_en_el_2010http://www.panamaeconomyinsight.com.pa/0215011101.htmlhttp://www.panamaeconomyinsight.com.pa/0215011101.htmlhttp://www.socialwatch.org/node/www.centralamericadata.com/es/article/home/Panama_Crecimiento_economico_del_7_en_el_2010


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(PRD).11 In this sense, if not achieved the reforms to Political Constitution that

allow for re-election, is likely in 2014 election look back a grand coalition to

confront the political strength of PRD.

B.Economic Weaknesses of the Republic of PanamaLike most countries in the region, Panama is feeling the impact of the global

financial crisis, which threatens to undermine the social gains made in the past few

years. Despite Panama's status as an upper-middle income nationas measured by

per capita GDPit remains a country of stark contrasts. Perpetuated by dramatic

educational disparities, over 24% of Panama's population lived in national poverty

in 2013 and currently according to latest reports by theWorld Bank 6.6% of the

country's population lives in extreme poverty.12

Panama has enjoyed economic growth in recent years, but this has not led to people being

empowered or freed to live decent and fulfilling lives. Nor has it resulted in effective policies to

reduce poverty or preserve and protect the environment. Since 2009 the Government has made

policy mistakes that have damaged governability, disturbed the populace and generated a climate of

tension in the country.13To achieve a sustainable development model, the Government will have to

design and implement better policies and increase social investment so as to tackle the alarming

levels of inequality in the country.

The social panorama of poverty, unequal income distribution and gender inequity

are dangerously spreading as well in panama. There are still enormous problems of

social inequality to be overcome. Income distribution gaps are very wide, especially

when they are analysed by type of region, ethnicity and gender. These disparities

can be seen in the countrys gini coefficient, which data from 2005 show to be

approximately 55, a clear indication that inequality is a serious problem.14

11Ibid.

12Panama,World Bank. April 15, 2010

13

Seehttp://www.socialwatch.org/sites/default/files/panama2012_eng.pdf

14Trading Economics, GINI index in Panama, )
http://en.wikipedia.org/wiki/World_Bankhttp://www.socialwatch.org/sites/default/files/panama2012_eng.pdfhttp://www.socialwatch.org/sites/default/files/panama2012_eng.pdfhttp://en.wikipedia.org/wiki/World_Bank


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Panamas growth is based on unsustainable development models that focus on

economic indicators and ignore the most pressing social and environmental

problems. This is a complex challenge for civil society organizations, above all

because the style of government imposed by President Ricardo Martinelli is

markedly autocratic and far to the political right.

C.The Economic Crisis The Canal EffectThe latest economic indicators report from the National Institute of Statistics and

Census (INEC) showed a slowdown in the Panama Canal activity to its contraction

in June 2011. The Panama Canal net tons (PCUMS), which is an indicator thatmeasures the activity of the Canal in real terms, without the influence of prices,

grew 20.6% in February 2011 but then declined consistently until contract by 0.8%

in June.15The downward trend also occurred in toll revenues, as these are charged

on PCUMS except for the case of cruises where tolls are collected based on the

number of berths of the ship. U.S. economic growth has been slowing and we

would expect in this case, the same segments of types of ships transiting the

Panama Canal, which were negatively impacted by the crisis, this time are also

slowing to the extent that does the U.S. economy. However, also the downward

trend of Panama Canal activity could also be due to a segment such as dry bulk

carriers is causing the slowdown, either by a decrease in demand or supply of grain

or by changes in transportation decisions, motivated by spreads between the

Panama Canal tolls and freight through other means of transportation in the

United States.16

D.Impact of a recession in U.S. economy over PanamaAs an apprehension against the projected growth of the Panamas economy in the

coming few years, in the case of a U.S. recession, the Panama Canal would be the

negatively impacted the first activity since the main route is going from China to

15http://www.panamaeconomyinsight.com.pa/0222081101e.html

16Ibid.
http://www.panamaeconomyinsight.com.pa/0222081101e.htmlhttp://www.panamaeconomyinsight.com.pa/0222081101e.html


