Panama’s challenge: growing with the best human talent

First published in La Estrella de Panamá.

Panama has built one of the strongest growth stories in Latin America over the past three decades.With an open economy, a strong commitment to investment, and a unique logistics platform, the country has succeeded in expanding per capita income, strengthening its middle class, and reducing poverty. This performance laid important foundations for development and positioned Panama above the regional average.

Today, with those foundations firmly in place, the country faces a new opportunity: ensuring that its future growth is increasingly underpinned by the capabilities of its people. In an international context that demands rapid changes in the labor market, strengthening human capital becomes the main engine for sustaining progress and expanding social opportunities.It is at this point that development challenges become more complex.

In recent years, Panama has achieved significant structural transformations. The reallocation of employment toward higher value-added sectors-such as modern services, logistics, construction, and activities linked to the Canal, among others-has helped boost productivity and economic growth.

The World Bank's Human Capital Index (HCI+) highlights a figure that should spark a national conversation: a child born in Panama today will achieve only about 54 percent of their future productive potential, given current conditions in health, education, and labor market participation. This indicator contrasts with the country's economic performance and shows that the central challenge lies in strengthening the human capabilities needed to sustain growth.

Behind this 54 percent are realities that cannot be ignored. The quality of education remains a critical obstacle: years of schooling are not translating into effective learning, and the learning gap is among the widest in the region. Added to this are deficits in nutrition and early stimulation during the first five years of life, as well as a labor transition that is not preparing young people for an economy that increasingly requires technological and digital skills.

Panama has unique advantages: a dynamic private sector, a world-class logistics platform, and a strategic geographic location. Fully harnessing this potential requires translating these strengths into real opportunities, and that depends on human capital. No sector-health, sustainable tourism, agribusiness, manufacturing, or specialized services-will be able to scale if the workforce does not have the competencies demanded by today's market.

The country needs a sustained commitment to early childhood, public education, technical training, and health care. Investing in nutrition, early learning, and job-related skills is not an expense, but one of the most strategic economic decisions a country can make.At a pivotal moment for the education system, these priorities must be embraced as an investment that will define Panama's ability to sustain growth in the coming years.

Only with better-prepared people will it be possible to generate higher-quality jobs, attract more sophisticated investment, and steadily raise productivity. Human capital is the bridge between economic growth and better opportunities for the population.

Panama has already shown that it can grow dynamically and attract investment in strategic sectors. The next step is to deepen this model by placing human capital at the center of the development agenda. If the country succeeds in aligning private investment, effective public institutions, and an ambitious agenda in health, education, and skills development, it will be able to consolidate more inclusive growth, raise productivity, and generate more and better jobs for all Panamanians.