Case Study 5: Building and Rebuilding the Panama Canal

Paul Miller, Susan Sloper, Shanjiang Zhu

Questions to Consider:

What are the benefits brought by the Panama Canal for the U.S. How does the Canal influence the life of a Panamanian?

How much political influence did the U.S. yield in Central America while controlling the Panama Canal?

Should alternatives be looked at for a new canal? If so, is it possible to ensure that the problems that have faced the Panama Canal do not occur in a new canal?

Building of the Panama Canal:

The Panama Canal has a long history of construction. At approximately 51 miles in length, the canal was successfully completed in 1914 by the United States. This article provides a good overview of the building of the Panama Canal.

TR’s Legacy of the Panama Canal

This article provides a complete history of the Panama Canal, and particularly elaborates on the construction and structure of the canal.

The building of the Panama Canal

Affects of the Canal:

When we try to evaluate the benefits of the Panama Canal, we need to consider it with a comprehensive point of view. That is, not only considering its influence for the U.S. and the direct income from the fee charged, but also for the local people and for the entire American market.

The direct income from the Canal toll can be found in this paper. The figure shows that this income is large enough to cover the operation fee and initial investment after years of operation. You are suggested to read briefly the entire paper.

Social Savings of the Panama

The economy of Panama was divided into two competitive parts. The Canal Zone, which covers only 5% of its territory, sustains half of the population. Those who lived in the countryside, instead lived on cattle. Both sides did compete for the territory and forests as resources.(NOTE: This article must be opened on a University computer)

On Cattle and Ships: Culture, History and Sustainable Development in Panama

After the 1977 Treaty, although the relative importance of the Canal has reduced, as pipelines and larger vessels came into being, Panama got more from the canal. You can find the new deal at this link.

Economic Implications of the Panama Canal

Future of the Panama Canal:

The Panama Canal faces some difficult problems as we look into the future. The canal faces issues of not being able to hold today’s large ships, environmental degradation, and high costs of expansion. This article discusses these issues and the future of the proposed expansion of the canal.

Proposed expansion of the Panama Canal

With the high costs of rebuilding the Panama Canal, some feel that this provides an opportunity for international businesses. This article discusses the opportunities for international investment firms and banks and their interest in the expansion.

Opportunities for International Business

NICARAGUA:

Due to these problems that the Panama Canal is encountering, several new alternatives have been addressed, both by land and water. One country that is considering a new canal is Nicaragua. This article discusses the perennial shortcomings of various canal plans crossing Nicaragua. Political and economic financing have combined to kill of Nicaraguan canal plans for over 120 years.

Nicaragua hopes to rival the Panama Canal

Nicaragua has thought about the possibility of a dry canal. This article is about the impact on indigenous people residing on the east coast of Nicaragua, in the area of the proposed “dry canal”. Focus on chapters 1,2, and 7. Skim briefly over the rest of the article.

Nicaragua’s proposed dry canal

MEXICO:

Mexico is a second alternative location. The Isthmus of Tehuantepec is a favorable route for either a canal of “dry canal”.

The Isthmus of Tehuantepec