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East Coast of the United States. With the recession and precipitate a meltdown in

the price of oil, copper and raw materials, which impact negatively Venezuela and

Chile, and also to Ecuador and Colombia. Venezuela and Colombia are the first

and second purchaser of the Colon Free Trade Zone, respectively, so that the

activity of this decrease. The slower growth in Latin America, besides affecting the

Colon Free Trade Zone also impact the activity of container transshipment port, as

these countries are also major users of these services. However, during global

economic crisis in 2009 Panama's economy grew 3.5%. With a U.S. recession, the

Panama economy still continue to grow at a high rate, much higher than 3.5%,

driven by construction and trade, among other sectors still continue to be dynamic.

III. THE ROLE OF SERVICE SECTOR OF REPUBLIC OF PANAMA

A.Introduction to the SectorThe economy of the Republic of Panama is firmly founded on a strong services

sector which contributes almost 77% to the national Gross Domestic Product

(GDP) of roughly $27 billion.17 The sector includes the world-famous Panama

Canal, Colon Free Trade Zone as well as other services such as banking, tourism,

flagship registry, health, container ports and insurance.18Considering the small size

of the economy, the services sector is quite diverse, assisted largely by a favourable

geographic location, and the Panama Canal, which has boosted international

shipping. The trans-shipping and port operations of the Panama Canal continue to

form the backbone of the logistics sector. The Colon Free Trade Zone has become

Latin Americas leading merchandise distribution center in recent times.19 The

Panamanian economy has historically concentrated on the service sector, and so

17 Services in US-Panama Trade Promotion Agreement, Official website of the Office of the US Trade

Representative. Accessible at http://www.ustr.gov/about-us/press-office/fact-sheets/2011/may/services-us-

panama-trade-promotion-agreement18

Economy Profile of Panama on the website of the World Factbook of the Central Intelligence Agency.

Accessible athttps://www.cia.gov/library/publications/the-world-factbook/geos/pm.html19 Country Report- Panama, Rabobank. Accessible at https://economie.rabobank.com/PageFiles/853/Panama-

201211.pdf
http://www.ustr.gov/about-us/press-office/fact-sheets/2011/may/services-us-panama-trade-promotion-agreementhttp://www.ustr.gov/about-us/press-office/fact-sheets/2011/may/services-us-panama-trade-promotion-agreementhttp://www.ustr.gov/about-us/press-office/fact-sheets/2011/may/services-us-panama-trade-promotion-agreementhttps://www.cia.gov/library/publications/the-world-factbook/geos/pm.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/pm.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/pm.htmlhttps://economie.rabobank.com/PageFiles/853/Panama-201211.pdfhttps://economie.rabobank.com/PageFiles/853/Panama-201211.pdfhttps://economie.rabobank.com/PageFiles/853/Panama-201211.pdfhttps://economie.rabobank.com/PageFiles/853/Panama-201211.pdfhttps://economie.rabobank.com/PageFiles/853/Panama-201211.pdfhttps://economie.rabobank.com/PageFiles/853/Panama-201211.pdfhttps://www.cia.gov/library/publications/the-world-factbook/geos/pm.htmlhttp://www.ustr.gov/about-us/press-office/fact-sheets/2011/may/services-us-panama-trade-promotion-agreementhttp://www.ustr.gov/about-us/press-office/fact-sheets/2011/may/services-us-panama-trade-promotion-agreement


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the assembly and manufacturing sectors account for only a small percentage of the

economy.20

B.The Panama CanalIntroduction: The Panama Canal is one of the most widely used trade routes in the

history of the world. It is an engineering marvel, which, since the 19 thcentury, has

drastically reduced the transit time of ships from the Pacific to the Atlantic oceans.

It cuts across the Isthmus of Panama and is a key conduit for international

maritime trade.

The US formally took over the project from France in 1904 and took almost a

decade to complete one of the most challenging engineering projects ever taken

up, which was officially opened in August 15, 1914. The US continued exercising

its control over the canal, until the 1977 Torrijos-CarterTreaties, which provided for

handover to Panama. After a period which saw joint exercise of control by USA

and Panama, the Panamanian government finally took over the reins in 1999.

