Why HE is key to Panama’s 21st century economy

Panama sits at the centre of the world, or at least of the Western Hemisphere. The Panama Canal offers symbolic evidence of this fact. Completed a century ago, it is essential to global commerce and Panama’s economy.

Banking, legal services, insurance, transport and tourism are all major industries. Logistics, based on the canal and geographic location, are critical to these sectors and in recent years Panama has become a major air hub as well, connecting North and South America.

All these economic motors have one thing in common – they require a highly educated workforce and sophisticated knowledge-based skills. Yet, Panama has one of the weakest education systems in the region and there is little recognition that brain power is central to the nation’s future.

In spite of this, Panama has done astonishingly well to date. Economic growth over the past decade has averaged over 7% annually and the infrastructural development of Panama City has been impressive. Even without appropriate and necessary investments in education, Panama has grown exponentially in physical, financial and commercial terms. This trajectory, however, is probably unsustainable.

Panama likes to compare itself to Singapore. Both tropical countries have small, diverse populations, limited physical resources and a privileged global positioning that has allowed for the creation of valuable niche economies based on international services. But Singapore successfully harnessed education early on for economic growth and sustainable development, based in significant part on human resources. Panama has not done this.

In fact, Panama is more comparable to the United Arab Emirates, a country that relied for years on a single natural resource, acknowledged relatively late the need to diversify its economy, began to do so with an over-reliance on imported talent and product and only recently has realised the importance of improving its education systems for turning out a better trained, more productive national workforce. Hopefully, Panama will take note.

Current liabilities

Like many countries in Latin America, Panama has underfunded and neglected the schools. Whatever investment has been made has concentrated on coverage, not student learning outcomes. As a result, public schools are, generally, of low quality and unable to provide the basic skills young people need to succeed in post-secondary education or participate directly in a service-based economy.

Those who can afford it send their children to private schools to prepare them for better employment opportunities. This has contributed to high levels of economic inequality in the country and an increasingly polarised social structure.

The higher education and research sectors have been particularly disadvantaged, badly managed and resource-starved. Consequently, public higher education quality is, overall, quite poor.

As has transpired at the K-12 level, private providers and other research and educational initiatives have stepped in to try to bridge gaps. Although there is an overabundance of universities in Panama, few are of reasonable quality and none come close to ‘world-class’ standards, nor do they compare favourably even with other Latin American institutions. This is not surprising given their modest resource allocation.

Panama invests a paltry 0.7% of gross domestic product (GDP) in higher education, less than half the percentage the United States and other OECD countries invest. The bulk of this goes to the University of Panama, the country’s largest public higher education institution, also notorious for its history of corruption, inefficient management and obsolete curricula.

In research, Panama invests less than 0.2% of its GDP, or roughly 20 times less than the average OECD country. The Panamanian academic human resource base is another constraint to developing research: only 2% of the population hold a masters degree while a miniscule 0.3% hold a doctorate.

Panama also grapples with a highly bureaucratised and politicised legal environment that limits innovation and development at all levels. Its Ministry of Education is the largest and most dysfunctional of the government agencies; the national constitution places all higher education programming authorisation under direct control of the dubious University of Panama.

The recently established National Higher Education Evaluation and Accreditation Council (CONEAUPA), set up in 2006, is just beginning to establish a presence in the sector. The effect of these multiple liabilities is debilitating.

Current assets

Nevertheless, Panama also has some assets at its disposal that it could better employ to reverse these lacklustre trends. It has an unparalleled but underused resource in its City of Knowledge, an academic-economic free zone located in the former Panama Canal Zone.

This attractive location is home to the United Nations hub for Latin America and the Caribbean (and numerous other international organisations), along with several research centres, schools and foreign universities, including a branch campus of Florida State University.

Most of these institutions have minimal permanent faculty, rely on short-term instructors and conduct little if any research, but still they offer an international complement to national higher education.

By law, the City of Knowledge is free from the regulation of the Ministry of Education and the University of Panama – an enormous advantage – and it also houses Panama’s National Secretariat for Science, Technology and Innovation (SENACYT), an autonomous body responsible for propelling scientific research and innovation.

SENACYT’s budget and human resources are limited, but in recent years it has begun to establish protocols and processes for promoting research activity.

Another autonomous public-private entity, INDICASAT, Panama’s first official biomedical research centre, is located in the City of Knowledge as well and has begun to achieve significant gains in research, doctoral training and national capacity building, largely in conjunction with important international partners.

Much more could be made of all these City of Knowledge assets with additional governmental and private sector support. Close collaboration, as yet lacking, among the City of Knowledge institutions, would boost productivity.

A way forward

The path to higher education relevance and excellence in Panama is rocky, but not impassable. Three macro-elements and various smaller initiatives are key to moving ahead.

First and foremost is the need for recognition by government and society of higher education’s importance to sustainable national development.

Second is the urgency for dismantling the stifling political, legal and bureaucratic hurdles endemic in the country’s systems. The University of Panama must be relieved from higher education oversight, and public funding of higher education and research must extend far beyond the University of Panama.

Third, provision of adequate resources is vital and Panama can well afford to pay for developing quality higher education institutions and R&D that serve national economic and social needs. To neglect this, given the country’s economic success over the decades, is unforgivable and foolish.

The private higher education sector can play a major role in Panama’s higher education development, too, and several institutions are beginning to do so in visible and important ways. For all institutions, relevant quality controls and freedom to innovate are indispensable, though neither is well governed at the moment.

Finally, internationalisation is as central to Panama’s academic future as it has been to its economic development and must be advanced accordingly. Potential institutional partners for higher education and research are readily available worldwide – what is required on the Panamanian end is some strategic planning, additional investment and promotional selling. The City of Knowledge is a fortuitously placed national asset for pushing this agenda and should be better exploited to this end.

Panama has always been a crucial regional and global crossroads. Using this geographic advantage to propel its lagging higher education and research base is now imperative.

Philip G Altbach is research professor and founding director of the Center for International Higher Education at Boston College, United States. Nanette A Svenson is a global development and education consultant in Panama.