Economic Growth

Panama’s secret to economic growth? Immigrants

A general view of a high income neighborhood of Panama City, April 6, 2016.  REUTERS/Carlos Jasso/File Photo - RTX2ATSC

Panama is one of Latin America’s most competitive economies Image: REUTERS/Carlos Jasso

Stéphanie Thomson
Writer, Forum Agenda
Share:
Our Impact
What's the World Economic Forum doing to accelerate action on Economic Growth?
The Big Picture
Explore and monitor how Latin America is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

Latin America

This article is part of: World Economic Forum on Latin America

Latin America is in the economic doldrums. After almost a decade of progress, GDP has been negative for the past two years, making it the region’s worst contraction since the 1980s.

But there’s one exception: Panama. Between 2001 and 2013, the country’s economy grew at twice the rate of the regional average. In fact, it has been one of the fastest growing economies in the world.

So what’s its secret sauce? Probably not what you’d expect, given the backlash across the rest of the world: immigration.

Immigrants: an economic boon

That’s according to Harvard Professor Ricardo Hausmann, speaking in a session at the World Economic Forum on Latin America.

“What Panama shows the rest of Latin America is that to grow significantly, you need to import talent,” Hausmann explained. That’s how countries like the US have managed to gain a competitive edge.

 Panama is one of Latin America’s most competitive economies
Panama is one of Latin America’s most competitive economies

“In the US, 14% of the population is foreign-born and 30% of entrepreneurs are foreigners. Most Harvard professors are foreigners. In Canada, Australia and New Zealand, 25% of the population is foreign born. In Singapore, 40% of the population is made up of foreigners.”

It was a point he hammered home in a later session: “It is very hard to create world-class institutions and to be able to innovate by relying exclusively on locally born talent. If it was based on locally born talent, Silicon Valley would not exist.”

In fact, look back in history and you’ll see that many of Latin America’s success stories are down to immigration. “The companies that exist in Latin America today are those that were founded by the migrants from three generations ago,” Hausmann added.

And yet today, immigration in the region is very low. “In Mexico, 0.4% of the population is foreign born. In Colombia, there is one foreign-born person for every 400 people. And when the country was given the opportunity to absorb all the talented people wanting to get out of Venezuela, it put every obstacle it could in their way.”

But Panama, along with Costa Rica, is a regional outlier. “Panama’s economic boom has led to a significant amount of immigration, even though the law almost forbids it so they’ve been looking for ways around it. What the country has shown is that to grow significantly, you need to import talent.”

Loading...

So while most policy-makers and experts focus on the importance of education for boosting growth in the region, Hausmann thinks the solution lies elsewhere. “If we want to build our countries, we have to be able to absorb the talent of the world. But our legislation and attitudes to immigration are preventing this.”

Have you read?
Loading...

This article has been updated.

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Share:
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

Why we must act now to revive women’s leadership prospects in an AI-driven workplace

Sue Duke

June 12, 2024

About Us

Events

Media

Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum