Panama's Growth Diagnostics


  • Working Papers Series. Documentos de trabajo


  • "In this context, the objective of the paper is to propose a set of recommendations on what needs to be done in order to assure success of the current growth strategy. We have no doubts on the value of strengthening Panama´s geographical comparative advantage with the Canal´s expansion. The key question is to identify the additional steps which could promote growth in the non-canal economy. In addition to making growth more sustainable, growth acceleration in the traditional sectors can result in a reduction of inequality, which is extremely high in Panama. To answer these questions the paper proceeds in the following way. Section 2 discusses some key features of Panama´s economic structure that are important for the analysis. Section 3 analyzes Panama´s growth using conventional techniques. In particular, we look at the role of the `fundamental´ determinants of growth, such as institutions, geography, and human capital. Also, the time series analysis shows that growth has experienced reversals while a standard sources-of-growth decomposition suggests that Panama has a severe productivity problem. Sections 4 to 8 deal with the GDM. Section 4 presents some general evidence from the Investment Climate Survey (ICS) on the main concerns of Panama’s entrepreneurs. Section 5 discusses all the problems that could imply low social returns to investment. Section 6 analyzes the issues related to problems of appropriability. Section 7 introduces the problems of self-discovery, and Section 8 looks at financing issues. Section 9 concludes".

fecha de publicación

  • 2007-11

Líneas de investigación

  • Crecimiento Económico
  • Panamá


  • 9190