KNOWLEDGE AND POWER

Panama 2017 | ECONOMY | FOCUS: ORANGE ECONOMY

Given the growing importance of the knowledge and information sectors, new proposals, regulations, and activities are being promoted to provide a boost to the Panamanian orange economy.

In a bid to encourage debate in Latin America and the Caribbean on the contribution of creativity as a key element of economic and social development, the Inter-American Development Bank (IDB) along with local institutions are currently promoting the concept of the “orange economy.” This involves the creative industry and includes a range of economic activities that are concerned with the generation or development of knowledge and information. According to a report published in 2013, cultural and creative industries (CCI) in western economies generated more than USD175,000 million per year, employing 11 million people.

If the so-called orange economy were a country, it would be the world's fourth-largest economy, be ranked ninth in terms of exports of goods and services, and represent the world's fourth-largest workforce, research developed by IDB has shown. As a consequence of the developing human capital in Latin America, opportunities to develop the concept of the orange economy are rising in Panama.

The orange economy includes all the services based on talent, cultural heritage, and creative related products that can be protected applying any kind of intellectual property law. In March 2017, Helga Flores, a specialist on the orange economy at IDB, headed a regional forum entirely focused on the development of cultural and creative industries in Panama and Latin America. BID is currently working to better understand the opportunities that this market offers to more than 107 million people between the ages of 15 and 24; every year, 80,000 people join the orange economy. Intellectual property, advertising and media, cinema, gastronomy, architecture, arts, and cultural-related activities are the sectors that currently underpin the growth of the orange economy in Panama and the Panamanian government is ready to further capitalize on this.

Unfortunately in Latin America, there are no clear statistics to rely on in order to define an adequate action plan to capitalize on the huge potential offered by the orange economy; countries like Colombia and Costa Rica have promoted specific initiatives such as Cuenta Satélite de la Cultura, a methodology that allows the national accounting departments to process all the economic information related to CCI that might be generated from other economic sectors.

Data released by the public politics department of MEF noted that public spending on culture per capita stands at USD6.5 in Panama, while the Latin American average is USD19, and that the difficulties facing the sector are cultural entrepreneurship informality, inequality, inadequate funding and investment, and lack infrastructure or cultural spaces, among others. However, MEF is not the only public institution analyzing the latest trends emerging within the Panamanian orange economy: in 2015, Ernst & Young released a regional and global report confirming that the sector generated USD2,250 million—3% of world GDP—and 29.3 million jobs worldwide, of which USD124 million and 1.9 million jobs were generated in Latin America. Research developed by World Intellectual Property Organization (WIPO) and Panama's Ministry of Commerce and Industry has shown that intellectual property generates 6.3% of the national GDP. According to openartspty.com, this economy generates over 50,000 jobs divided among 545 companies operating in the segment, making up 3.2% of the total workforce active in the country.

In 2016, the film industry alone attracted USD23 million in foreign direct investment, and the sector should be accurately studied and regulated in all its dimensions by the state. However, by and large the industry is still relatively informal and the Ministry of Economy and Finance (MEF) along with the Municipality of Panama City are currently working on new proposals, regulations, and activities to promote and to boost the performance of the orange economy; events like jazz festivals, Feria de Artesanías, and Festival de Cine are events that are only becoming more successful and relevant in Panama's cultural agenda. Considering the cultural melting pot that lays at the basis of Panama, the young and talented generation that is emerging in Panama the country must capitalize on the huge potential offered by the orange economy.