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Volume
14, Number 8 |
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in this section:
 The real problem isn't the Hushmail image... Can the Howard Free Zone save this duty-free industrial park? Panamanian public discourse about the government's economic development policies tends to be remarkably foolish, full of buzz words and catch phrases that can't hide the glaring conceptual weaknesses from ordinary scrutiny. (Remember all the talk about "clusters" coming from the Torrijos administraton a few years ago? One need not have been Mongolian to suspect the scant meaning behind the slogans.) Some of the people engaging in the lame discourse and promulgating the doomed policies clearly know this, which naturally leads one to suspect that they also pursue educational policies designed to let them get away with this. The photo above shows a typical remnant from the days of the old Interoceanic Regional Authoity (ARI) and the Pérez Balladares administration's industrial zones projects for the Reverted Areas (former Canal Zone). Fort Davis was the most celebrated of these, opened with great fanfare, a supposed arrangement with Taiwan and a promise of 20,000 jobs for economically depressed Colon. It turns out that the would-be investors from Taiwan were promised that Panamanian labor and environmental laws wouldn't apply, and when they found out that for domestic political reasons Toro and his successors couldn't deliver on those things it tended to diminish those investors' enthusiasm --- they could get slave wages and unlimited pollution by putting their money into mainland China instead. But the real killer was in most cases the moment when those thinking about putting their industrial enterprises here factored Panama's electricity rates into their hypothetical business plans. Under the old state-owned IRHE electric utility, rates were kept artificially high to subsidize rural electrification and to provide jobs for a legion of superfluous political appointees. With privatization came the presumption of those high rates as a base from which the new multinational players could work up, plus a regulatory system designed to favor the companies over the consumers and the national interest. In his 1994 campaign, Toro held up the Honduran maquiladora sector as a model of industrial development for Panama to follow. In its own terms that would imply staravation wages for Panamanians employed in such factories, all other things being equal. It was argued that what made things unequal in Panama's favor was our position astride major world shipping routes, but unless this country were to risk the political upheavals inherent in a standard of living for working people like those applicable in places like inland China and Haiti, the only other way we could compete with places like Honduras would be by having higher productivity. In manufacturing that generally means highly automated factories with the small but highly skilled work forces able to run them. Setting aside the educational issues (if that's possible without the importation of foreign workers that also politically unpopular), automated factories tend to be energy intensive. Much higher electricity costs than the competition make such factories losers in any attempt to compete in open world markets. And thus Fort Davis only got about 200 of the promised 20,000 jobs, an export processing zone in the Diablo / Corozal area was mainly successful at annoying residential neighbors with the odors coming from a seafood processing plant and the Cocoli export processing zone was an even more complete nonstarter. The industrial policy was such a failure that after a few years it couldn't even support the cost of political hacks in the few processing zone administrative posts. Now the former Howard Air Force Base, a stone's throw from Cocoli, is to be a new mainly freight-handling airport, an aircraft repair and maintenance center and a duty-free import/export zone. The area's attractiveness to investors is diminished by the collapse of a plan for an adjacent major seaport, and by the traffic bottlenecks that limit its connections with the rail, seaports and Colon Free Zone multimodal container handling system that exists on the east side of the canal. But if Howard is able to make good use of the advantages that it does have, might it rescue the nearby Cocoli industrial park as well? Maybe. But the same labor, utility rate and regulatory paradigms that sank the other export processing zone projects will still apply. Photo by José F. Ponce, caption by Eric Jackson Also
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