Panama — a high-income country with a GDP per capita of around 16500 US dollars — has development potentials in economic, social and other terms. Panama has notably developed its economy, which is mainly based on the tourism and services sector, and other sectors, along with securing moderate human development and improved living conditions. It has the potential for further development of its tourism industry, based on the Panama Canal, and the service sector economy. Among others, Panama’s diverse natural resources, improved connectivity, strategically important locations and stable political conditions can facilitate foreign investment and the diversification of the economy that can in turn lead to further development in economic, social and other terms.
It is pertinently notable that there are diversification-based and other development challenges in Panama. There are challenges of diversifying the economy beyond its reliance on tourism and service sector, developing infrastructure further to support economic development and addressing limited economic opportunities for many, a lack of human capital and poverty and high levels of income disparities, particularly in rural areas and indigenous communities. Additionally, there are challenges in addressing the low quality of, and access to, key public services including education and healthcare for all citizens and sustainable development practices to protect its natural resources and environment for future generations. Among others, there is corruption, one of the biggest challenges in Panama, and a lack of transparency and accountability in government institutions.
The government’s policy based and other steps have helped address the challenges, promote development and reduce poverty in Panama. The government of Panama has formulated and implemented various policies (including the Government Strategic Plan 2019-2024 which includes the Five-year Investment Plan), invested in infrastructure development projects, promoted foreign investment through tax incentives and taken steps to support small businesses through financial assistance programs. Its timely infrastructure development — such as the enlargement of the Panama Canal and the Tocumen airport — and market reforms have played a vital role in the investment boom and economic development. Among others, Panama has improved education and workforce training programs and implemented policies to reduce corruption and improve transparency in various government institutions.
But there are various flaws in the development steps of the Republic of Panama, one of the fastest-growing economies in the world over the previous decade, leading to limited outcomes in various development aspects. There remain inadequate steps to address the challenges of diversifying the economy and economic disparities, prevent corruption in public institutions, ensure transparency in the decision-making processes and provide increased access to financing for small businesses. Additionally, there is a lack of effective coordination between agencies. Among others, steps are less in addressing human rights violations, though Panama has notably improved its human rights record, and restrictions on free expression and media, including threats to enforce criminal libel laws.
Steps need to be strengthened to address diverse development challenges and promote the development of Panama, which connects North and South America. Implementing policies that put emphasis on investing in diversifying the economy, addressing institutional shortcomings, addressing economic and social disparities including significant poverty among indigenous peoples and Afro-Panamanians and providing access to resources is vital. Additionally, addressing corruption and promoting transparency and accountability in governance is crucial to ensure that the development efforts are successful in Panama and — and can lead to better outcomes. But improving the quality of and access to key public services including education and healthcare is vital.
But Panama also needs to put emphasis on implementing policies that promote sustainable development and protect natural resources to ensure long-term prosperity for future generations. The concerns of indigenous people need to be addressed in implementing development projects. Fostering increased cooperation and partnerships with international organizations can provide resources and expertise to support the sustainable development efforts of Panama. But Panama needs to address the political interference in the judiciary and its human rights violations.
