Panama, officially the Republic of Panama, is a country located at the southern end of Central America in North America, bordering South America. It is bordered by Costa Rica to the west, Colombia to the southeast, the Caribbean Sea to the north, and the Pacific Ocean to the south. Its capital and largest city is Panama City, whose metropolitan area is home to nearly half of the country's over 4 million inhabitants. Located on a narrow isthmus between two oceans, Panama is the site of the Panama Canal, a major route for maritime trade.
Before the arrival of Spanish colonists in the 16th century, Panama was inhabited by a number of different Indigenous peoples. It broke away from Spain in 1821 and joined the Republic of Gran Colombia, a union of Nueva Granada, Ecuador, and Venezuela. After Gran Colombia dissolved in 1831, Panama and Nueva Granada eventually became the Republic of Colombia. With the backing of the United States, Panama seceded from Colombia in 1903, allowing the construction of the Panama Canal to be completed by the United States Army Corps of Engineers between 1904 and 1914. The 1977 Torrijos–Carter Treaties agreed to transfer the canal from the United States to Panama on December 31, 1999. The surrounding territory was returned first, in 1979.
Revenue from canal tolls has continued to represent a significant portion of Panama's GDP, especially after the Panama Canal expansion project (finished in 2016) doubled its capacity. Commerce, banking, and tourism are major sectors. Panama is regarded as having a high-income economy. In 2019, Panama ranked 57th in the world in terms of the Human Development Index. In 2018, Panama was ranked the seventh-most competitive economy in Latin America, according to the World Economic Forum's Global Competitiveness Index. Panama was ranked 82nd in the Global Innovation Index in 2025. Covering around 40 percent of its land area, Panama's jungles are home to an abundance of tropical plants and animals – some of them found nowhere else on Earth.
Panama is a founding member of the United Nations and other international organizations such as the Organization of American States, Latin America Integration Association, Group of 77, World Health Organization, and Non-Aligned Movement.
Etymology
The exact origin of the name "Panama" remains uncertain, with several theories proposed.
- Sterculia apetala (Panama tree): One theory suggests that the name derives from the Sterculia apetala tree, commonly known as the Panama tree, which is native to the region and holds national significance. This tree was declared the national tree of Panama by Cabinet Decree No. 371 on November 26, 1969.
- Guna language "pannaba": A further hypothesis is that "Panama" is a Castilianization of the Guna word "pannaba," meaning "very far away."
A widely recounted legend holds that "Panamá" was the name of a fishing village encountered by Spanish colonists, purportedly meaning "abundance of fish." While the precise location of this village is unknown, the legend is often associated with accounts from Spanish explorer Antonio Tello de Guzmán, who in 1515 described landing at an unnamed indigenous fishing village along the Pacific coast. Subsequently, in 1517, Spanish lieutenant Gaspar de Espinosa established a trading post at the site, and in 1519, Pedro Arias Dávila founded Panama City there, replacing the earlier settlement of Santa María la Antigua del Darién.
History
Pre-Columbian period
The Isthmus of Panama was formed about three million years ago when the land bridge between North and South America finally became complete, and plants and animals gradually crossed it in both directions. The existence of the isthmus affected the dispersal of people, agriculture and technology throughout the Americas from the appearance of the first hunters and collectors to the era of villages and cities.
The earliest discovered artifacts of indigenous peoples in Panama include Paleo-Indian projectile points. Later central Panama was home to some of the first pottery-making in the Americas, for example the cultures at Monagrillo, which date back to 2500–1700 BC. These evolved into significant populations best known through their spectacular burials (dating to c. 500–900 AD) at the Monagrillo archaeological site, and their Gran Coclé style polychrome pottery. The monumental monolithic sculptures at the Barriles (Chiriqui) site are also important traces of these ancient isthmian cultures.
