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GTAP Resource #2689

"Will Panama Experience Large Poverty Effects from the Canal Expansion?"
by Bussolo, Maurizio, Rafael De Hoyos and Denis Medvedev

A general equilibrium analysis of the Panama Canal expansion indicates that the danger for Panama of perpetuating its dual development pattern is a possibility that needs to be addressed carefully. The analysis concludes that the income gains linked to the construction and operation of the new Canal are likely to be concentrated in the top portion of the income distribution. This means that, in the absence of other complementary measures, aggregate poverty would remain largely unchanged as a result of the Canal expansion and that income inequality and the poverty gap would be likely to increase. Key aspects of the Panamanian economy that drive this result are (i) the enclave nature of the Canal, characterized by limited output and employment links to the rest of the economy, (ii) the absence of significant amounts of idle labor (as indicated by recent evidence on Panama’s labor markets), (iii) an increased demand for formal-sector skilled and semi-skilled labor, relative to unskilled workers in the informal, rural and indigenous sectors, which raises wage disparities, and (iv) higher domestic prices which hurt the poorest consumers in the Panamanian society.

Resource Details (Export Citation) GTAP Keywords
Category: 2008 Conference Paper
Status: Published
By/In: Presented at the 11th Annual Conference on Global Economic Analysis, Helsinki, Finland
Date: 2008
Created: Bussolo, M. (4/14/2008)
Updated: Bussolo, M. (4/14/2008)
Visits: 2,259
- Trade in services
- Economic growth
- Economic development
- Economic analysis of poverty
- Dynamic modeling
- Central America

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