Growth is a completely unique process of life. It is an interesting process to understand because it does not fit any mold. One can tell when something has grown, but cannot so easily quantify the process of growth. Growth is highly variable, many things can derail it, and many things can accelerate it. We all want to achieve growth, but how do we control it? How do we grow with balance? Panama finds itself in a similar trade off dichotomy: how does it become an industrial powerhouse while maintaining its status as one of the richest countries in biodiversity?
The Panamanian government has created an economic growth strategy for 2010-2014 calls for specialization and globalization of four sectors. By Specializing in four sectors of Panama’s economy, the government is banking that these sectors will make Panama a top tier global economy:
- Logistics (Canal)
- Financial Services
An excerpt from the strategy reads:
“Harnessing the untapped potential of these sectors is an important opportunity: 6%-9% annual economic growth and the creation of 860,000 new or better jobs, from now until 2020. However, to achieve this, Panama will have to make major long-term infrastructure investments for an estimated total of US$9.6 billion. This amount represents 70% of the total planned investments (US$13.6 billion) for the next five years” (Panama’s Economic Strategy 2010-2014)
Of all the money that the government is planning to pump in the country for the next 5 years, 70%(9.6B) is going to create infrastructure that will expand four current industries and actually create industries within those industries. New sub-industries are planned in all four sectors. The government is essentially begging for current business to get bigger and entrepreneurs to start businesses in manufacturing, logistical, hotel, agri-business and banking. But that’s not all; Panama currently has a FTA (free trade) deal recently approved with the good old USA. Not only does the Government want to grow the power and influence of Panamanian corporations; it is opening the door for the American giants to come join the party. It is clear that the government wants companies to get large, powerful and rich. Why? One word Jobs. This strategy took up 53 pages of the report.
Later in the strategic plan environmental issues are covered, in 6 pages. The strategy outlined in those 6 pages centers on merging two environmental institutions while modernizing and making them more efficient. ANAM and ARAP will merge to create a single institution to report and carry out “conservation and protection” tasks.
From this strategy it is sufficiently clear that the government is planning to spend $9.6B for an ever-expanding GDP output growth number and a large number of “job creations”. The one problem with this plan is that it is not realistic. The government is proposing to create clean growth but will most likely create economic disparity along with ecologic degradation. The reason why is founded upon a simple principle:
GDP and industrial growth is singular, simplistic, quantifiable, and based on efficiency. Ecological preservation and human capital is multi-faceted, complex, not quantifiable, and based on diversity.
When a corporation is given an investment, there is one goal; take money and multiply it. An essential aspect of creating profits is to drive costs below revenues. When a company does this it classifies diverse resources into simplified suppliers.
Land = Raw materials
Men = Labor Units
As I said, the standard way to cut a profit is to drive costs below revenue. The Panamanian government is giving 9.6B dollars to four sectors and asking them to multiply the investment. Thus, they have to take the complex land and people of Panama and take what they need from them for the least amount of cost. In exchange, business will provide the lowest amount of money possible to people and essentially no compensation to the land. The government is endorsing the belief that life is best viewed from a financial point of view. With an increasing number of competitors trying to beat each other out of business, the Panamanian market will increasingly pursue greater efficiency and lower costs of production. This implies that growth that carries hidden costs to the people and land with the least representation (lower classes and eco-systems that can’t speak for themselves) will get expanded.
By treating the multi-faceted people and diverse eco-systems as simplified inputs to an equation, GDP based industrial growth damages more than it helps. This is not the only way that this happens either, only one of the most obvious and easy ways to explore this complex quandary.
On Wednesday of last week I attended ANAM’s (Panama’s EPA) presentation of the first Panamanian comprehensive ecological atlas. This Atlas provides comprehensive ecological information over every area of Panama. During the event, the president of ANAM highlighted that this information was written concisely and simply so that non-governmental institutions would read it. She stressed that these organizations must understand this information to sustainably hold operations in Panama. While the effort is an impressive accomplishment, I ask myself:
What authority does ANAM have to hold these non-governmental corporations in check? It seems that both worlds are set to collide, Economy vs Ecology.
More importantly, what corporations actually understand anything about ecology and how to relate to it?
That is, I think something that Kalu Yala is on the road to achieve. To create a new version of industry, industry that is patterned from the natural growth patterns of people and places. The natural growth patterns that are both rich in quality and low in local cost.