Today, the canal is managed and operated by the Panama Canal Authority, aPanamanian Government Agency.

Close to 14,000 ships use the Canal today and shippers pay almost a quarter

million USD for a single days transit. A Panamax is a ship of the largest dimension

that the Canal can handle- such as the Maersk Sealand, which measures 300m long

and 30m wide. The canal is governed by a system of locks, which manage traffic by

altering the height of the ships above sea-level. TheAmerican Society of Civil Engineershas called the Panama Canal as one of the seven wonders of the modern world.21

Expansion plans: The expansion plans were formulated in 2007 and the project is

estimated to be completed by 2015, with a total cost of $5.3 billion, which amounts

to almost 15% of the GDP. The expanded canal will be able to comfortably

20

Panamas Economy, Andrew Plowman, Official website of the Institute of the Americas. Accessible athttps://www.iamericas.org/en/media-room/reports-analisys/1931-panamas-economy21

Official website of ASCE. Accessible athttp://www.asce.org/content.aspx?id=2147487305
https://www.iamericas.org/en/media-room/reports-analisys/1931-panamas-economyhttps://www.iamericas.org/en/media-room/reports-analisys/1931-panamas-economyhttp://www.asce.org/content.aspx?id=2147487305http://www.asce.org/content.aspx?id=2147487305http://www.asce.org/content.aspx?id=2147487305http://www.asce.org/content.aspx?id=2147487305https://www.iamericas.org/en/media-room/reports-analisys/1931-panamas-economy


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accommodate twice the traffic and very large ships. Countries that stand to benefit

the most are the USA and China, its top users.22This development, along with an

increase in the capacities of the ports on the Pacific and Atlantic coasts and the

current investments in regional fuelling operations will consolidate Panamas global

logistical advantage in the western part of the world. The project will also generate

enormous requirements for technology, goods and services. Participation is

expected to be global and competition will be fierce.23

The Panama Canal Crisis: Almost 100 years after it was first declared functional,

negotiations as to the completion of the expansion project have failed, and this has

halted expansion temporarily. After weeks of negotiation between the Panama

Canal Authority and a consortium led by Spanish builder Sacyr and its Italian

counterpart Salini-Impreglio, the two sides have failed to reach an agreement as to

who must pay the $1.6 billion of cost-overruns on the $3.2 billion cost of

expansion.24 While the consortium is claiming compensation for the unforeseen

costs, the Canal administrator has insisted that the project will b completed as

scheduled in 2015, with or without the consortium.25

The dispute has drawn attention to alternative routes for large ships, such as the

Suez Canal, Inter-modal services between West and East Coast America, and even

near shoring to Mexico. Analysts have warned that the dispute has put on the line

thousands of jobs and the economy. The delay will also be a fiscal nightmare for

governments, which will have to wait longer to reap the returns of the

infrastructural marvel. Use of the canal rakes in an annual revenue of almost $960

million, amounting to 10% of the total annual revenue.

22Profile of Panama on the Forbes website. Accessible athttp://www.forbes.com/places/panama/

23Market of the Month: Panama, Official website of the USA International Trade Administration. Accessible at

http://trade.gov/press/publications/newsletters/ita_1107/panama_1107.asp24

Trouble at the Panama Canal- Dead Locks, The Economist. Accessible at

http://www.economist.com/blogs/americasview/2014/02/trouble-panama-canal25 Panama Canal Crisis Threatens Jobs, Economy, News Asia. Accessible at

