Panama

F

Culture

Panamanian culture derives fundamentally from European musical, artistic, and literary traditions brought by the Spanish. Important African and Native American influences have been added to these, however, creating hybrid forms unique to Panama. The traditional dance, tamborito, for example, is descended from Spanish folkways, yet it also incorporates native rhythms, themes, and dance steps. Popular music, while influenced by international recordings, draws heavily on Afro-Caribbean music. Verse and prose are composed and published in Spanish but incorporate themes, characters, and plots that arise out of Panama’s complex experience. Generally speaking, art for the elite stays closer to European models, while that for the lower classes contains strong African and Native American overtones.

The best overview of Panamanian culture is found in the Museum of the Panamanian, in downtown Panama City. Its collection documents the evolution of human life on the isthmus from the earliest native settlements to the present. Other cultural institutions (all in Panama City) include the Museum of Panamanian History, the Museum of Natural Sciences, the Museum of Religious Colonial Art, the Museum of Contemporary Art, the Museum of the Interoceanic Canal, and the national institutes of culture and music.

IV

Economy

Since colonial times, Panama’s location has made it a crossroads for trade and transit. This role assumed worldwide significance in the 20th century with the completion of the Panama Canal, which dominated Panama’s economy for decades and tied it closely to the United States.

Panama’s gross domestic product (GDP) was $15.47 billion in 2005, equal to $4,786.20 per person. Commerce, finance, and business services constituted the core of Panama’s economy, contributing 76 percent of the GDP. Most economic activity was concentrated in the urban area of central Panama surrounding the canal. In the 1990s the rural economy accounted for 10 percent of the GDP and was primarily agricultural, producing farm and ranch commodities. Spending by the United States on military bases added another 5 percent, or $366 million, to the GDP, but that ended when Panama assumed control of the canal in 1999.

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Business related to the Panama Canal plays a major role in this sector, but its importance has declined as the economy has become more diverse. International banking, maritime services, manufacturing, and shipping combine to provide more jobs and tax revenue than the canal. Economic growth planned in the late 1990s was expected to further reduce the country’s dependence on canal-related business.

The economy suffered a serious decline in the late 1980s, when the United States imposed a series of restrictions on trade and financial dealings with Panama and eventually invaded the country to overthrow the government of Manuel Noriega. The embargo caused a sharp drop in the GDP and higher unemployment. It also hurt tourism, manufacturing, and commerce, and made it difficult to maintain roads, power utilities, and communication equipment. Since the 1989 invasion the GDP has grown substantially, fueled by U.S. reconstruction funds, an end to the embargo, restored international credit, and the return of investor confidence.

A major factor in Panama’s industry and foreign commerce is the Colón Free Zone, an international trade facility that allows businesses to operate without paying import duties or taxes. Established in 1948 near the northern terminus of the canal, this zone is the largest of its kind in the Western Hemisphere and second only to Hong Kong in the world. In 1995 its 1,600 businesses generated $11 billion in sales and employed 14,000 people. Companies in the zone import raw materials and other components for manufacturing, or operate warehouses that break down large shipments from Asia and distribute them in nations bordering the Atlantic. In the 1990s the free zone doubled its area and has benefited from new container ports at Manzanillo and Coco Solo.

Since the 1970s, when it borrowed large sums for social and economic programs, Panama has had one of the highest levels of debt per capita in the world. In 1995 the nation’s foreign debt was $7 billion, or $2,600 per person, much of it overdue. In 1996 the government settled outstanding commercial debt claims against Panama through negotiations, reducing pressure on the government and allowing it to seek new credit. However, payments on the debt were the largest government expenditure in 1995, taking 28 percent of the $1.9 billion budget.

Since taking office in 1994, President Ernesto Pérez Balladares has relaxed labor controls, reduced government regulation of business, and sold off major public enterprises. These actions aimed to reduce spending on state-run industries and payrolls, curb the power of unions, and encourage private enterprise and investment, in hopes of revitalizing the economy.

A

Panama Canal

The Panama Canal continues to generate more jobs, contracts, and government revenues than any other single source in the nation. It contributes more than 10 percent of the nation’s GDP.

From 1979 to 1999 the canal was operated jointly by the United States and Panama, with four Panamanians serving on the nine-member board of directors of the Panama Canal Commission. After 1990 the canal administrator was also Panamanian. After Panama assumed control of the canal in 1999, the commission became the Panama Canal Authority, a public Panamanian corporation, and took over the operation of the canal.

B

Labor

Panama’s labor force includes about 1.5 million people. The largest group, 67 percent, works in services, including government, finance, and trade. Agriculture, forestry, and fishing employs 16 percent. Industry, including manufacturing, mining, and construction, employs 17 percent. Unemployment was 13.6 percent in 2003, and underemployment has also reduced the earning power of workers.

The leading labor federations are the National Council of Organized Workers (CONATO) and the Workers Confederation of the Republic of Panama (CTRP).

C

Agriculture

Agriculture employs one in four Panamanians, but much of that labor is absorbed in subsistence farming. Panama’s productivity is too low to export many agricultural goods. The only crops sold abroad are bananas, coffee, and sugar, which is protected by a U.S. quota system. Among the more important products are fruit, corn, rice, timber, some vegetables, and livestock. A large percentage of these goods are processed in towns and cities outside the transit zone. Panama imports cereal and fresh vegetables.

In 1994 agriculture grew at a rate of 3.9 percent, more slowly than industry and services. Principal problems facing the rural sector are concentration of land ownership in the hands of few farmers, high labor costs, and low levels of mechanization on all but the largest farms. Some 7 percent of the land is cultivated, with another 20 percent used for grazing.

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