CHAPTER I

POVERTY, INEQUALITY AND DEVELOPMENT

This chapter presents data regarding on the poverty and inequality index of the Panama.
The data gathered tend to help indicate the situation of the country in the said sectors, also this
chapter provide information subject to Panama’s high poverty group and policies implemented
that are either efficient or not on sustaining the need on the country’s problem.

A. POVERTY AND GROWTH

Over the past decade, Panama has been one of the fastest growing economies in the world,
with an average annual growth rate of 5.6 percent over the last five years. Given the momentum
generated by the Cobre Panama mine, growth in Panama this year is projected with a substantial
acceleration with respect to last year (3.7 in 2018 versus 6 percent in 2019). The country ranks as
the second fastest growing economy in Latin America and the Caribbean (surpassed only by St.
Kitts and Nevis), in an environment where public investments have been high and private
investment has remained strong. However, in an increasingly competitive global context, this
model could be at risk, since the economy has been based on traffic through the Canal and
investments in infrastructure. Growth could also be affected from protracted international trade
disputes or by a global economic turndown. Panama has made significant progress in reducing
poverty in recent years. Economic growth and public transfers have helped reduce poverty
substantially. Poverty continues to fall, irrespective of the poverty line (national or international)
used. Between 2015 and 2017, poverty at US$5.5 fell from 15.4 to an estimated 14.1 percent while
extreme poverty at US$3.2 declined marginally from 6.7 to an estimated 6.6 percent. Despite the
gains on poverty reduction, sharp regional disparities remain. Poverty prevails in rural areas,
mainly inhabited by indigenous people. Access to basic services is not universal and remains
linked to factors such as geographic location, education levels, ethnicity and income levels of
households. For example, there are 11 years less in life expectancy for Indigenous women and men
living in their territories (67.75) versus the overall population (79); and the maternal mortality rate
is five times higher in Indigenous women who live in their territories versus the national average
for all women (462 vs. 80 per 100,000 births).
 Figure 1.

Panama: Commitments by Fiscal Year (in millions of dollars)

Sources: https://www.worldbank.org/en/country/panama/overview#1

Increased Income and Productive Capacity of Small-Scale Producers. Financing and

technical assistance for access to markets was provided to 152 productive alliances of small-scale
producers in high-poverty areas, including indigenous areas. Producers benefitted from increased
agricultural productivity and a 23 percent increase in sales. Around 4,600 producers (30 percent
women) received investment and technical support through 130 sub-projects covering a range of
agro activities.

Figure 2.

Share of Population living on less than 3.20 US dollars per day in Panama from 2005 to
2017

Sources: https://www.worldbank.org/en/country/panama/overview#1

The poverty rate in Panama has been decreasing recently. In 2017, approximately 6.3
percent of the Panamanian population were living on less than 3.20 U.S. dollars per day, down
from 18.7 percent in 2005. Still, social inequality remains a challenge in Panama as well as in all
Latin America. Share of population living on less than 3.20 U.S. dollars per day in Panama from
2005 to 2017.
B. INEQUALITY AND GROWTH

Figure 3.

GINI Index for Panama 1992 – 2016

Sources: https://fred.stlouisfed.org/series/SIPOVGINIPAN

The economic growth in Latin America, with a rate of 6% for the year 2015, while the rest
of the region will shrink 0.3%, according to the latest update of the projections of the International
Monetary Fund (IMF).

Macroeconomic indicators that have been registered in Panama so far this year, show a more
moderate growth, but stable and without inflation.

In this event, the Gross Domestic Product (GDP) of Panama grew 5.9% in the first half of 2015,
a percentage point more than the same period in 2014, and that key factors of this economic
dynamism have been the construction, transportation, financial intermediation and energy, among
others. The official stressed that the strong economic growth that Panama has experienced in
recent years, improvements in the quality of employment and conditional cash transfers that the
Government is distributing in the lower-income population, through social programs 120 a los 65,
Guardian Angel, Network of Opportunities and Universal Scholarship, have enabled us to reduce
the levels of poverty and inequality in the country.

Poverty in Panama decreased from 25% in 2014 to 22% in 2015, and the Gini coefficient, which
is used to measure inequality, under 0.48 in March of this year. In 2014, for the first time after
23 years of measurement, the Gini coefficient is ranked below 0.50, registering 0.49. And at the
end of March 2015, the downward trend was maintained, with 0.48. It is worth noting that in the
scale of the Gini coefficient, 1 represents "perfect inequality" and 0 represents "perfect equality".
The Panamanian economy generated until the month of March of this year, 39,985 new jobs, whose
median reached salaries equivalent to the 580 dollars per month, more than in the same period of
time of the previous year.

C. ECONOMIC CHARACTERISTICS OF HIGH-POVERTY GROUP

Rural Poverty

Panama has made significant progress in reducing poverty in recent years. Economic
growth and public transfers have helped reduce poverty substantially. Poverty continues to fall,
irrespectively of the poverty line (national or international) used.

Despite the gains on poverty reduction, sharp regional disparities remain. Poverty prevails
in rural areas, mainly inhabited by indigenous people. Access to basic services is not universal and
remains linked to factors such as geographic location, education levels, ethnicity and income levels
of households.

Panama’s leading health challenge concerns the nation’s pronounced disparities between
the health status of the urban and rural populations (particularly the indigenous population) and
inequalities in income levels. Such inequalities lead to disparities in the coverage of services and
in access to comprehensive, high-quality health services. These disparities include the numbers
and distribution of human resources; the presence of campaigns for promotion, prevention, and
care services in the most marginalized areas; health infrastructure; and the availability of drugs
and other medical supplies, and health technology.

Sources: https://www.worldbank.org/en/country/panama/overview

https://www.paho.org/salud-en-las-americas-2017/?p=4289

Women and Poverty

In Panama, women have a level of education; however, they are still the minority in the
job market as the difference in participation with relation to men is higher than 30%. Also, there
are higher rates of unemployment among women (6% vs. 3.8% among men) and they represent
the minority among those contributing to the Social Security System (three to one in favour of
men, INEC 2012). Further, more women who work receive only a fraction of male salary, and it
has been demonstrated that this gap increases when women have a better education.

In 2015, the United Nations Development Program (UNDP) reported that access to basic
rights such as health, education and employment was becoming increasingly difficult for women
in the country of Panama.

Sources: https://borgenproject.org/tag/womens-empowerment-in-panama/

Ethnic Minorities and Indigenous Populations

The majority of Panama's indigenous people live in the under-served peripheral rural zones
of the country.

The three main indigenous groups are Ngöbe-Buglé (sometimes called Guaymís), Kuna and
Embera-Wounan (Darienitas or Chocós). Of these Ngöbe-Buglé account for almost two-thirds of
the 200,000 indigenous population, with Kuna being the second largest group.
 Half of all indigenous children suffer from malnutrition, while only 10 per cent of non-
indigenous children are undernourished, according to the PAHO. Infant mortality among Panama's
indigenous population is approximately 40 to 50 children for every 1,000 live births. In stark
contrast the national average is 19, which is considered a very positive ratio for Latin American
countries. The huge difference is another expression both of income concentration and the public
policy towards the country's indigenous population.

Housing problems and lack of basic services such as potable water and sanitation promote
diseases including diarrhoea, typhus and other health problems. These affect mostly indigenous
children, and are directly connected to the social, economic and political marginalization of the
respective populations.

In addition, access to formal health services and institutions by the majority of the rural
indigenous population in Panama is limited. This is partly due to the dispersed nature of the
population and the distance between their communities and the nearest medical services. In some
areas, indigenous people need to walk between three and five days to get to a health centre and
there is no guarantee there will be personnel or medicines on hand. Language is also a significant
factor. Many poor indigenous families are headed by monolingual non-Spanish-speaking parents
who are also non-literate.