http://www.channelnewsasia.com/news/business/international/panama-canal-crisis/985788.html
http://www.forbes.com/places/panama/http://www.forbes.com/places/panama/http://www.forbes.com/places/panama/http://trade.gov/press/publications/newsletters/ita_1107/panama_1107.asphttp://trade.gov/press/publications/newsletters/ita_1107/panama_1107.asphttp://www.economist.com/blogs/americasview/2014/02/trouble-panama-canalhttp://www.economist.com/blogs/americasview/2014/02/trouble-panama-canalhttp://www.channelnewsasia.com/news/business/international/panama-canal-crisis/985788.htmlhttp://www.channelnewsasia.com/news/business/international/panama-canal-crisis/985788.htmlhttp://www.channelnewsasia.com/news/business/international/panama-canal-crisis/985788.htmlhttp://www.economist.com/blogs/americasview/2014/02/trouble-panama-canalhttp://trade.gov/press/publications/newsletters/ita_1107/panama_1107.asphttp://www.forbes.com/places/panama/


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The cluster of multi-modal transportation services that serves the world maritime

trade includes the Panama Canal, containers-trans-shipment ports, inter-oceanic

railway, bunker supply as well as the supply of goods to ships in transit through the

canal.

C.The Colon Free Trade ZoneThe logistical standing of the country has contributed to the success of the Colon

Free Zone (CFZ), which happens to be the second largest in the world, after Hong

Kong. It has become a vital trading and trans-shipment center, serving both the

region and the world. It imports and re-exports goods worth $14 billion annually.

CFZ imports include a wide array of luxury goods, electronic products, clothing

and other consumer products. These arrive from all over the world, to be resold,

repackages and reshipped, primarily to regional markets. It is due to this mixture of

products that the American brand market has a significant share, eve if most of the

products are made in Asia. Hong Kong is the CFZs biggest supplier, while

Colombia and Ecuador are the two largest destinations for exports from the

CFZ.26

D.Other Servicesi. Franchise Sector

Panama has a very dynamic and receptive franchise sector which is accommodative

of interests of economies such as the American. Apart from a few local franchises

in the food sector, almost 95% of the franchises in Panama are foreign. The USAleads here, but is closely followed by European countries and Central America. The

success of the market penetration may be attributed to brand promotion and

recognition, general quality of the products and the competitive prices. Besides,

franchise business in Panama is not plagued by strict laws and excessive regulation.

26Doing Business in Panama 2013, on the official website of th Embassy of the United States in Panama.

Accessible athttp://panama.usembassy.gov/business.html
http://panama.usembassy.gov/business.htmlhttp://panama.usembassy.gov/business.htmlhttp://panama.usembassy.gov/business.htmlhttp://panama.usembassy.gov/business.html


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And to add to this, the Panamanian banking system is highly competent and

capable of franchise business transactions.27

ii. Air TransportAir transport sector, along with the Panama Canal, forms a key infrastructure asset

which establishes trade routes and connects the country with overseas markets.

This service sector has been among Panamas fastest growing sectors in the

economy with value addition growth of 21.3%, aided largely by tourism.

Investment in the air transport network has been said to have diversified the risk

of reliance on the Panama Canal revenue, and it supports tourism, financial and

business services. Panamas Tocumen International Airport is the key hub for

connecting passengers among north, Central and South America.28

iii. TourismThe local tourism sector is gaining ground in the Central American sector. Growth

in this sector had been slow during 1998 to 2004, but drastically picked up during

2006-07, and has been unprecedented. While the number of rooms occupied rose

to 3,000 per day in 2007, expenditure of tourists rose to $900 million. These

increases are partly due to an increase of at least twelve international frequencies by

the principal and other foreign Panamanian airlines.29

iv. Information TechnologyThe dramatic improvement of telecommunications infrastructure in the last 5 yearsand the entry of new service providers due to de-regulation have boosted the

implementation of new technology in Information Technology in Panama. The

information and communication technology market in Panama is comprised of

27Official publication of the US Commercial Service, US Department of Commerce, July 2010. Accessible at

http://www.franchise.org/uploadedFiles/Franchise_Industry/International_Development/PanamaFranchising.pdf28

Economic Benefits from Air Transport in Panama, IATA.

Acessible athttp://clacsec.lima.icao.int/IATA_Estudio/PAN/panama_eng-FT.pdf29Economic Growth of Panama, Business Panama.

