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Political, Economic, and Social Development of Panama

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Political, Economic, and Social development of Panama

Panama’s political development: Panama has made notable political and economic progress since the December 1989 U.S. military intervention that ousted the military regime of General Manuel Antonio Noriega from power. Since that time, the country has had five successive civilian governments, with the current government of President Ricardo Martinelli of the center-right Democratic Change (CD) party elected in May 2009 to a five-year term (Sullivan, 2012). Until the May 2009 Presidential election, the fight for political power in Panama had been essentially limited to the Partido Revolucionario Democrático (PRD) and the Partido Panameñista (PP) (Economics, 2012). Both of these parties are on the right of the political spectrum and made up of elites that move smoothly between business and politics depending on the opportunities at hand (Panama, 2012) Moscoso Government (1999-2004) In her second bid for the presidency, Arnulfista Party (PA) candidate Mireya Moscoso was victorious in the May 1999 elections. President Moscoso, a coffee plantation owner and Panama’s first female president, ran as a populist during the campaign, promising to end government corruption, slow the privatization of state enterprises, and reduce poverty. She also promised to ensure that politics and corruption did not interfere with the administration of the Canal. (Sullivan, 2012) Torrijos Government (2004-2009) In the May 2004 presidential race, Martín Torrijos of the PRD won a decisive victory with 47.5% of the vote. Torrijos spent many years in the United States and studied political science and economics at Texas A&M University. In the campaign, he emphasized anti-corruption measures as well as a national strategy to deal with poverty, unemployment, and underdevelopment. He was popular among younger voters and had a base of support in rural areas. Torrijos maintained that his first priority would be job creation. He called for the widening of the Canal, a project that would cost several billion dollars, and would seek a referendum on the issue. (Sullivan, 2012) Martinelli Government (2009-2014) Inaugurated on July 1, 2009, Martinelli is a businessman and former government minister. His electoral alliance, known as the Alliance for Change, also won a majority of seats in the unicameral National Assembly. The strength of President Martinelli’s CD grew significantly after the 2009 election because of defections from other parties, but the CD’s ruling alliance with the PP fell apart at the end of August 2011. President Martinelli sacked PP leader Juan Carlos Varela as Foreign Minister for allegedly neglecting his duties by spending too much time fostering his ambitions to run for President in 2014, while Varela maintains that the coalition fell apart because of policy differences related to transparency and accountability in the use of state resources. (Sullivan, 2012) Panama’s economic development: Although Panama is categorized by the World Bank as having an upper-middle-income economy because of its relatively high per capita income level of $7,910 (2011), one of the country’s major challenges is highly skewed income distribution with large disparities between the rich and poor. According to the U.N. Economic Commission for Latin America and the Caribbean, Panama’s poverty rate was almost 37% in 2002, but declined to about 26% in 2009 and 2010. Extreme poverty or indigence in Panama also fell from 18.6% in 2002 to 11.1% in 2009, although it increased to 12.6% in 2010. In order to tackle poverty, the previous government of President Martin Torrijos (2004-2009) initiated a social support program of conditional cash transfers to poor families and the elderly living in extreme poverty. Since taking office, President Martinelli has fulfilled his campaign pledge to provide $100 a month to poor seniors. In May 2011, the World Bank approved a $100 million policy loan for Panama to help it strengthen fiscal management, improve tax collection, and expand key social programs. (Sullivan, 2012) Panama has seen a continuing economic expansion, a high rate of foreign investment, and a steady increase in property values over the last decade since the Americans handed over control of the Canal in 2000. The economic boom since then has translated to Panama’s Political Stability (Economic, 2012). Panama’s largely service-based economy has been booming in recent years, spurred on by the Panama Canal expansion project that begun in 2007 that is expected to be completed in 2015 (Sullivan, 2012). The democratic country of Panama has strong economic assets and is well governed which will exploit these assets to the good of its citizens and those wise enough to invest in Panama’s future. The Canal expansion will boost growth by an average of 1% in each of the next two years, which should partially offset the effects of a still weak U.S. economy. Economists predict and expect the economic growth in Panama to be around 4.5% in 2010 and 5.5% in 2011. Solid economic growth, enhanced tax collection, and spending restraint have helped improve the government’s fiscal position over the past few years. Fiscal improvements have helped reduce Panama’s public debt (domestic and external) from 70% of GDP in 2004 to an estimated 47% last year. In addition, good debt management has allowed the government to extend the average maturity of its obligations and reduce interest rates. Over the medium-long term, Panama’s economy will continue to benefit from its position as a major international hub. Further, the Canal expansion is expected to boost growth above potential until 2014. (Economic, 2012) Panama’s social development: In 2000, Panama had approximately 2.816 million inhabitants, 700,000 of whom lived in Panama City, with another 300,000 in the immediate suburbs (Moore, n.d.). The Social Security Fund, established by the government in 1941, provides medical service and hospitalization, maternity care, pensions for disability or old age, and funeral benefits. Retirement is set at age 62 for men, or age 57 for women. This program is financed by an alcohol tax, in addition to employee and employer contributions. Employed women receive 14 weeks of maternity leave at 100% pay. Compulsory workers' compensation legislation covers employees in the public and private sectors. This program is funded entirely by employer contributions. Despite constitutional equality, women generally do not enjoy the same opportunities as men. While Panama has a relatively high rate of female enrollment in higher education, many female graduates are still forced to take low-paying jobs. Women's wages are, on average, 20% lower than those of men. Until 1995, communal assets were not recognized in marriage, and many divorced women were left economically destitute. Women also face sexual harassment in the workplace, although it is prohibited by the Labor Code. Domestic violence remains a widespread problem. In 1998 the Ministry of Women, Youth, Family, and Childhood was established, helping focus national attention on social issues affecting women and families. Indigenous peoples in Panama are increasingly demanding more participation in decisions that affect their land. Semiautonomous status has been given to some tribal groups. Despite these provisions, many indigenous groups feel that existing reserves are too small. Human rights abuses include prolonged pretrial detention, poor prison conditions, and internal prison violence. (Social development, n.d.) References:
Economic & Political Stability in Panama | Live Invest Panama Real Estate. (2012, December). Panama Real Estate | Live Invest Panama Listings. Retrieved March 1, 2013, from
Moore, A. (n.d.). Culture of Panama - history, people, women, beliefs, food, customs, family, social, dress. Countries and Their Cultures. Retrieved March 1, 2013, from
Panama: Economics. (2012, December). Export Development Canada (EDC). Retrieved March 1, 2013, from
Social development - Panama - tax, problem, average, issues. (n.d.). In Encyclopedia of the Nations - Information about countries of the world, United Nations, and World Leaders. Retrieved March 1, 2013, from
Sullivan, M. P. (2012, November 27). Panama: Political and Economic Conditions and U.S. Relations. Federation of American Scientists. Retrieved March 1, 2013, from

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