Editing Economy of Panama (section)

==Economic history==
{{Main|Economic history of Panama}}
Since the early 16th century, Panama's geographic location gave the country a comparative advantage. From the earliest Spanish times, ports on each coast and a trail between them handled much of Spain's colonial trade to the benefit of the inhabitants of the port cities.<ref name="csecon" />

Panama has always been dependent on world commerce for its prosperity,<ref name="csecon">{{Country study |country=Panama |abbr=pa|editor=Sandra W. Meditz & Dennis M. Hanratty |date=December 1987 |section=Growth and Structure of the Economy |author=Scott D. Tollefson }}</ref> and it is affected by the cyclical nature of international trade. The economy stagnated in the 18th century as colonial exchange via the isthmus declined. In the mid-19th century, Panama's economy boomed as a result of increased cargo and passengers associated with the [[California Gold Rush]]. A railroad across the isthmus, completed in 1855, extended economic growth for about fifteen years until completion of the first transcontinental railroad in the United States led to a decline in trans-isthmian traffic.

France's efforts to construct a canal across the isthmus in the 1880s and efforts by the United States in the early 20th century stimulated the Panamanian economy.<ref name="csecon" /> The United States completed the canal in 1914.<ref>{{cite web |title=Building the Panama Canal, 1903–2030 |url=https://history.state.gov/milestones/1899-1913/panama-canal |website=history@state.gov |publisher=Office of the Historian, Bureau of Public Affairs}}</ref> However, the world depression of the 1930s reduced international trade and canal traffic, causing widespread unemployment in the terminal cities and generating a flow of workers to subsistence farming. During [[World War II]], canal traffic did not increase, but the economy boomed as the convoy system and the presence of United States forces, sent to defend the canal, increased foreign spending in the canal cities. The end of the war was followed by an economic depression and another movement of unemployed people into agriculture.<ref name="csecon" />

The postwar depression gave way to rapid economic expansion between 1950 and 1970. All sectors contributed to the growth. Agricultural output rose, and commerce evolved into a relatively sophisticated wholesale and retail system. Banking, tourism, and the export of services to the Canal Zone grew rapidly. Most importantly, an increase in world trade provided a major stimulus to use of the canal and to the economy.<ref name="csecon" />

In the 1970s and 1980s, Panama's growth fluctuated with the vagaries of the world economy. After 1973, economic expansion slowed considerably as a result of a number of international and domestic factors. In the early 1980s, the economy rebounded. The acute recession in Latin America after 1982, however, wreaked havoc on Panama's economy.<ref name="csecon" /> This period coincided with the rise to power of General [[Manuel Noriega]] during which Panama became increasingly indebted.<ref name="IMFhistory">{{cite book | url=https://www.imf.org/external/pubs/ft/history/2001/ch16.pdf | pages=799–803 | title=Silent Revolution - The International Monetary Fund 1979–1989 | first=James M. | last= Boughton | date= 1 October 2001 | publisher=IMF}}</ref>

The United States started to pursue Noriega, culminating in sanctions that froze Panama's assets in the United States, and because Panama used the US dollar it was forced to default on its IMF debt in 1987.<ref name="IMFhistory" /> Economic turmoil in the country included a general strike and the banking system closing down for two months.<ref name="IMFhistory" /> The [[US invasion of Panama|United States invaded Panama]] in 1989 and forced the surrender of Noriega.<ref name="IMFhistory" /> Panama regained access to IMF funds in 1992.<ref>Boughton (2001), p763</ref>

After taking office in 1994, President [[Ernesto Perez Balladares]] instituted an economic liberalization program designed to liberalize the trade regime, attract foreign investment, privatize state-owned enterprises, institute fiscal discipline. After two years of near-stagnation, there was strong GDP growth in 1997–1998. The most important sectors which drove growth were the Panama Canal and the shipping and port activities of the [[Colón Free Trade Zone]].

During the Moscoso administration beginning in 1999, Moscoso attempted to strengthen social programs. Moscoso's administration successfully handled the Panama Canal transfer and was effective in the administration of the Canal.

Under the [[Martín Torrijos]] administration beginning in 2004, Panama continued strong economic growth and initiated the 2007–2016 [[Panama Canal expansion project]].<ref name=NYT062016>{{cite news | url=https://www.nytimes.com/aponline/2016/06/26/world/americas/ap-lt-panama-canal-expansion.html?ref=world&_r=0 | title=Panama Canal Opens $5B Locks, Bullish Despite Shipping Woes | author=The Associated Press | author-link=The Associated Press | work=[[The New York Times]] | date=2016-06-26 | access-date=2016-06-26}}</ref> The canal expansion doubled the waterway capacity.<ref name=NYT062016/> Strong economic performance had reduced the national poverty level to 29% in 2008.

In 2008, Panama had the second most unequal income distribution in Latin America. The Torrijos government implemented tax reforms, as well as social security reforms, and backed regional trade agreements and development of tourism. Not a [[CAFTA]] signatory, Panama in December 2006 independently negotiated a free trade agreement with the US.

In May 2009, [[Ricardo Martinelli]] was elected president, and promised to promote free trade, establish a [[Panama Metro|metro system]],<ref>{{cite web |url=http://www.thepanamanews.com/pn/v_15/issue_19/economy_01a.html |title=Route for Panama City's Metro rail system unveiled |access-date=2010-07-25 |url-status=dead |archive-url=https://web.archive.org/web/20100119165135/http://www.thepanamanews.com/pn/v_15/issue_19/economy_01a.html |archive-date=2010-01-19 }}</ref> and complete the expansion plan for the Panama Canal.

Panama's economic role has been compared to that of [[Singapore]]: commentators have described the country as "the Singapore of central America",<ref>Montero, C. G. (2020), [https://books.google.com/books?id=EX_iDwAAQBAJ From Temporary Migrants to Permanent Attractions: Tourism, Cultural Heritage, and Afro-Antillean Identities in Panama], p. 4, quoting from ''[[The Economist]]'', 14 July 2011</ref> although Panama's involvement in the [[Odebrecht scandal]] has dealt a blow to official attempts to market Panama using this expression.<ref>Simpson, P., [https://www.cips.org/supply-management/analysis/2019/april/brazils-corruption-crisis/ Behind Brazil’s corruption crisis], ''Supply Management'', published 5 April 2019, accessed 22 April 2022</ref>