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“Development Drift”
Visions of a Demographic Redistribution of the Americas 
-The case of the Republic of Panama-
 2007 – Ing. Scott A. Muller 
Abstract
The socio-economic development of the Republic of Panama is being undermined bythe overwhelming middle class migration boom from the United States, Canada, andother Latin American Nations. With 117 high rises built in 2005, by 2006 there wereanother 146 high rises under construction and 105 more proposed, grave violationsof carrying capacities threaten the traditional stability of the “canal” economy. Acritical shift in development policy drivers is required.
Keywords:
Panama, Sustainable Development, Migration, Tourism, UrbanDevelopment.
 
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2.0 The Need for Development Engines
As left and right governments agree, sustainable development is financed byeconomic growth. So there is hemisphere agreement on the importance ofincreasing national savings through non-inflationary economic growth. And mostcountries have identified foreign investments as an excellent means to achieve thisobjective.But as Latin America is realizing, development is not simply a process of increasingnational income and property values. While growth is certainly beneficial, it isinsufficient to guarantee human development. Economic growth also requires theproper focus (objectives and monitoring), legal guidance, institutional infrastructure,human resources and interministerial collaboration; not to mention the foundationalimportance of education.In 2005, the national public debt stock of Panama climbed to US$10.23 billion, givinga debt to GDP ratio of 68%. [IADB, 2006] Income distribution continued to worsen,with a Gini coefficient (a standard way to measure income inequality) of .58, reflectinga severely uneven internal division of wealth. [World Bank, 2005] As for naturalassets, Panama continues to clear around 519 square kilometers of forests eachyear contributing to one of the most severe soil erosion and deterioration problems inLatin America. [World Bank, 2004]
 
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2.1 Sustainable Tourism Development
This was the logic behind Panama
ʼ
s mid 1990
ʼ
s commitment to the development ofsustainable tourism as a national priority, creating
(inter alia)
Law No.8 of 1994“Whereby tourist activities are promoted in the Republic of Panama.” This definedtourism as a “public service industry,” and went on to define tourism activities andinvestment incentives. The benefits for nationals and foreigners alike, include
(inter alia)
exonerations on import taxes (20years), property taxes (20years), fullexoneration from tax on capital, full exoneration from income tax on any interestearned by creditors and an annual rate of 10 percent for real property depreciation.Approved investments in declared “Tourist Development Zones of National Interest”receive additional benefits, including full exoneration from income tax (15 years).This law also established the Panamanian Institute of Tourism (IPAT) as theinstitution in charge of approving benefits.Indeed, the main positive economic impacts of tourism relate to foreign exchangeearnings, contributions to government revenues, and generation of employment andbusiness opportunities. All possible via the sustainable use of natural and culturalpatrimonies. These are vital steps towards eliminating poverty; an important goalhighlighted by President Torrijos in 2004 during his address to the 59th UN GeneralAssembly.
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