Neoliberal globalization and the pension reform in Panama

Neoliberal Globalization and the Pension Reform in Panama

   For the economic crisis of the 1980s, the Latin American nations experienced neoliberal globalization. In the process, the financial problems of the Pay-As-You-GO(PAYGO) pension scheme, upon which most of the Latin American nations had their pension insurance basis, had been highlighted. While some Latin American counties including Chile and Peru reformed their pension system to have private insurance companies operating scheme as a solution to the issue, the others did not. Panama did reform their pension system as their financial status was at risk. However, Panamanian’s choice was different from the countries that adapted neoliberal reform for their national pension system.

   This thesis aims to analyze why countries like Panama chose the pension scheme that might not be endorsed by both the multilateral and bilateral donors; especially when Panama is not only vulnerable to the external economic pressure, due to its openness, but also subordinate to the external debtors such as international financial organizations and donor countries, for its large liabilities. By bringing the definition of globalization as the interactions between the outside forces and inside responses borrowed from Cerny(2005), this paper analyzes the processes and results of the pension reform in Panama.

   Most of the research papers that have focused on the social policy in Latin America after neoliberal globalization are either statistical researches with the panel data in the range of whole Latin American countries or case studies with big countries in terms of economy and population such as Chile, Argentina or Brazil. However this paper attempts to find out how the small open economy in Latin America has responded to neoliberal globalization by the case of Panama’s pension reform.