| Panama's
economy rely primarily on the service sector, it
accounts for 80% of Panama's GDP. These services
include operating the Panama Canal, banking, the
Colon Free Zone, insurance, container ports,
flagship registry, and tourism. Economic growth is
expected to grow due to the Panama Canal expansion
project which began in 2007. The Panama Canal is
scheduled to be completed by 2014 at a cost of $5.3
billion, that is approximately 25% of Panama's GDP.
The expansion project will double the Canal's
capacity and revenues, enabling it to accommodate
ships that are now too large to transverse the
transoceanic crossway. The Panama Canal project will
help to reduce the high unemployment rate.
Panama's Strong
economic performance has reduced the national
poverty level to 29% in 200. Panama has the
second most unequal income distribution in Latin
America. The government has implemented tax reforms,
as well as social security reforms, and backs
regional trade agreements and development of
tourism. Not a CAFTA signatory, Panama in December
2006 independently negotiated a free trade agreement
with the US, which, when implemented, will help
promote the country's economic growth.
Panama was explored
and settled by the Spanish in the 16th century.
Panama broke its ties with Spain in 1821 and joined
a union with Colombia, Ecuador, and Venezuela. They
named the new pact the Republic of Gran Colombia. It
latter dissolved in 1830 and Panama remained part of
Colombia. With the help of US backing, Panama
seceded from Colombia in 1903 and promptly signed a
treaty with the United States allowing for the
construction of the Panama Canal and the US held
sovereignty over a strip of land and called it the
Panama Canal Zone. The Panama Canal was built by the
US Army Corps of Engineers between 1904 and 1914. In
1977 the United states signed a document
transferring the ownership of the Canal to Panama by
the end of the century. Certain portions of the Zone
and increasing responsibility over the Canal were
turned over in the subsequent decades. The entire
Panama Canal and remaining US military bases were
transferred to Panama by the end of 1999. In October
2006, Panamanians approved an ambitious plan to
expand the Canal. In 2007 the expansion started and
could double the Canal's capacity, is expected to be
completed in 2014-15. |
