Climate change means different things to different countries, but for Panama it potentially opens up a strategic rival to its canal for maritime trade to travel instead by way of the northwest passage linking the Pacific and the Atlantic.
To forestall a competitive threat that could be decades away from taking significant trade away from the central American country, Panama has started investing more in its infrastructure and becoming more innovative.
The lodestar in its plans is another entrepôt nation beside valuable commercial sea lanes, Singapore, which has taken its gross domestic product from $25bn to more than $300bn since 1980 by refining for export raw materials using its port, investing in its population’s competitiveness and building a sovereign wealth fund to take stakes in the country’s businesses and others overseas.
Frank de Lima, Panama’s minister of economy and finance, said: "The Singapore model of building growth around our competitive logistics advantage is exactly what Panama is doing.
"Panama is the logistics hub of the Americas with an expansion of the canal plus a world-class ports system and a free trade agreement with the US. So multinational companies can be based in Panama to do business with the huge markets of the Americas, north and south."
The expansion of the Panama canal by 2014 will enable it to handle an expected 14% of world trade and also finance the creation of a sovereign wealth fund to invest in business.
But the country is also an air and mobile phone hub for the continents, and Kristelle Getzler, economic secretary for the country, said it had the cheapest internet in Latin America.
The canal currently ships 5.5 million containers with 144 maritime routes meeting at its ports.
The Switzerland-based non-profit World Economic Forum in its Global Competitiveness Report 2010-11 said Panama had posted "one of the largest improvements in the region, climbing to 53rd this year thanks in large part to a more positive assessment of infrastructure quality (44th, up 21 places from last year), increased macroeconomic stability (30th, up 16 places) and technological readiness (41st, up 18 places)".
However, the report said: "Strengthening the quality of its educational system (ranked 89th and 82nd for primary education and higher education and training respectively) and increasing the flexibility of its labour market and the efficient use of talent (107th for the efficiency of the labour market) are crucial to further reinforce Panama’s long-term growth potential."
De Lima said the nation was looking at what work its people did after their education and how it attracted corporate investment.
He said: "The government is also helping corporations through simplifying internal processes, creating a onestop shop with the necessary technology infrastructure.
"There is also government assistance on technology to encourage innovation. Encouraging entrepreneurship is a key part of what we are doing. In fact, 94% of companies here are micro, small or medium-sized. We have a Micro, Small and Medium-size Enterprise Authority, which provides guarantees to help entrepreneurs raise the finances to get started and compete with the bigger corporations and enable innovation."
Such entrepreneurial businesses that register in Panama get two years free of income tax and do not need to charge sales tax on the first $36,000.
But while the country has 93 banks, having formerly been regarded as a tax haven by international bodies, there are only four named venture capital firms and almost no significant corporate venturing activity. De Lima said this was an important area for his ministry to be looking at as part of its innovation and entrepreneurialism campaign.
Fact box:
Key indicators 2009
Population: 3.5 million
Gross domestic product: $24.7bn
GDP per capita: $7,133
GDP as share of world total: 0.06%
Source: Global Competitiveness Index 2010-11 rankings by
World Economic Forum