Panama and Central American economic integration

This article looks at the benefits that Panama could derive from its possible integration with the countries of the Central American Common Market (CACM). First of all, Panama’s production structure is analysed in terms of the phenomenon known as the “Dutch disease”: this reveals the de-industrializing effect that the booms in the services sector have had on the economy. An examination is then made of the advantages that Panama could derive from gradual integration with the CACM countries in terms of intra-industry exports, promotion of investments, competition and modernization of production, and it is asserted that these benefits do not exist, on a reciprocal basis, in a scheme based on unilateral trade openness.