Panama’s territory of 75,420 sq km is a comparatively small area of land, with a population of a little under 4m people. However, the country has experienced and contributed to key events that have and will continue to shape global trade. Just 24 years ago Panama began a period of intense change, following the end of the authoritarian regime that ruled the country for two decades. Some of the most important changes included the strengthening of the legal structure and the nurturing of a climate conducive to business and foreign investment. The outcome of these changes can be seen across the country. One of the most obvious examples of progress is the development of a stronger banking centre due to the implementation of prudent regulation and well-developed capital markets. Further, the legal structures surrounding the corporate law system, one of the soundest internationally, have been supplemented with several laws to protect against their use for criminal purposes.
The implementation of the Multinational Corporation Headquarters’ legislation has seen international conglomerates establish their regional headquarters in Panama in order to benefit from the advantages offered by the law, as well as the ever-increasing benefits Panama offers as a destination to do business regionally, such as world class logistics, transportation and export facilities. This has created a number of growth opportunities for Panama building on a cluster of core competencies that in turn build upon our natural and man-made comparative advantages. Progress in this direction is visible through developments such as the City of Knowledge, a centre for higher education institutions and headquarters for high-tech companies; the Panama Pacifico Special Economic Area, which hosts a large number of international companies and a large number of business process outsourcing centres of recognised global companies; and the existence of free zones as part of a special, comprehensive and simplified system for the establishment and operation of companies, which contribute to the development and generation of employment and foreign exchange. All of these build upon and add value to the hub concept.
The Panama Canal is being expanded to increase the benefits it yields to the country, not to mention world trade. Panama’s port system is one of the most important, modern and efficient in the region. The expansion of Tocumen International Airport and the opening of two new international airports, as well as the growth of Panamanian airlines, have positive direct and indirect effects on the country’s tourism industry and overall competitiveness. These elements, together with a leading level of telecommunications connectivity in the region, a significantly improved road network, the construction of a third and fourth bridge over the Panama Canal, the wider modernisation of the transport system, including the construction of a modern subway, the sanitation of the Panama Bay and substantial improvements to health systems, demonstrate that the country is committed to reaching the highest global standards in terms of human development.
However, even as all these advances are being made and we experience strong economic growth, several challenges remain unresolved and need to be addressed moving forward. Further efforts to fight corruption are necessary. This is a reality which affects almost all countries and Panama is no exception. The independence of the judiciary must be protected and increased, as the status quo is far from ideal and further changes are necessary to fully address the issue. Education needs to see great reforms, as it is lacking at both elementary and high school levels, while tertiary education also needs to be adjusted to provide the skills Panama needs to continue its growth. Finally, the unequal distribution of wealth is a key issue that needs to be addressed over the long term to ensure the continued peaceful development of the country. For now, we must maintain our positive outlook for Panama in continuing to climb regional and global rankings on richness, competitiveness and human development.
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