What is Panama's economic system? More free market, capitalistic, socialist, etc.?

A broad question.  In brief, the economy in Panama is pretty much a free market, with certain businesses and professions reserved for Panamanian nationals.  The reserved businesses include stores that sell retail to the public, such as supermarkets.  Taxis require a permit that is only issued to Panamanians, this also applies to certain classes of driver's licenses.  Professions such as medicine are reserved for Panamanians.

 

The economy is...

A broad question.  In brief, the economy in Panama is pretty much a free market, with certain businesses and professions reserved for Panamanian nationals.  The reserved businesses include stores that sell retail to the public, such as supermarkets.  Taxis require a permit that is only issued to Panamanians, this also applies to certain classes of driver's licenses.  Professions such as medicine are reserved for Panamanians.

 

The economy is booming, but as is frequently the case in Latin American countries,  "the rich get richer...the poor seem to be getting poorer" when local inflation is taken into consideration.  The minimum wage is increased from time to time and wages are rising, but the majority of the population complains that the prices go up faster than their wages.  Business owners frequently claim that productivity is low when using local labor and thus higher wages are difficult to justify.  There are a large number of unfilled professional and semi-professional jobs, but few qualified people from the local population to take these positions.   As a consequence the government has put a range of visa options in place to make it easier for local employers to bring foreign professionals to work in Panama.

 

The "middle class" is growing, but the large majority of the working population earns less than $600 a month.  If you earn $2000 a month you are probably in the top 10% of the working population in Panama.

 

The Ministry of Labor appears to exist for the benefit of the working man, so it is important if you have workers that you have a well drafted labor contract in place.  This also applies to domestic help.
 

Panama officially uses the balbóa as its currency. But, because the balbóa is pegged to the U.S. dollar in value, you will only see U.S. paper money, and often have U.S. coins in change. The exception is the "Martinelli", nicknamed for the current president, a one-balbóa (i.e., one-dollar) coin.

Panama is highly capitalistic, very much on the U.S. model. The country is run by a small junta of plutocrats, who manipulate the government to their own economic...

Panama officially uses the balbóa as its currency. But, because the balbóa is pegged to the U.S. dollar in value, you will only see U.S. paper money, and often have U.S. coins in change. The exception is the "Martinelli", nicknamed for the current president, a one-balbóa (i.e., one-dollar) coin.

Panama is highly capitalistic, very much on the U.S. model. The country is run by a small junta of plutocrats, who manipulate the government to their own economic benefit, while keeping up the pretense of doing good for the common person. In short, it is pretty much the same as the United States, Canada, Western Europe, and so on in this regard.

Economic Phenomenon in Panamá
 

Since the separation of Panamá from Colombia in 1903, Panamá has experienced all kinds of economic changes.
 
Beginning in 1968 and fortunately ending in 1989, the sad military years put the country backwards in every aspect.  Since then, however, year after year, with great effort and enormous discipline, Panamanians have put their efforts into a joint venture between the government and private...

Economic Phenomenon in Panamá
 

Since the separation of Panamá from Colombia in 1903, Panamá has experienced all kinds of economic changes.
 
Beginning in 1968 and fortunately ending in 1989, the sad military years put the country backwards in every aspect.  Since then, however, year after year, with great effort and enormous discipline, Panamanians have put their efforts into a joint venture between the government and private enterprise, with the result that ​Panamá has made notable progress and is today one of the regional leaders with a booming and enviable economy, expecting to grow at a rate of a minimum of 7% in future years.
 
Panamá is a democratic country, with not yet 4 millions inhabitants.  The main sources of income for Panamá​ are the canal, services, tourism and some agriculture export products.
 
Panamá is currently undergoing a political campaign, with elections scheduled for May 4, 2014.  There are 3 candidates supported by different parties, and 2 independent candidates.  All polls indicate Mr. Arias as a favorite.
 
The Panamanian constitution does not allow a president to seek re-election until after a 10 year period has passed.
 
The Panamanian government is divided into 3 branches:  the Executive, the Legislative and the Judicial.  Every one is independent from the others.
 
At the present time, Panamá has several mega-projects undergoing construction.  The main one is the expansion of the canal, at $5.3 billion, which will double the present capacity.  Another mega-project is the Metro, valued in $1.2 billion, which is expected to be fully operational March 2014, bringing Panamanians total first class public transportation.
 
The current administration has put in place innumerable social programs, from education to seniors, including programs that have resulted in a considerable reduction of poverty, with a focus of bringing Panamanian citizens a better quality of life.  These programs have gained hundreds of international awards from worldwide organizations for their leadership.  The First Lady just got an award from Rhode Island Congress, for her efforts fighting autism problems.
 
The unemployment  rate in Panamá is one of the lowest in the continent, and strong tax reform has brought millions of revenue to the country.  International investments are booming, and to this point, Panamá projects prosperity and a bright future.
 