Accessible athttp://www.businesspanama.com/about_panama/fundamentals/growth_sectors.php
http://www.franchise.org/uploadedFiles/Franchise_Industry/International_Development/PanamaFranchising.pdfhttp://www.franchise.org/uploadedFiles/Franchise_Industry/International_Development/PanamaFranchising.pdfhttp://clacsec.lima.icao.int/IATA_Estudio/PAN/panama_eng-FT.pdfhttp://clacsec.lima.icao.int/IATA_Estudio/PAN/panama_eng-FT.pdfhttp://clacsec.lima.icao.int/IATA_Estudio/PAN/panama_eng-FT.pdfhttp://www.businesspanama.com/about_panama/fundamentals/growth_sectors.phphttp://www.businesspanama.com/about_panama/fundamentals/growth_sectors.phphttp://www.businesspanama.com/about_panama/fundamentals/growth_sectors.phphttp://www.businesspanama.com/about_panama/fundamentals/growth_sectors.phphttp://clacsec.lima.icao.int/IATA_Estudio/PAN/panama_eng-FT.pdfhttp://www.franchise.org/uploadedFiles/Franchise_Industry/International_Development/PanamaFranchising.pdf


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three main groups- individuals, households and businesses. Since 2003, growth in

this sector has been propelled be de-regulation, access to modern technology,

outsourcing services (BPOs) and new government initiatives.30

E.Inference as to the Service Sector in PanamaThe Panamanian economy has historically concentrated on the service sector, and

so the assembly and manufacturing sectors account for only a small percentage of

the economy.31Of course, the predominant components are the Panama Canal and

the CFZ. The Panama Canal is a 19 thcentury engineering feat, which is struggling

to keep up with the modern shipping and commercial demands of the 21 stcentury.

Therefore, its continued utility will largely depend upon the success of the

expansion project due for completion in 2015. If the Panama Canal is to measure

up to its competitor Suez Canal, then it must develop the capacity to push more

ships across, in lesser time. And the Republic of Panama must work on attracting

foreign investment as well as developing the manufacturing sector, in order to

supplement the service sector.

IV. IMPACT OF BANKING SYSTEM IN PANAMA ON ITS FINANCIAL SECTORPanama is known in the international finance community as the Switzerland of

Latin America for its modernity and stability.32 A key strength to the financial

sector has been the stable banking system, which has benefited from Panama's

continuing favourable economic and business climate. The fully dollarized

economy and completely open capital account have helped to keep inflation low

30Information Technology in Panama.

Accessible athttp://www1.american.edu/initeb/cs6223a/sizeofdomesticmarket.htm31

Panamas Economy, Andrew Plowman, Official website of the Institute of the Americas. Accessible at

https://www.iamericas.org/en/media-room/reports-analisys/1931-panamas-economy32

Cooper Laurie Understanding the Panama Financial Overview Available at:http://www.streetdirectory.com/travel_guide/209052/north_america_destinations/understanding_the_panama_fi

nancial_overview.html(Last Visited on 5th March, 2014).
http://www1.american.edu/initeb/cs6223a/sizeofdomesticmarket.htmhttp://www1.american.edu/initeb/cs6223a/sizeofdomesticmarket.htmhttp://www1.american.edu/initeb/cs6223a/sizeofdomesticmarket.htmhttps://www.iamericas.org/en/media-room/reports-analisys/1931-panamas-economyhttps://www.iamericas.org/en/media-room/reports-analisys/1931-panamas-economyhttp://www.streetdirectory.com/travel_guide/209052/north_america_destinations/understanding_the_panama_financial_overview.htmlhttp://www.streetdirectory.com/travel_guide/209052/north_america_destinations/understanding_the_panama_financial_overview.htmlhttp://www.streetdirectory.com/travel_guide/209052/north_america_destinations/understanding_the_panama_financial_overview.htmlhttp://www.streetdirectory.com/travel_guide/209052/north_america_destinations/understanding_the_panama_financial_overview.htmlhttp://www.streetdirectory.com/travel_guide/209052/north_america_destinations/understanding_the_panama_financial_overview.htmlhttps://www.iamericas.org/en/media-room/reports-analisys/1931-panamas-economyhttp://www1.american.edu/initeb/cs6223a/sizeofdomesticmarket.htm


