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Economic Complexity in Panama: Assessing Opportunities for Productive Diversification

Author

Listed:
  • Hausmann, Ricardo

    (Harvard University)

  • Morales, Jose Ramon

    (Harvard University)

  • Santos, Miguel Angel

    (Harvard University)

Abstract

The economy of Panama has thrived for more than a decade, based on a modern service sector on the activities surrounding the Canal. Panama has inserted its economy into global value chains, providing competitive services in logistics, ship handling, financial intermediation, insurance, communication and trade. The expansion of the modern service sector required significant non-residential construction, including office buildings, commercial outlets, warehouses, and even shopping malls. Large public infrastructure projects such as the expansion of the Canal, the Metro, and Tocumen airport, have provided an additional drive and paved the road for productive diversification. But productive diversification does not spread randomly. A country diversifies towards activities that demand similar capacities than the ones already in place. Current capabilities and know-how can be recombined and redeployed into new, adjacent activities, of higher value added. This report identifies productive capabilities already in place in Panama, as signaled by the variety and ubiquity of products and services that is already able to manufacture and provide competitively. Once there, we move on to identifying opportunities for productive diversification based on technological proximity. As a result, we provide a roadmap for potential diversification opportunities both at the national and sub-national level.

Suggested Citation

  • Hausmann, Ricardo & Morales, Jose Ramon & Santos, Miguel Angel, 2016. "Economic Complexity in Panama: Assessing Opportunities for Productive Diversification," Working Paper Series rwp16-046, Harvard University, John F. Kennedy School of Government.
    • Handle: RePEc:ecl:harjfk:rwp16-046
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    References listed on IDEAS

    as
    1. Hausmann, Ricardo & Obach, Juan & Santos, Miquel Angel, 2016. "Special Economic Zones in Panama: A Critical Assessment," Working Paper Series rwp16-044, Harvard University, John F. Kennedy School of Government.
    2. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
    3. Ricardo Hausmann & Juan Obach & Miguel Angel Santos, 2016. "Special Economic Zones in Panama: Technology Spillovers from a Labor Market Perspective," Growth Lab Working Papers 86, Harvard's Growth Lab.
    4. Neffke, Frank M.H. & Otto, Anne & Weyh, Antje, 2017. "Inter-industry labor flows," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 275-292.
    5. Ricardo Hausmann & Bailey Klinger, 2007. "The Structure of the Product Space and the Evolution of Comparative Advantage," Growth Lab Working Papers 10, Harvard's Growth Lab.
    6. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    7. Bahar, Dany & Hausmann, Ricardo & Hidalgo, Cesar A., 2014. "Neighbors and the evolution of the comparative advantage of nations: Evidence of international knowledge diffusion?," Journal of International Economics, Elsevier, vol. 92(1), pages 111-123.
    8. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
    9. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
    10. Hausmann, Ricardo & Hidalgo, Cesar A. & Stock, Daniel P. & Yildirim, Muhammed A., 2014. "Implied Comparative Advantage," Working Paper Series rwp14-003, Harvard University, John F. Kennedy School of Government.
    11. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 584-584.
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    Cited by:

    1. Ricardo Hausmann & Luis Espinoza & Miguel Angel Santos, 2016. "Shifting Gears: A Growth Diagnostic of Panama," Growth Lab Working Papers 85, Harvard's Growth Lab.
    2. Wang, Qiang & Zhang, Fuyu & Li, Rongrong & Zhang, Siqi, 2024. "Reinvestigating the impact of natural resource rents on carbon emissions: Novel insights from geopolitical risks and economic complexity," Resources Policy, Elsevier, vol. 99(C).
    3. Penny Mealy & Diane Coyle, 2022. "To them that hath: economic complexity and local industrial strategy in the UK," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(2), pages 358-377, April.
    4. Hausmann, Ricardo & Obach, Juan & Santos, Miquel Angel, 2016. "Special Economic Zones in Panama: A Critical Assessment," Working Paper Series rwp16-044, Harvard University, John F. Kennedy School of Government.
    5. Destek, Mehmet Akif & Hossain, Mohammad Razib & Aydın, Sercan & Shakib, Mohammed & Destek, Gamze, 2023. "Investigating the role of economic complexity in evading the resource curse," Resources Policy, Elsevier, vol. 86(PB).
    6. Bianchi, Carlos & Isabella, Fernando & Martinis, Anaclara & Picasso, Santiago, 2024. "Varieties of middle-income trap: Heterogeneous trajectories and common determinants," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 320-336.

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