Economic Growth: Why is Panama Succeeding and Nicaragua is Failing? Essay

Economic Growth: Why is Panama Succeeding and Nicaragua is Failing? Essay

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There are approximately one billion people living in extreme poverty worldwide. Paul Collier identifies this group of people as the ‘bottom billion,’ because they are living in countries plagued with fourteenth century settings (civil war, diseases, ignorance, etc.). Meanwhile, the majority of the remaining five billion people live in countries that are experiencing unprecedented levels of economic growth and well being (Collier, p. 3-5). The objectives of this paper are: a) to identify two major positives factors and two major negatives factors for economic growth, b) to compare and analyse economic growth indicators for Panama and Nicaragua, and to discuss three important lessons drawn from these countries’ economic growth experiences.
Economic growth is one of the prime indicators of a country’s development success. To understand which factors would potentially accelerate its rate of expansion or hinder it is imperative. Technological innovation and labor specialization promoted by trade liberalization are two major positive forces of economic growth. The worldwide spread of technology has fostered unprecedented advances in quality life that both enhanced people’s productivity and increased countries’ production capacity This increase in a country’s production capacity will directly result in an immediate increase in GDP levels; thus, the country will exhibit economic growth. (Kenny, p. XX). Labor specialization emerges from the assumption that each country possesses a comparative advantage for the production, manufacturing or supply of certain goods and services. Labor specialization generally arises from trade liberalization and usually propels a country’s economic efficiency. An increase in economic efficiency, in theory, w...

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...nment, and investment in technology innovation are three strategies could be used in order to improve economic growth in countries that are lagging behind. Panama’s exceptionally economic performance have shown that a careful implementation of these three strategies will potentially increase the export of goods and services, the level of foreign direct investment, literacy rates, and decrease poverty headcount ratios. In the other hand, Nicaragua’s experience helps us understand how essential it is for countries to move away from an agricultural-based economic and toward a manufacturing/service-providing economy in order to truly enhance sustainable economic growth. Through an increase in technology innovation, countries such as Nicargua could potentially increases yields in agricultural productions and propel manufacturing and service providing businesses.

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