Panama with 2nd highest productivity in Latin America

Panama is the second country with the highest productivity in the Latin American region, according to a recent report from the Development Bank of Latin America (CAF).

According to the document, the total productivity of Panama, relative to the United States, is the second-highest in the region with 58%, only behind Argentina, which has 61%.

In this sense, the Bank emphasizes that the sustained growth of productivity is an "essential requirement to return to a path of greater prosperity and well-being" in the region.

Therefore, he deduces that Latin America has the fundamental challenge of significantly reducing the huge income gap per inhabitant concerning the more developed countries to advance productivity levels.

The CAF estimated in 2014 that Latin America, for example, had a level of per capita income of around 26% for the United States and argued that the progress report has been insufficient in the last 50 years, when the Gross Domestic Product per capita, on average, it was 19%.

In this context, according to Manuel Toledo, senior economist at CAF's Macroeconomic Studies Department, Panama also showed little significant progress, going from a per capita income of 16% to 38% in 2014, relative to the United States.

On this result Mauricio Salazar, director in charge of the CAF Office in Panama, acknowledged that this country has managed to rebound in several indexes, however, he clarified that there are significant challenges in terms of productivity in the region.

"It is necessary to strengthen public policies with a transversal focus for the best performance of the productive sectors."

The Economics and Development Report (RED) 2018 "Institutions for Productivity: Towards a Better Business Environment", analyzes in a general way the level of productivity of Latin American countries and its relationship with per capita income, taking as a point of reference to the United States, to determine if it is high, low or adequate.

Among the information collected, it was recorded that the product per worker of Panama relative to the United States is 39%, being the third-highest among the countries of the region according to 2014 data.

The study also showed that Panama had a non-agricultural informal employment percentage of 42% in 2016 that is considered high, but below the average of 15 countries in Latin America that has 54%, for several years, which is relevant because Informality is linked to low levels of productivity.

Regarding the promotion of competition, in the Isthmus 34% of the establishments of the service sector consider that permits and licenses represent a significant obstacle to operating in the market.

In contrast, the result in the manufacturing sector is only 23%. In the regional context, the average for Latin America is 45% and 42%, respectively.

In antitrust policy effectiveness, Panama scored 3.9%, higher than the average for Latin America, which is 3.4%, but lower than the United States of 5.6%.