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The Long Run: How Will Panama Develop New Resources?
Short-term economic growth has sustained Panama for more than a decade now, but at least one business insider is emphasizing development for Panama’s future. According to Luis José Varela Jr., education and training will be key to economic development, as well as stronger institutions, in particular a robust and reliable judicial system.
As the CEO of Varela Hermanos, the nation’s leading producer of spirits, Luis José Varela Jr. certainly appreciates the explosive growth of the Panamanian economy. Businesses around the nation have benefited, but Varela looks at the long term, something that hasn’t always been a priority in Panama.
As he sees it, Panama excels at planning for today but falls short when it comes to the future. For example, Panama produces half the rice it did ten years ago, making the commodity an overpriced import. With abundant space for rice production, this situation was unnecessary. “If you want to help people in the countryside, why don’t we work on establishing a more agricultural society?” Varela asks.
LWooking inside for growth hen the CEO looks at development, he sees not only the canal and the capital city, but the country’s interior as well.Tourism in the interior has a lot of potential.The nation has some work ahead, however, to make it happen. Panama’s service economy focuses on finance and logistics, not hospitality, and there is an important need for trained personnel. “You take a head waiter from a good restaurant in Bogotá, for example, you bring him here, and the guy is like a genius. He’s a rock star here,” he said, noting the disparity in experience in the hospitality industry.
Luis José Varela Jr.
CEO Varela Hermanos
Education and training are crucial, and Panama’s Ministry of Labor has already moved to put new policies in place. A recent roundtable with industry, labor, and students began work on a plan to provide now for growth and continuity into the future.
Looking outside
Bfor the future
uilding a strong export base is one key to the economy. In a country with two coasts,Varela asks why
fishing and aquaculture exports are not more prominent. The Japanese, for instance, represent an enormous market for seaweed.The aquatic delicacy grows well in the sea at Bocas del Toro, an area on the Caribbean coast far from Panama City—just the sort of location that is primed for development.
Panama continues to pursue trade agreements around the globe, but with some countries in the region, the rules change with frequency, making trade “like a roller-coaster” for Panamanian exporters. Varela believes that, regardless of trade agreements, companies must commit to long-term investment and promotion in foreign markets in order to be successful.
t is a time of change for Panama. Clear rules for business, development, and
planning are the order of the day.The
ECONOMY
    The canal links the Pacific and the
Caribbean, a geographic asset that
Panama will never lose, but the country is alsoattheheartoftheAmericas.Travelers
from two continents pass through Panama
on their way to other locations, but only
a small percentage stay over. Panama has a surplus of hotel rooms and is building a new, state-of-the-art convention center, but Varela points out that the industry must get its house in order to land not only the business traveler that is so crucial to a thriving hospitality industry, but also visitors looking for high-end service.
long view permeates Varela’s thinking—a growing economy provides short-term returns, but development serves both the present and the future.
“Panama is not only about Panama City. Panama is about the Pearl Islands, it’s about Chiriquí, it’s about San Blas, the Azuero Península, and many other fascinating places. There are a lot of things that Panama represents, and our biodiversity is unique.
Doing it on day one
I
 “How do we do it best for the Republic of Panama?” Varela asks. “We should start on day one, not one year later or three years later or five years later.” In his view, the focus on the instant gratification of fast economic growth must give way to long-term structural changes. “Growth,” he says, “is
a good thing, but development is much better.”
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