Before Europeans arrived, Panama was widely settled by Chibchan and Chocoan-speaking peoples. The largest group were the Cueva, who spoke a Chocoan language. The size of the Indigenous population of the isthmus at the time of European colonization is uncertain. Estimates range as high as two million people, but more recent studies place that number closer to 200,000. Archaeological finds and testimonials by early European explorers describe diverse native isthmian groups exhibiting cultural variety and suggesting people developed by regular regional routes of commerce. Austronesians had a trade network to Panama as there is evidence of coconuts reaching the Pacific coast of Panama from the Philippines in Precolumbian times.
When Panama was colonized, the Indigenous peoples fled into the forest and nearby islands. Scholars believe that infectious disease was the primary cause of their population decline. They had no acquired immunity to diseases such as smallpox, which had been chronic in Eurasian populations for centuries.
Conquest to 1799
Rodrigo de Bastidas sailed westward from Venezuela in 1501 in search of gold, and became the first European to explore the isthmus of Panama. A year later, Christopher Columbus visited the isthmus, and established a short-lived settlement in the province of Darien. Vasco Núñez de Balboa's tortuous trek from the Atlantic to the Pacific in 1513 demonstrated that the isthmus was indeed the path between the seas, and Panama quickly became the crossroads and marketplace of Spain's empire in the New World. King Ferdinand II assigned Pedro Arias Dávila as Royal Governor. He arrived in June 1514 with 19 vessels and 1,500 men. In 1519, Dávila founded Panama City. Gold and silver were brought by ship from South America, hauled across the isthmus, and loaded aboard ships for Spain. The route became known as the Camino Real, or Royal Road, although it was more commonly known as Camino de Cruces (Road of Crosses) because of the number of gravesites along the way. By 1520 the Genoese controlled the port of Panama. The Genoese obtained a concession from the Spanish to exploit the port of Panama mainly for the slave trade, until the destruction of the primeval city in 1671. In the meantime in 1635 Don Sebastián Hurtado de Corcuera, the then governor of Panama, had recruited Genoese, Peruvians, and Panamanians, as soldiers to wage war against Muslims in the Philippines and to found the city of Zamboanga.
Panama was under Spanish rule for almost 300 years (1538–1821), and became part of the Viceroyalty of Peru, along with all other Spanish possessions in South America. From the outset, Panamanian identity was based on a sense of "geographic destiny", and Panamanian fortunes fluctuated with the geopolitical importance of the isthmus. The colonial experience spawned Panamanian nationalism and a racially complex and highly stratified society, the source of internal conflicts that ran counter to the unifying force of nationalism.
Spanish authorities had little control over much of the territory of Panama. Large sections managed to resist conquest and missionization until late in the colonial era. Because of this, indigenous people of the area were often referred to as "indios de guerra" (war Indians). However, Panama was important to Spain strategically because it was the easiest way to ship silver mined in Peru to Europe. Silver cargoes were landed on the west coast of Panama and then taken overland to Portobello or Nombre de Dios on the Caribbean side of the isthmus for further shipment. Aside from the European route, there was also an Asian-American route, which led to traders and adventurers carrying silver from Peru going over land through Panama to reach Acapulco, Mexico before sailing to Manila, Philippines using the famed Manila galleons. In 1579, the royal monopoly that Acapulco, Mexico had on trading with Manila, Philippines was relaxed and Panama was assigned as another port that was able to trade directly with Asia.
Because of incomplete Spanish control, the Panama route was vulnerable to attack from pirates (mostly Dutch and English), and from "new world" Africans called cimarrons who had freed themselves from enslavement and lived in communes or palenques around the Camino Real in Panama's Interior, and on some of the islands off Panama's Pacific coast. One such famous community amounted to a small kingdom under Bayano, which emerged in the 1552 to 1558 period. Sir Francis Drake's famous raids on Panama in 1572–73 and John Oxenham's crossing to the Pacific Ocean were aided by Panama cimarrons, and Spanish authorities were only able to bring them under control by making an alliance with them that guaranteed their freedom in exchange for military support in 1582.
