Panama is upping spending in order to boost an education system that has historically failed to fulfill the needs of the labor market.

The contrast between the glistening skyline of Panama City and the country's impoverished rural areas is also reflected in an education system that has often failed swathes of the population and left worrying skills gaps across the economy. Now, the government is looking to spend more to bolster public education, improve the quality of its teaching workforce, and better cater to the needs of industry.

The education system consists of primary, middle, secondary, and tertiary education, with vocational education also available. Primary and middle school are compulsory and, according to Foreign Credits, exist in an decades-long unchanged state as the authorities fear stoking unionized teachers. Attendance in rural areas can also be patchy. At the secondary stage, which lasts from the age of 15 to 18, students choose between an academic or vocational track. According to ICEF Monitor, 34,000 students chose the former in 2013, with 40,500 opting for the latter. At this level, ICEF Monitor also notes that public education represents 87% of enrolled students, compared to private schools with 13%.

Private education is far wider at the tertiary level, where 34 private schools instruct 47,000 students compared to the five large public universities, which have over 90,000 students on their books. Enrollment is on an upward curve, steadily increasing YoY as a reflection of increased demand for skilled labor across the economy. ICEF Monitor points out that private institutions account for much of the growth in tertiary-sector education in recent years, boosting their share from 20% in 2009 to over a third presently. The increase in demand, however, means that as many as 350,000 students are unable to secure a place at university due to capacity issues.
In order to tackle the challenges facing the sector, the education budget has increased in recent years, notably so following the election of President Varela in 2014—the Ministry of Education's budget grew from $1 billion in 2013 to $1.29 billion in 2015, with a substantial $412 million earmarked for middle and post-secondary schools. One key aim of the Ministry, which is the largest government entity, employing 25% of the public workforce or some 56,600 people, is to improve the level of English language teaching in the country, in line with the country's aspirations to be a cosmopolitan business hub for the region. Panama Bilingual is the result of that, and, having been launched in 2014, has seen around 2,000 Panamanian teachers travel abroad for training in new instruction methods. In 2016, Panama Bilingual received a budget of $24.6 million, which will go toward training for 1,500 more teachers in Canada, the US, and the UK. By 2019, the Ministry hopes to have trained 10,000 English teachers. Currently, the country ranks 48th out of 70 countries on the EF English Proficiency Index 2015, and 11th out of 14 Latin American countries surveyed.

But while spending is on the up, challenges remain, with Newsroom Panama reporting in early 2016 that 50% of students drop out of secondary education. Panama also lags behind many of its contemporaries in Latin America in the core subjects of math, reading, and science. This results in young school leavers being relatively unprepared for the job market.

A quick look at official rankings reveals how far Panama has to go, the country ranking 83rd out of 144 in terms of the quality of its education system in the World Economic Forum's Global Competitiveness Report 2014/15. That is a drop of eight places on the previous year, the report also underlined the disparity between the education system and the needs of industry. Elsewhere, the top-placed Panamanian university on the QS University Rankings: Latin America 2015 is the Universidad Tecnológica de Panamá (UTP), in 92nd. In total, seven Panamanian universities made the list, including four in the top 200. ICEF Monitor is quick to point out, however, that some metrics are encouraging, including a 53% rate of women in higher education.

With much room for improvement, however, comes ample room for investment. One major draw is the Ciudad del Saber, or City of Knowledge, a state cluster of academic organizations, technology companies, and non-governmental organizations. One such academic organization is the Instituto Tecnológico de Monterrey, or Monterrey Tech, a private Mexican educational institution. “Panama is open to international organizations, and Monterrey Tech was no exception. We are located within the City of Knowledge, which is a hub for knowledge close to the Panama Canal," said Director for Latin America and the Caribbean Sandra María Ortiz Ramos, in an interview with TBY. And Monterrey Tech is not the only institution looking to expand the knowledge economy. Back in 2002, the National Secretariat of Science, Technology, and Innovation (SENACYT) established the Institute of Scientific Research and Technological Advances (INDICASAT-AIP), which today is a leading research institution that publishes papers and drives awareness, in areas such as patentability. The institution is also planning to build a Knowledge-Based Technology Park on donated land and collaborate with scientists and companies involved in the creation of innovative technology. At the grass roots level, INDICASAT-AIP is working to build interest in STEM subjects, and visits rural schools to promote the study of science and technology. “We are looking for policymakers in Panama to invest in science and technology in the upcoming years. We predict that, by 2050, the GDP of Panama is going to grow three fold and we need Panamanian man power to be able to handle such economic growth," Dr. K.S. Jagannatha Rao, Director of INDICASAT-AIP.

Another way that Panama's universities are looking to boost human capital in the country is through the use of exchange programs. According to ICEF Monitor, Panama sends around 2,600 students a year abroad for tertiary education, around half of which go to the US. Other popular destinations include Cuba, Spain, Saudi Arabia, Honduras, Italy, Chile, Canada, the UK, and France. The country's historic ties to the US can explain why so many choose to go there, with universities like Florida State, originally set up to provide education to serving US military personnel, now helping Panamanians travel north. “The 2+2 program, which is based on a statute of the State of Florida that allows citizens from Latin America and the Caribbean to access financial assistance such as a scholarship or government grants, subsequently became attractive for Panamanians and Latin American students. We started that program in 2001 and it is what has made us successful," said Rector Dr. Carlos Ricardo Langoni.

Overall, Panama still has a long way to go to before its education sector is working in lockstep with the needs of the economy. High levels of investment could help to promote increased access and quality, especially in rural areas, whereas, moving forward, capacity will also have to be expanded if tertiary education is to fulfill its potential.