Sources: https://www.refworld.org/docid/526fb73614.html
D. POLICIES IMPLEMENTED
Poverty and Growth:

 Improving efficiency and enhancing development

 Upgrading nature of development
 Fortify human capital
 Improving infrastructure
 Improving ecological manageability, including the executives

Inequality and Growth –The administration stands to profit by concentrating on making

increasingly formal employments improving aptitudes of the workforce and encouraging the
advancement all things considered. This requires advancing private part inclusion through sound
administrative and in.

Fiscal Revenue – A progressively powerful and efficient charge framework would improve salary
redistribution and give, steady, long haul assets to back social and profitable approaches. Panama
ought to receive and actualize new standards for open private organizations with sound
administrative and institutional structures (July 6, 2018)

 Expanded income and Productive Capacity of small-scale producers: financing and

specialized help for access to business sectors was given to 152 gainful partnerships of
little scale makers in high-neediness regions, including indigenous religions. Makers
profited by expanded horticultural profitability and a 23 percent expansion in deals. Around
4,600 makers (30 percent ladies) got speculation and specialized help through 130 sub-
ventures covering a scope argo exercises.
 Improved Targeting of Social Transfer Programs and Increased Social Security Coverage:
By improving the focusing of the Red de Oportunidades program (deciphered as “System
of Opportunities”), the Government directed assets to the poor in remote geographic
territories, to a great extent avoided before, expanding inclusion in the indigenous
comarcas (from half in 2008, to 70% in 2014) which spoke 46 percent of recipient family
units.
 Improved Household Access to Quality Basic Health and Nutrition Services: through the
arrangement of fundamental bundle of wellbeing administrations under the Coverage
 Extension Strategy, versatile wellbeing units gave customary access to an essential bundle
of wellbeing administrations to 149,028 recipients from 47 poor rustic networks by 2014
with 86 percent of pregnant ladies accepting at any rate three pre-birth controls (contrasted
with 20 percent in 2010), and 96 percent of youngsters under age getting full
immunizations (contrasted with 26 percent in 2010)
 Upgraded Capacity for Disaster Risk Management and Adaptation to Climate Change: The
Disaster Risk Management Development Policy Loan with a Catastrophe Risk Deferred
Drawdown Option has been a speedy and adaptable instrument in tending to a national dry
spell crisis activated by El Niño wonder (2015-2016), including backing to the Water
Security Plan. A large portion of the World Bank catastrophe chance administration
backing has been furnished through specialized help exercise with key outcomes including
the advancement of the main Disaster Risk Finance and Insurance Framework in Latin
America, and a reinforced crisis readiness and reaction limit at the subnational level.

Economic characteristics of high-poverty groups: Rural Poverty, Women and Poverty, ethnic
minorities and indigenous populations – In the course of the most recent years, indigenous peoples’
privileges have been progressively perceived through the appropriation of worldwide instruments
and systems, for example the United Nations declaration on the Rights of Indigenous Peoples
(UNDRIP) IN 2007, the American Declaration of Rights of Indigenous Peoples in 2016, 23
endorsements of the Indigenous Tribal People Convention from 1991, the Foundation of the
United Permanent Forum on Indigenous Issues (UNPFII), The Expert Mechanism on the Rights
of Indigenous Peoples (EMRIP), and the UN Special Rapporteur on the Rights of Indigenous
People (UNSR)

References:
 https://www.worldbank.org/en/topic/poverty
 https://www.worldbank.org/en/results/2017/08/24/strengthening-shared-prosperity-in-
panama-fostering-inclusive-growth-and-better-opportunities-for-the-marginalized-and-
vulnerable
 https://www.worldbank.org/en/topic/indigenouspeoples
 https://growthlab.cid.harvard.edu/files/growthlab/files/panama_policy_wp_334.pdf
 https://www.dropbox.com/s/div1hjxge8k0wsh/High-Poverty%20Groups.docx?dl=0
 https://fred.stlouisfed.org/series/SIPOVGINIPAN
 https://www.worldbank.org/en/country/panama/overview
 https://www.paho.org/salud-en-las-americas-2017/?p=4289
 https://borgenproject.org/tag/womens-empowerment-in-panama/
 https://www.refworld.org/docid/526fb73614.html