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and interest rates stable. Market discipline continues to be an important force for

high operating standards, as there is no lender of last resort or deposit insurance.33

A large number of major international banks operate in Panama and intermediate

between the local and the international financial system, inducing a complete or

full financial integration. Financial integration equalizes Panamas and world

interest rates and implies that capital inflows and outflows arising from banks

portfolio adjustments are a crucial element in the macroeconomic adjustment

process.34The participation of international banks reduces systemic financial risks

because these banks are not threatened by local losses and follow best practices. In

addition, international banks provide liquidity to the system when needed, serving

as lenders of last resort.35 Furthermore, a competitive banking environment

improves risk management for banks and firms recently enhanced by using capital

adequacy requirements and Basle standards. Moreover, lower financial risk comes

from the stability of interest rates and of the economy, large amounts of

commercial lending, and banks freedom to allocate resources.36 In addition,

interest rates on long-term mortgage loans are flexible upward but rigid downward,which reduces banks credit risks from a decrease in asset value due to an increase

in interest rates. Also, banks low lending risk in Panama is reinforced from

payments retention from wages because this shifts the burden of expenditures-

adjustment in case of family financial problems, protecting banks, as was clearly

shown during the 198889 crisis in Panama.37

Banks in Panama, both national and foreign, have maintained positive real lending

and deposit rates over the last five years. In 2008, however, as a result of the rise in

33 IMF Country Report No. 07/66 on Panama: Assessment of Financial Sector Supervision and Regulation,

including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision,

Insurance Supervision, and Securities Regulation Available at:

https://www.imf.org/external/pubs/ft/scr/2007/cr0766.pdf(Last Visited on 5th March, 2014).34

Juan Luis Moreno Villalaz Financial Integration and Dollarization: The Case of Panama Cato Journal, Vol.

25, No. 1 (Winter 2005).35

Juan Luis Moreno Villalaz Lessons From The Monetary Experience of Panama: A Dollar Economy with

Financial Integration Cato Journal, Vol. 18, No. 3 (Winter 1999)36Supra note 3.

37Ibid.
https://www.imf.org/external/pubs/ft/scr/2007/cr0766.pdfhttps://www.imf.org/external/pubs/ft/scr/2007/cr0766.pdfhttps://www.imf.org/external/pubs/ft/scr/2007/cr0766.pdf


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the price index, these interest rates turned slightly negative, with the exception of

the lending rates for consumer loans and credit cards. Deposit rates in national and

foreign banks both for individuals and firm were negative as of the last quarter of

2007. Loans granted by the national banking system grew by 12.6% in 2008,

compared with 19.6% in 2007.38 Assets in the Panamanian banking system

maintained the accelerated pace of growth observed over the last few years,

moving from US$ 45.642 billion in 2007 to US$ 53.427 billion in 2008. This

increase (17.1%) is slightly lower than the 2007 figure (20%), though it still signals

a significant expansion.39

Towards the end of 2008, the financial sector began to show signs of deceleration

owing to the global financial crisis. Term deposits in the Panamanian banking

system decreased, as did sight deposits of firms. From December 2008 to March

2009, term deposits grew by only 0.4%, compared with 5.5% in the same period

the year before. Deposits of private individuals totalled US$ 3.764 billion in

December 2008 and were down by US$ 163 million by the end of March. In

January 2009 the government adopted the Financial Stimulus Programme (FSP)with a view to injecting financial resources into the system and addressing the

credit squeeze. The FSP has received US$ 1.11 billion in financing from the Inter-

American Development Bank, the Andean Development Corporation and the

National Bank of Panama. The National Bank of Panama administers these funds

through a trust. The trust extends loans to banking and financial institutions which,

in turn, make loans to their clients using their normal standards. Implementation

has been slow, however, and as of April 2009 only US$ 18 million had been lent to

banks.40

Proposals have been made for the National Bank of Panama, which has US$ 2.3

billion in international banks, to allocate funds to a programme which would

38Economic Survey of Latin America and the Caribbean 2008-09

Available at:http://www.cepal.org/publicaciones/xml/5/36465/Panama.pdf(Last Visited on 5th March, 2014).39Ibid.

