Panama beyond the Canal: Using technological proximities to identify opportunities for productive diversification

Produced by: 
Harvard University
Available from: 
October 2016
Paper author(s): 
Ricardo Hausmann
Jose Ramon Morales
Miguel Angel Santos
Topic: 
Microeconomics - Competition - Productivity
Year: 
2017

In recent years, Panama has become one of the fastest growing economies in the world. Leveraging on the activities of the Panama Canal, the country has doubled its income per capita over the last decade. A modern sector specialized in logistics, financial services, communications and trade has spurred economic growth and provided a consistent foreign exchange surplus in the balance of services. Growth in the service sector has, in turn, demanded considerable investment in construction, the leading growing sector in Panama, which has tripled its share within gross domestic product (GDP) in ten years. Private non-residential construction and large public infrastructure projects such as the expansion of the Canal, Tocumen airport, and the Metro of Panama City account for most of the boom. Another pillar of growth over the acceleration period has been trade, namely leveraging on Panama´s excellent trade infrastructure to channel merchandise from Asia to Central America and the Caribbean. A recently-created vibrant air-traffic hub in Panama City features as another factor in the country’s economic boom.

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