It's boom time in the Canal Zone.  Photographer: Susana Gonzalez/Bloomberg

Panama Can School U.S. on Immigration

Raul Gallegos is a Bloomberg View contributor, who covers Latin American politics, business and finance. He was a columnist for Reuters and a correspondent for Dow Jones and the Wall Street Journal. He is a graduate of the University of California at Berkeley and Columbia University. He grew up in El Salvador and is based in Colombia.
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Panama's newly elected President Juan Carlos Varela will soon take over one of the world's fastest-growing economies. It is no coincidence that Panama is also one of the most welcoming nations to immigrants. Anti-immigration politicians in the U.S. should take note.

Panama is a testament to how far a country can go when it uses the skills of newcomers willing to work for a better life. The Central American country has achieved an 8.5 percent average growth rate during the past decade. The country fancies itself as the next logistics and finance hub, a sort of mini-Singapore. But with just 3.5 million people it needs plenty of extra manpower to make this possible.

Panama has undergone a construction boom of five-star hotels, office buildings and apartment complexes. That has created jobs for construction workers and service staff, which has pushed down joblessness to a record low 4.1 percent. The country is also in the midst of a huge expansion of the Panama Canal, a project that has created more than 30,000 jobs. This is one reason Panama has made it easy for foreigners, ranging from manual laborers to engineers, to find work.

To alleviate this talent shortage, Panama's government has resorted to mass legalization ceremonies called "melting pots," which offer foreigners a two-year residency and quick access to a work permit. Entrepreneurs are allowed to start a business in Panama by opening a $5,000 bank account.

The country legalized 50,000 foreign workers in the last four years, and 5,072 got papers last month alone. Those are huge numbers for such a small country, which shows how serious Panamanians are about embracing foreign talent while taking advantage of the economic mistakes of its neighbors. Many newly admitted workers come from Venezuela, where business nationalizations and state meddling in the economy has cost many Venezuelans their jobs.

In other words, Panama is the kind of country the U.S. once was: quick to embrace workers -- many from different cultures fleeing less-welcoming nations -- who can contribute to growth. In contrast, many U.S. politicians these days have gone out of their way to delay or derail immigration reform. The upshot is that the talents of more than 11 million undocumented immigrants, who aren't going anywhere, are underutilized and often relegated to the shadow economy.

Opponents of U.S. immigration reform remain fixated on beefing up the southern border even though most undocumented immigrants arrive without crossing it and net migration from Mexico has trickled down to almost zero.

Meanwhile, companies often fail to fill jobs because the U.S. allows no more than 85,000 H-1B work visas a year for qualified foreigners. Plenty of students from top U.S. schools end up leaving the country after graduation because there aren't enough visas to go around.

Panama's circumstances are obviously very different from those of the U.S. It is a much smaller nation, and most Panamanians support opening the door to others. And yes, most immigrants to Panama share the same language as the host country, though the U.S. has also welcomed plenty of non-English speaking immigrants willing to embrace its work ethic.

But Panamanian and U.S. companies face similar difficulties finding workers. Last year almost as many U.S. employers (39 percent) reported having difficulties filling jobs, as in Panama (38 percent), according to a survey by the Manpower Group.

The difference is that the administration of Panama's departing President Ricardo Martinelli, in contrast to the U.S., has a clear understanding of how to err on the side of economic growth. Rather than serving as "deporter in chief," his administration tolerated employers who hired new arrivals to fill urgently needed jobs, worrying about legalization later.

Such an open take on immigration may be too much for some U.S. politicians and their constituents to stomach. But almost anything other than the status quo would be an improvement. It might even get the U.S. a little more of Panama's kind of economic growth.

To contact the author of this article: Raul Gallegos at

To contact the editor responsible for this article: James Greiff at

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
James Greiff at