Panama pre release

Question 1

Economic overview of Panamas development

Answer 1

• Trade and market liberalisation and privatisation of state-owned enterprises in 1990s helped secure international investment for Panama.
• FDI encouraged thorough tax regulation and guaranteeing ease of business

• Panama has a large logistics and storage services sector, as well as a modern
banking and insurance industry.

• The Panama Canal accounts for 10% of trade.
• The Colon Free Trade Zone (CFZ) is the second largest free port in the world and accounts for more than 7.0% of the national economy.
• Trans-Panama Pipeline allows for the transport of crude oil between the Pacific and Atlantic coasts.
• Bilateral free trade agreement with the USA since October 2012.
• Significant investments in infrastructure development projects e.g. metro systems which opened in April 2014 and enhancements to Tocumen International Airport.

Question 2

Achievements-Panamas development

Answer 2

• Ricardo Martinelli (President 2009-2014) implemented a USD 15 billion strategic spending plan in key sectors including: financial services, agriculture, logistics, tourism, as well as in airport, port and road infrastructure. Expansion of infrastructure and reformation of teacher training

• The Ministry of Education’s budget increased from US$1 billion in 2013 to US$1.29 billion in 2015 under President Varela (2014).
Improving education

• Increase in secondary school enrolment, led by female enrolment 14

• Increasing female enrolment in higher education (53% of students in higher
education are women).
Improving health

• Declining fertility and mortality rates, suggesting development levels
increasing.

• Health expenditure was 5.9% of GDP in 2016.

Question 3

Development challenges-Social challenges-Panamas development

Answer 3

-High poverty and extreme poverty rates amongst the indigenous communities e.g. in indigenous territories, known as “comarcas”, poverty is above 70 percent
and extreme poverty above 40 percent .

• Lack of education/skills (literacy rate 95%).

Question 4

Environmental challenges-Panamas development

Answer 4

• Loss of agricultural productivity due to land being lost as a result of soil erosion and desertification
• Poor resilience to natural disasters

Question 5

Political/economic challenges-Panamas development

Answer 5

Poor long term planning- change in administration every 5 year means
progress can be inconsistent

• Poor infrastructure and inadequate access to sanitation
• High levels of debt (US$23 billion) and concerns over future stability with 25 European and American banks severing ties with Panama over money laundering concerns
• Decreasing GDP growth (2011: 11.8%, 2014 6.1%)

Question 6

Why do these challenges still exist in Panama?

Answer 6

• e.g. on un-targeted subsidies for fuel, water and electricity
• Out of 139 nations, Panama’s primary education ranks 129th, according to the World Economic Forum’s “Global Competitiveness Report” for 2010-2011.

• 365,000 prospective students in Panama unable to pursue post-secondary study
due to lack of available spaces

• Relaxed child labour laws- minimum working age of 15 isn’t always adhered to and agricultural and domestic industries allow children to work from age 12