Panama poverty assessment priorities and strategies for poverty reduction

Despite Panama's relatively high income per capita, poverty remains pervasive. Over one million people (37 percent of the population) live below the poverty line, and, of these, over half a million live in extreme poverty. The distribution and magnitude of poverty in Panama varies significantly by geographic area, with a bias towards rural areas. Poverty in indigenous areas can only be described as abysmal: over 95 percent of residents of indigenous areas fall below the poverty line and 86 percent live in extreme poverty. Although poverty is not as widespread or deep in urban areas, a significant share of the poor and near-poor live in Panama's cities. One half of all children are poor and there is a strong correlation between poverty and child malnutrition. Panama is also one of the most unequal countries in the world, with a consumption Gini of 49 and an income Gini of 60. The problems of poverty, malnutrition, and inequality are symptomatic of underlying disparities in opportunity. These distribution of key productive asset - labor, human capital, physical assets, financial assets, and social capital - is highly unequal. These disparities are most prevalent between the poor and non-poor, but also manifest themselves differently by geographic area. Such disparities largely reflect a legacy of distortions in Panama's economy and it's uniquely dualistic pattern of development. Factor markets have been segmented by policies that drive up the cost of labor - the poor's most abundant asset - to capital.