The Republic Of Panama Essay Example for Free

The Republic Of Panama Essay Thesis statement. Some economists believe that the Republic of Panama could become the next world business center but others are skeptical about it. Panama is a country in Central America that borders both the Caribbean and the Northern Pacific Ocean between Colombo and Costa Rica .The geographical coordinates of panama are 900 N and 8000 W. Panama has an interesting history as a former colony of Spain starting from the 16th century up to 1821 when it broke ranks with Spain to affiliate with Colombia, Ecuador, and Venezuela to form the Gran Colombia. This lasted up to 1830 but nevertheless, Panama remained under the control of Colombia. It was through the US backing that Panama was able to break free from Colombia in 1903 when in return, the Panama government signed a treaty with the US to usher in the construction of Panama Canal by the US army corps of engineers. The construction lasted from 1904 to 1914 and upon completion; the canal was to remain under the US control. It was until 1977 that an agreement was signed and subsequently ratified to complete the transfer of the Panama Canal from the US’ stewardship to Panama’s. This was after the deposing of the dictator Manuel Noriega in 1989 that the entire Panama Canal was transferred to Panama together with the areas supporting it, and the US military barracks – an exercise that was completely consummated at the turn of the 21st century. Panamanians have a project underway to double the canal’s capacity (Rigole, 2003).This project is already underway since it began in 2007 and is expected to come to conclusion at the end of 2015. The strengths of the Republic of Panama. Panama’s climate is that of tropical maritime and is hot, humid and cloudy with a protracted rainy season starting from May to January and January to May being the dry season. Based on this, Panama, a country that has 24.4% of its total land as arable land, has a steady food supply since it produces in large scale grain crops such as maize, rice, wheat, cassava, potato, sorghum, millet, and industrial crops such as sugarcane, coffee, tropical timber, peanut, oranges and sesame. Other foodstuffs that are indigenous to Panama include beef (and this is due to the large scale cattle rearing activities in the country), and fishing. The fishing industries thrive herein due to the preponderance of shrimps and lobsters. Although the agricultural output of Panama is not large enough to sustain large scale exports, yet it is reliable enough to sustain steady food supply to sustain the entire population of Panama. An economy that can sustain its population’s food demand stands a higher chance to develop economically to become a business center than its counterpart that lacks these prospects. The economy of Panama is fairing well with the major exports being melons, bananas, water melons, lobsters and shrimps, sugar, coffee and clothing. Of these total exports, the principle market is the US which is now procuring 44.5%. Its imports on other hand entail machinery and transport equipments, chemicals and chemical products, mineral and mineral products, electrical and electrical products and foodstuffs. Panama’s principle source of imports is the USA which makes up 27% of this. The currency used in Panama is balboa, with its mainstay of economy being the industrial sector which account for the 67.1% of the economy. The economic dominance of Panamanian industry is due to the fact that Panama is a country rich in mineral resources such as limestone, deposits of coal, molybdenum, copper, salt and clay. The industrial sector is mainly driven by the processing of paper and paper products, food and beverage processing, textiles and clothing, petrol refining, petroleum products, chemical refinery, light assembly and tourism. America, Spain, Netherlands Costa Rica, Japan, and Sweden form the major trading partners of Panama. The gross domestic product of Panama is 15.5 billion according to the 2005 estimates while the Purchasing Power Parity which is also known as the GNI was American dollar (USD) 7,310. The consumer price inflation remained at 2.8% according to the 2006 estimates. At the same time, unemployment was rated at 13.6% (Institute of Central Business, 32). Given the geographical size of Panama, it enjoys a favorable population of 3,287,500 according to 2006 estimate, and a steady population growth rate of 1.6 % according to 2006 estimate. The population occupying the urban area is rated 58%. However, this should always be checked against the availability of natural resources. A country that has a big population pitted against scarce national resources always experiences lapses in foreign investments since socio economic problems such as unemployment, overcrowding, explosion of diseases, and insecurity are always likely to ensue. Debts are always likely to set in as the government seeks to rectify the situation through foreign borrowing. Such states are always subject to inability to fund the public sector and government projects. Foreign investors shy away from such situations since the securities of their investment in such situations are always in danger of default. At such a time, the government will mostly seek to reverse the situation by selling its securities but this only worsens the situation since this will also lower the worth of these securities Panama’s population distribution is also fairly balanced. The age bracket between 1-14 years makes up 30% of the total population while the bracket representing 15-59 makes 61%. The bracket representing 60 and above accounts for 9%.The age distribution of Panama provides it with adequate labor force since the most productive age group falls under the bracket that ranks the highest. A country or any geo political entity that is about to be considered world business center must have a large working power. A country with a dense transport system, Panama has 116 airports of which 54 have paved runways, a comprehensive road network covering 11,643 km of which 4,028 are paved, 800 kilometers of waterways including the 82 km Panama Canal. In addition to the above, there are 5,764 merchant marines being served by 3 ports and terminals; the Balboa, Colon and Cristobal (Woods, 161). Panama enjoys a fairly balanced political leadership that has taken the form of liberal democracy. The government is well balanced with a clear system of separation of powers whereby the executive, the legislature and the judiciary are clearly separate and autonomous to exercise their duties without interference from any arm. In addition to this, under the aegis of the judiciary, the civil law system and the judicial review of the legislative acts recognize the importance of the International Court Justice. Panama plebiscites after every five years- a process which sees the president and his vice president either being installed into or exiting power depending on the verdict of the majority votes (Schreck, 189). International trade and investments thrive well in democracies and not in communist societies since the former entrenches the concept of free market or the liberalization of the market. Liberalization of the market allows free global flow of capital. Weaknesses of the Republic of Panama Reasons against the notion that Panama cannot arise to become the next world trade center are diverse. The most prominent one argues that as a country, it is still suffering the historical financial crisis of the 80s. In 1980, Panama had a high foreign debt that had accrued as a result of high import rate against the export rate. The explanation behind this was that its high consumption was on imports since there were no local industries. Since 1983 the country has been registering pluses, but the present situation is still tough since Panama has a standing debt which claims 81.2% of its GNP. Although this according to established economies is not very large, yet strictly speaking, Panama will not be able to extricate itself from debt since its debt- to- export ratio is high. The only recourse is to have the 1989 Braddy Initiative to offer Panama an extension implemented, but even this will take 39 years for Panama to clear the debt (World Bank, 217). Other social and health underpinnings can still stand in the way towards the establishment of Panama as world business center. Panamanian medical services are still below the World Health Organization’s standards since out of 10,000 patients, there are 17 doctors (2004 report).On another front, out of 1,000 people, only 13% are landline telephone subscribers. Similarly, out of 100 people interviewed, 16% were internet users, and out of 100 people interviewed, 4.6% were personal computer users. No form of foreign or domestic investment can effectively take place without proper social amenities, communication and communication services. BIBLIOGRAPHY. Institute of Central Business Studies. Mesoamerica. US: University of Virginia, 1982. Rigole, Mark and Langlois, Claude- Victor. Panama. Panama: Ulysses Travel Guides, 2003. Sarah, Kristina. Frommer’s Panama. Central America: John Willeys and Sons, 2007. Woods, Sarah. Panama. Panama: Bradt Travel Guides, 2005. World Bank. Poverty Assessment in Panama: Strategies for Poverty. Panama: WB Publication, 2000.