The Panama Canal Expansion to Reduce Poverty Rates

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SEATTLE — The Panama Canal, one of the most carefully designed man-made waterways in the world, has just completed its first expansion since its original construction in 1914.

The construction of the Canal cost more than 5 billion dollars. Upon the Canal inauguration, tens of thousands of free tickets were given to citizens around the country to join in the celebration. One Panamanian stated, “we are the bridge to the world and the heart of the universe,” reveling his pride over the country’s newest success.

The expansion of the Panama Canal began in 2007 with the main purpose of allowing larger ships to enter the waterway, which stretches 50 miles. The Panamax, the largest ship that can pass through the canal, was previously limited to only 5,000 containers and can now carry nearly 14,000 containers. By 2021, the project is expected to raise $2.1 billion per year, on top of what was already received prior to reconstruction.

This expansion means great strides in regards to reducing poverty and increasing revenue for the small Republic. Doubling the capacity of the canal also means doubling its contribution to the country’s GDP, which was around 15 percent before expansion.

The canal will now hold up to 98 percent of the world’s shipping, doubling the cargo volume over the next decade. Additionally, the new canal will attract business from countries and companies around the world as they realize that this is the new hub for business in Central America. Despite years of success, significant revenues have not always made a difference in the lives of the people who live around the port.

Many Panamanians are worried that this canal may appear to be a great step for the country, but in reality will not benefit them. A woman named Georgina Province stated in an interview, “we’re surrounded by millions of dollars, because there are three ports, and we live in misery. This is misery”.

There are extreme regional disparities that contradict the country’s ranking as one of the fastest growing economies in the world. Most of the indigenous populations suffer from a poverty rate of over 70 percent, and extreme poverty at 40 percent, whereas urban areas only experience 4 percent. There is an extreme lack of water sanitation, access to medical services and more.

These fears are supported by the many complications of the canal’s expansion process. The expansion is two years behind, and was originally set to open on the centennial anniversary of the canal’s construction. The  troubles faced by the shipping did not help the canal’s highly anticipated inauguration as costs have sharply dwindled due to China’s economic slowdown.

There were also cost overruns of billions of dollars that delayed the inauguration. Finally, there are uncontrollable fears such as a guarantee of enough rainfall each year to support the weight of such large ships that will now be traversing the canal frequently.

Although there are hesitations amongst the people of Panama, there are endless possibilities with the Panama Canal expansion. There may have been a past lacking of revenue trickling down to some of the poorer constituents of Panama, but there is hope that President Juan Carlos Valera will uphold his promise to use the project to combat poverty.

The president has stated that the expansion will not only bring economic benefits, but hopefully more transparency throughout the state and more equality.

Ashley Morefield

Photo: Flickr

 

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Ashley Morefield

Ashley is from Columbia, Maryland but originally from Washington, D.C. When she went to Ghana as a kid, she met the king of the Ashante Empire!

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