The following elements helped define a distinctive sense of autonomy and of regional or national identity within Panama well before the rest of the colonies: the prosperity enjoyed during the first two centuries (1540–1740) while contributing to colonial growth; the placing of extensive regional judicial authority (Real Audiencia) as part of its jurisdiction; and the pivotal role it played at the height of the Spanish Empire – the first modern global empire.
Panama was the site of the ill-fated Darien scheme, which set up a Scottish colony in the region in 1698. This failed for a number of reasons, and the ensuing debt contributed to the union of England and Scotland in 1707.
In 1671, the privateer Henry Morgan, licensed by the English government, sacked and burned the city of Panama – the second most important city in the Spanish New World at the time. In 1717 the viceroyalty of New Granada (northern South America) was created in response to other Europeans trying to take Spanish territory in the Caribbean region. The Isthmus of Panama was placed under its jurisdiction. However, the remoteness of New Granada's capital, Santa Fe de Bogotá (the modern capital of Colombia) proved a greater obstacle than the Spanish crown anticipated as the authority of New Granada was contested by the seniority, closer proximity, and previous ties to the viceroyalty of Peru and even by Panama's own initiative. This uneasy relationship between Panama and Bogotá would persist for centuries.
In 1744, Bishop Francisco Javier de Luna Victoria DeCastro established the College of San Ignacio de Loyola and on June 3, 1749, founded La Real y Pontificia Universidad de San Javier. By this time, however, Panama's importance and influence had become insignificant as Spain's power dwindled in Europe and advances in navigation technique increasingly permitted ships to round Cape Horn in order to reach the Pacific. While the Panama route was short it was also labor-intensive and expensive because of the loading and unloading and laden-down trek required to get from the one coast to the other.
1800s
As the Spanish American wars of independence were heating up all across Latin America, Panama City was preparing for independence; however, their plans were accelerated by the unilateral Grito de La Villa de Los Santos (Cry From the Town of Saints), issued on November 10, 1821, by the residents of Azuero without backing from Panama City to declare their separation from the Spanish Empire. In both Veraguas and the capital this act was met with disdain, although on differing levels. To Veraguas, it was the ultimate act of treason, while to the capital, it was seen as inefficient and irregular, and furthermore forced them to accelerate their plans.
Nevertheless, the Grito was a sign, on the part of the residents of Azuero, of their antagonism toward the independence movement in the capital. Those in the capital region in turn regarded the Azueran movement with contempt, since the separatists in Panama City believed that their counterparts in Azuero were fighting not only for independence from Spain, but also for their right to self-rule apart from Panama City once the Spaniards were gone.
It was seen as a risky move on the part of Azuero, which lived in fear of Colonel José Pedro Antonio de Fábrega y de las Cuevas (1774–1841). The colonel was a staunch loyalist and had all of the isthmus' military supplies in his hands. They feared quick retaliation and swift retribution against the separatists.
What they had counted on, however, was the influence of the separatists in the capital. Ever since October 1821, when the former Governor General, Juan de la Cruz Murgeón, left the isthmus on a campaign in Quito and left a colonel in charge, the separatists had been slowly converting Fábrega to the separatist side. So, by November 10, Fábrega was now a supporter of the independence movement. Soon after the separatist declaration of Los Santos, Fábrega convened every organization in the capital with separatist interests and formally declared the city's support for independence. No military repercussions occurred because of skillful bribing of royalist troops.
Independence to 1968
In the 80 years following its independence from Spain, Panama was a subdivision of Gran Colombia, after voluntarily joining the country at the end of 1821. It then became part of the Republic of New Granada in 1831 and was divided into several provinces. In 1855, the autonomous State of Panama was created within the Republic out of the New Granada provinces of Panama, Azuero, Chiriquí, and Veraguas. It continued as a state in the Granadine Confederation (1858–1863) and United States of Colombia (1863–1886). The 1886 constitution of the modern Republic of Colombia created a new Panama Department.