Guatemala has the highest gross domestic product in Central America, followed by Panama, Costa Rica and El Salvador. Costa Rica's political stability, high standard of living, and well-developed social benefits system differentiate it from its Central American neighbors. Thanks to sustained government social spending (almost 20% of annual GDP), Costa Rica has made enormous strides toward achieving its goal of providing universal access to education, health care, drinking water, sanitation and electricity. Since the 1970s, the expansion of these services has led to a rapid decline in infant mortality, an increase in life expectancy at birth, and a sharp decline in the birth rate. The average number of children born per woman has fallen from around 7 in the 1960s to 3.5 in the early 1980s and is below the current replacement level.
Costa Rica's poverty rate is lower than that of most Latin American countries, but it has stagnated at around 20% for nearly two decades. Inadequate access to sanitation contributes to a high incidence of diarrhea among children in Panama, which is one of the main causes of Panama's high rate of chronic malnutrition, especially among indigenous communities. Foreign investors remain attracted by the country's political stability and relatively high educational levels, as well as by the incentives offered by free trade zones; Costa Rica has attracted one of the highest levels of foreign direct investment per capita in Latin America. Panama has one of the fastest-growing economies in Latin America and dedicates substantial funds to social programs, yet poverty and inequality continue to prevail.
Services include the operation of the Panama Canal, logistics, banking, the Colon Free Zone, insurance, container ports, flagship registration and tourism, and Panama is an offshore banking center. Organized illegal narcotics operations in Colombia operate within the remote border region with Panama. The Panamanian economy, based on the dollar, is based primarily on a well-developed service sector that represents more than three-quarters parts of GDP. The indigenous population represents an increasing proportion of Panama's poor and extreme population, while the non-indigenous rural poor have been more successful in lifting themselves out of poverty through labor migration from the countryside to the city.
Costa Rica's economy also faces challenges due to an increase in the fiscal deficit, an increase in public debt, and relatively low levels of national income. Costa Rica is a popular regional immigration destination because of its employment opportunities and social programs. Costa Rica has extensive telecommunications coverage, although the geographical distribution of digital services is uneven; recent regulatory liberalization has driven expansion in all sectors; the broadband market is the most advanced and most penetrating in Central America, but it lags behind many South American countries; operators that invest in NGN technology; number portability and cheaper broadband costs will increase competition; the government aims to subsidize telehealth and e-learning ( 202). Strong economic performance has not translated into broadly shared prosperity, as Panama has the second worst income distribution in Latin America. Many Nicaraguans who do unskilled seasonal work enter Costa Rica illegally or stay longer than their visas allow, which continues to be a source of tension.
Panama has expanded access to education and drinking water, but the availability of sanitation services and, to a lesser extent, electricity it is still deficient.
