The country is well on the mark ‘ranking’ of competitiveness and economic freedom, but if it does not strengthen its institutions, the future is uncertain.
In 2009 institutional quality index, developed by Martin Krause, Panama stands out as one of the top four countries in Latin America. Only Chile, Uruguay and Costa Rica is ahead.
When Panama is compared with its Latin American neighbors usually noted within the group of leading countries and more advanced. But when the comparison is part of the world, history is another (see graphic).
And that it has become evident in the Institutional Quality Index (ICI) 2009, created by Dr. Martin Krause, the Higher School of Economics and Business Administration from Argentina, which was located in Panama’s position among the 68 192 countries assessed. Far from the first world, but in the context of Latin America, among the top four: only Chile (24), Uruguay (52) and Costa Rica (60) exceeded.
Krause’s ranking is an index of indexes “, which evaluates the quality of institutions of the countries from the weight of the eight major global ranking: Perception of Corruption, Transparency International Press Freedom, Freedom House , Global Competitiveness, World Economic Forum; rule of law, accountability and Doing Business, World Bank and the Economic Freedom of Fraser and Heritage.
“This index summarizes information is very valuable to disaggregate a large number of international indexes. And when you select the most important and condensates, provides a much clearer picture of how and what should we do to improve, “noted Ramon Barreiro, director of Freedom Foundation, responsible for the diffusion index in Panama Krause.
The country is strong in competitiveness, economic freedom and openness, ease of doing business and commerce. But evil is standing rule of law, perceptions of corruption, press freedom, quality of education and social equity.
“All the indicators that compose the ICI are linked. Just as the bureaucracy can increase the level of corruption, poor rule of law and economic freedom deteriorates the performance of the economies of countries, discouraging investment and raising the cost of transactions, “says Krause.

The conclusion is obvious: there is still much to do. What are the priorities? Major surgery to the administration of justice and an effective fight against corruption, says the Freedom Foundation.
“In the last five years, in the fight against corruption, the country has stagnated. Were set very ambitious goals and expectations were not filled. We must reduce the discretion of the officer in the public administration to make progress there, with clear rules and processes and more transparent management, “noted Barreiro.
And in terms of ease of doing business, “progress was indisputable, as PanamaCompra and PanamaEmprende, but we can not stay alone with that,” he said.
To improve its position, the country must also improve property rights, remove barriers to the outside that still persist and promote competition through decentralization, deregulation, greater accountability and transparency.
The crisis that shook the world was launched in United States, one of the best positioned country in the Index of Institutional Quality of Martin Krause, but with serious weaknesses in the banking and monetary system, where the combination of paper money and banking systems of reserves fractional generated significant systemic risks.
Governments now seek any means to overcome it, but the way they do it “also creates an institutional deterioration: public expenditure, fiscal deficit, debt and monetary emission grows exponentially, and decay controls and balan times of power.
Billions of dollars are allocated with little control. And in the midst of this “every man for himself,” not discussing the structural reforms of the monetary and banking systems that could prevent new crisis in the future. Not occur, this will lead to a general deterioration in institutional quality, “says Krause.