40Ibid.
http://www.cepal.org/publicaciones/xml/5/36465/Panama.pdfhttp://www.cepal.org/publicaciones/xml/5/36465/Panama.pdfhttp://www.cepal.org/publicaciones/xml/5/36465/Panama.pdfhttp://www.cepal.org/publicaciones/xml/5/36465/Panama.pdf


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channel loans to national productive sectors. An initiative of this kind was already

attempted during earlier crises, such as at the beginning of the 1990s, when the

government of Guillermo Endara set up a programme to provide funds to private

banks to boost liquidity in the national market.41

Recently, Panama was put on the OECDs gray list of countries deemed

uncooperative with global tax standards. To get off the list, Panama entered into a

number of international tax agreements with places like Singapore and Japan

harmless countries where very few of its banking customers originated from.

After a few more years of intense pressure, though, the government of President

Ricardo Martinelli capitulated to the United States and signed one of the most

unilaterally disarming comprehensive tax treaties in history. As a result, agreement

between the US and Panama effectively gives the US government carte blanche

over any information it wants from Panamanian bank accounts. The agreement

requires Panamanian authorities to cooperate with US investigations even when

the charges are not criminal in nature or violate Panamanian law. 42 Many banks

simply closed their doors to US taxpayers (though there are a number of banks likeHSBC, Tower Bank, and Banvivienda that still open personal accounts for

Americans). Devoid of its competitive advantage, the banking sector now has to

stand on its own and compete head to head against Hong Kong, Singapore, Abu

Dhabi.43

Currently, Panama has a sizeable banking sector with total assets amounting to

about 215 percent of GDP and domestic credit to the private sector amounting to

about 90 percent of GDP (as of end-2011). Foreign assets of Panamas banking

center, such as loans and other financial assets, are mostly concentrated in Latin

America, reflecting a strong presence of other Central and South American banks

41Supra note 7

42 Panamas Financial Industry: Shades of Grey( October 29, 2009) Available at:

http://www.economist.com/node/14745043(Last Visited on 6th March, 2014).43

Simon Black An Analysis of International Diversification in Panama Sovereignman March 12, 2012Available at: http://www.sovereignman.com/expat/an-analysis-of-international-diversification-in-panama-6173/

(Last Visited on 6th March, 2014).
http://www.economist.com/node/14745043http://www.economist.com/node/14745043http://www.sovereignman.com/expat/an-analysis-of-international-diversification-in-panama-6173/http://www.sovereignman.com/expat/an-analysis-of-international-diversification-in-panama-6173/http://www.sovereignman.com/expat/an-analysis-of-international-diversification-in-panama-6173/http://www.sovereignman.com/expat/an-analysis-of-international-diversification-in-panama-6173/http://www.economist.com/node/14745043


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in Panama.44 However, Panamas future growth prospects are bright. New

investment opportunities stemming from infrastructure development and the

expanded Panama Canal, the recent approval of Free-Trade Agreements with the

United States, the European Union, and Canada, as well as a large private mining

project should help support growth over the medium term.45

V. CONCLUSIONPanama's economy is based primarily on a well-developed services sector that

accounts for nearly 80% of itsGDP.Like most countries in the region, Panama is

feeling the impact of the global financial crisis, which threatens to undermine the

social gains made in the past few years. The social panorama of poverty, unequal

income distribution and gender inequity are dangerously spreading as well in

panama. The Republic of Panama must work on attracting foreign investment as

well as developing the manufacturing sector, in order to supplement the service

sector.