Panamá significantly influences worldwide commerce due the impressive Panamá Canal and the Free Zone, one of the most important in the hemisphere.
 
The official language of Panamá is Spanish.  The normal currency is the US dollar, even though the official currency is the Balboa.  However, the Balboa is not in use, other than for coins.
 
Panamá is considered the second safest country in Central America, after Costa Rica.
 
Some of the main products for exportation from Panamá are pineapples, mangos, shrimps, corvina (fish), bananas, among others.  But due to important trade with other countries, more and more products are chosen for export on a daily basis, complying with the highest standards for exportation to Europe, North America and Asia.
 
Panamá has become hub of several lines, like ports, airports, logistics, maritime, flagship registry and is tremendously attractive for visitors as a number one destination in tourism.

Panama’s economic system is more of a free-market system, like the US. It’s basically identical to a US market—the opportunities exist here, you can come down here, and open up your business. You can offer service; you can freely compete with any other existing Panamanian business. It’s just a question of who’s offering a better service, product, or quality. If you’re ambitious and hungry and you’re a good businessperson, you’ll have success...

Panama’s economic system is more of a free-market system, like the US. It’s basically identical to a US market—the opportunities exist here, you can come down here, and open up your business. You can offer service; you can freely compete with any other existing Panamanian business. It’s just a question of who’s offering a better service, product, or quality. If you’re ambitious and hungry and you’re a good businessperson, you’ll have success in Panama.

 

Compared to Canada, I would say the government in Panama is less involved in business here. Panama has great tax incentives for business, which is the reason why we have so many large multinational companies that relocate to Panama; specifically for a lot of the tax rates and benefits. You can start a business in Panama but if you’re providing service to people outside of Panama, the income that you generate is tax free in Panama. You have a lot of the multinational companies located down here that have been able to operate their international businesses on a tax-free basis.

 

(Young entrepreneurs at Startup Weekend Panama, pictured.)

Panama has a capitalist / free market economy. You can do most any business you want in Panama that is legal and you would have no problem in starting the business and getting the paperwork done. With a local lawyer it will take you a couple of weeks to get your licenses. And any legal business is acceptable. Anything in financing, building, buying and selling, retailing, and putting up a franchise; all is doable. Everything is doable and everybody will help you to do it. You just have to...

Panama has a capitalist / free market economy. You can do most any business you want in Panama that is legal and you would have no problem in starting the business and getting the paperwork done. With a local lawyer it will take you a couple of weeks to get your licenses. And any legal business is acceptable. Anything in financing, building, buying and selling, retailing, and putting up a franchise; all is doable. Everything is doable and everybody will help you to do it. You just have to get people to do the paperwork and you’re in business.
 
Panama is a small country.  When I was young, my father compared the business climate here in Panama to a wine bottle cork and he told me, “Whatever you do, even if you press this cork down to the bottom of the ocean, it will always pop up.”  Panama is very, very benevolent.  It will let you make money and it will let you live a good life.  Panama is a good country.  That’s why my father compared it to a wine bottle cork.  If you work hard and keep your expenses low, you can make money in Panama.
 
Over the last five years or so, the population of Panama has doubled from people new to Panama, many of whom are business people.   Sometimes they come from countries with as many as 40 million people or more, while Panama has only 2.5 million people.  Many of these newcomers come with bigger ideas and see things bigger than we as Panamanians do.
 
Many of the newcomers come with their larger scope ideas, yet we Panamanians are “owners of the backyard” and we know that the very large projects may take a little more time than the newcomers are accustomed to. As an example, a franchise of McDonald’s will work in Panama, but it would be difficult to begin with opening fifty at one time.  The reason is that the country of Panama is too small to support expansion that rapidly.
 
The business people in Panama can be sophisticated and worldly.  Many are graduates from US schools.  For example, I graduated from Georgia Tech and Panama’s president is from Georgia Tech. We have graduates from other top schools.  We have Panamanian graduates from the Wharton School of Business, such as my son.  In Panama, there is a large quantity of very highly educated people. However, there are no major industrial companies that Panamanians run. Instead, they run companies such as banks. We have 110 banks, partially because Panama is well situated at being the center of the world. Our business people don’t run companies like General Motors because there’s no such thing as an industrial company that size here in Panama.
 
Part of the motto of Panama is, “We are the crossroads of the world” because north to south and east to west, you have to go through the Canal. We have seventy local flights to anywhere in the world and we have approximately ten new airlines coming in. We are going to have a flight directly to Dubai in another month, which will be around 16 hours long.  You can fly from Panama City to Paris directly. You fly directly to London. You fly to Spain on any of several Spanish airlines. These are just some examples of the destinations you can reach from Panama City through approximately seventy flights a day to virtually anywhere in the world.

 

(Upcoming Sea Point apartments on the Pacific Coast of Punta Paitilla, Panama City, Panama, pictured.)