![]() In the past two decades growth came from investment and construction: with the private construction boom ending and major development projects now completed, future growth will need to come from other sectors.ġ. South Korea and Taiwan saw faster growth because of rapid TFP growth while Singapore-which like Panama saw little TFP growth-had faster growth of human capital and employment per capita. While Panama has grown rapidly in the past two decades, when assessed over a longer time period it has not converged as rapidly as the Asian Tigers. In fact, TFP fell sharply in the past decade. In terms of supply factors, output growth was driven by rapid growth of capital and labor inputs rather than a rise in total factor productivity (TFP). As the consumption to GDP rate dropped sharply, consumption grew much more slowly than GDP. In terms of demand factors, much of Panama’s strong growth was the result of a sharp increase in the investment to GDP ratio. Panama has achieved more rapid income convergence to US standards in the past 25 years than most other countries in Latin America and is now the richest country in Latin America.
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