Panamas growth is based on unsustainable development models that focus on

economic indicators and ignore the most pressing social and environmental

problems. This is a complex challenge for civil society organizations, above all

because the style of government imposed by President Ricardo Martinelli is

markedly autocratic and far to the political right. To achieve a sustainable

development model, the Government will have to design and implement better

policies and increase social investment so as to tackle the alarming levels of

inequality in the country.

44IMF Country Report No. 13/89

Panama Selected Issues Available at:http://www.imf.org/external/pubs/ft/scr/2013/cr1389.pdf(Last Visited on

6th March, 2014).45

Corinne Delchat and Svetlana VtyurinaIMF Western Hemisphere Department Panama: Growth to remainbuoyant Available at: http://www.imf.org/external/pubs/ft/survey/so/2013/car032713a.htm(Last Visited on 6th

March, 2014).
http://en.wikipedia.org/wiki/GDPhttp://www.imf.org/external/pubs/ft/scr/2013/cr1389.pdfhttp://www.imf.org/external/pubs/ft/scr/2013/cr1389.pdfhttp://www.imf.org/external/pubs/ft/scr/2013/cr1389.pdfhttp://www.imf.org/external/pubs/ft/survey/so/2013/car032713a.htmhttp://www.imf.org/external/pubs/ft/survey/so/2013/car032713a.htmhttp://www.imf.org/external/pubs/ft/survey/so/2013/car032713a.htmhttp://www.imf.org/external/pubs/ft/scr/2013/cr1389.pdfhttp://en.wikipedia.org/wiki/GDP


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VI. BIBLIOGRAPHY

A.ARTICLES1.Berg, Andrew; Borensztein, Eduardo (2008-12-01),"Full Dollarization The Pros

and Cons",International Monetary Fund

2.Oancea, Dan (January 2009), Mining in Central America, magazine.mining.com,pp. 1012

3.Latin Business Chronicle, October 7, 20094.Juan Luis Moreno Villalaz Financial Integration and Dollarization: The Case of

Panama Cato Journal, Vol. 25, No. 1 (Winter 2005).

B.WEBSITES1."CEPAL.org",retrieved March 04, 20142."The United States-Panama Trade Promotion Agreement (TPA)",trade.gov,

retrieved March 04, 2014.

3.CIAThe World Factbook, See also:IMF.org4.ABC.es, Panam: Crecimiento econmico del 7% en el 2010, (16 December 2010),

5.See http://www.panamaeconomyinsight.com.pa/0215011101.html,visited on 7March 2013

6.http://www.socialwatch.org/sites/default/files/panama2012_eng.pdf7.http://www.panamaeconomyinsight.com.pa/0222081101e.html8.Services in US-Panama Trade Promotion Agreement, Official website of the Office of

the US Trade Representative. Accessible athttp://www.ustr.gov/about-

us/press-office/fact-sheets/2011/may/services-us-panama-trade-promotion-

agreement

9.Economy Profile of Panama on the website of the World Factbook of theCentral Intelligence Agency. Accessible at

https://www.cia.gov/library/publications/the-world-factbook/geos/pm.html
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11.Panamas Economy,Andrew Plowman, Official website of the Institute of theAmericas. Accessible at https://www.iamericas.org/en/media-room/reports-

analisys/1931-panamas-economy

12.Official website of ASCE. Accessible athttp://www.asce.org/content.aspx?id=2147487305

13.Profile of Panama on the Forbes website. Accessible athttp://www.forbes.com/places/panama/

14.Panama Canal Crisis Threatens Jobs, Economy, News Asia. Accessible at

http://www.channelnewsasia.com/news/business/international/panama-canal-

crisis/985788.html

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http://panama.usembassy.gov/business.html

16.Information Technology in Panama.Accessible athttp://www1.american.edu/initeb/cs6223a/sizeofdomesticmarket.htm

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and Codes on the following topics: Banking Supervision, Insurance Supervision,

and Securities Regulation Available at:

https://www.imf.org/external/pubs/ft/scr/2007/cr0766.pdf (Last Visited on

5th March, 2014)

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on 5th March, 2014).

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Documents

Article on Republic of Panama- An Economic Analysis