Why is Panama Succeeding and Nicaragua is Failing? Essay

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.’ He identifies them in this manner because they are living in countries surrounded by economic and social conditions prevalent in the fourteenth century (i.e. civil war, diseases, social malaise, etc.) Meanwhile, the remaining five billion people live in countries experiencing unprecedented levels of economic growth and well being (Collier, p. 3-5). The objectives of this paper are as follows: 1) to identify two major positive factors and two major negative factors for economic growth, 2) to compare and analyze economic growth indicators for Panama and Nicaragua, and 3) to discuss three important lessons drawn from the economic growth experiences of these two countries.
Economic growth is one of the prime factors in the welfare of a country. To understand which factors would potentially stabilize and accelerate its rate of expansion is an important issue to policymakers in all countries. Technological innovation and labor specialization promoted by the liberalization of trade are two major positive forces in propelling economic growth. The worldwide spread of technology has fostered unprecedented advances in the quality life that have resulted in the enhancement of labor productivity and an increase in the production capacity of soveriegn states. 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, CH 7). Labor specialization emerges from the assumption that each country possesses a comparative advantage for the production, manufacturing, or supply of certain goods and se...

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...rnment, 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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