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Costa Rica versus Panama, a Comparison for Expats

  
  
  
  
  

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People ask all the time about Panama as the new Costa Rica.  Both are popular expat locations and both have pros and cons.  Panama is cheaper from a tax perspective since under the pensionado program there, property taxes are waived for at least 10 years but keep in mind that many who move there do not do so under the pensionado program, therefore they still pay property taxes.  Candidly property taxes are low in both countries, so low that to base a consideration on where to live on that aspect makes no sense.  Choose the place you like the best based on quality of life, health care, ease and cost of accessibility, activities available, infrastructure, friendliness, etc.  Cost of living is candidly about the same in either country.  Living in Panama City is similar to living in San Jose, lots of expats, more crime, like city living anywhere. 

Costa Rica has many more Americans living there.  There are only a handful of American expat communities in Panama, Boquette, El Valle, Boca Del Toros, all far away from Panama City.  Panama is still trying hard to attract expats while Costa Rica is trying to slow down the inflow a bit.  Sure I'm biased to Costa Rica but here are some facts that might also help you understand why we chose Costa Rica over Panama.

Looking at statistics on things like availability of clean drinking water, number of students enrolled in secondary educational istitutes, number of population living in poverty, Costa Rica is just much better.  When basic needs are met, people prepare, educate and improve their situations.  When basic needs are not met, people fall behind. 

crime stats central AmericaAccording to the United nations Office of Drugs and Crime One of the main reasons to prefer Costa Rica over Panama is the size of the middle class in Costa Rica versus Panama.  According to the United nations Office of Drugs and Crime, in Panama nearly 81% of total population was living on less than $2.00 per day per capita in 2005.  The number was only 13% in Costa Rica.  There is also much higher use of drugs in Panama, both marijuana and cocaine.  In Costa Rica, most of the population is descended from European Spanish, nearly 96%, while in Panama most are descended from groups indigenous to Latin America and Africa.  The literacy rate in Costa Rica educational levels attained are much higher than in Panama.   

Flights to Panama versus Flights to Costa Rica

If you look on sites like Kayak, Expedia or Travelocity for flights to Panama city, Panama Tocumen International, Airport code PTY you will see that the main carrier to PTY is TACA airlines and Copa.  The airport is also serviced by American, Delta, United, Mexicana, Avianca, and Lacsa.  The average price from Miami is under $300 on TACA but once you get onto an American bases airline, the price jumps to over $400 on American, over $500 on Continental and over $900 on Delta.

Performing the same search from Miami to San Jose Costa Rica (Juan Santamaria airport, code SJO) you will find United at $250, American at $301, Continenal at $302, Delta at $411, US Air at $400 and even carriers like Alaska Airlines, Jet Blue, Spirit Airlines, Frontier Airlines, as well as TACA, Lacsa, Mexicana and Avianca.  More airlines and more flights equates to lower prices and more competition.  So if you end up going back to the states or Canada a few times each year, your cost of accessibility will be significantly lower. 

Pensionado Programs:  Costa Rica has one of the oldest pensionado (retiree) programs on the planet.  They reduced and eliminated many of the incentives they once offered to expats looking to immigrate there.  They did so since their pensionado program was hugely successful.  They initially offered a tax free import allowance though they do not any more.  Typically the duty on a 40 foot container of household goods is about $1500 (quoted from ABC Moving) so there is your guideline on potential savings verus Panama.

Panama has a newer pensionado program.  They are still trying to entice expats to move there.  They are still offering a tax free allowance on personal goods coming to Panama for expats.  In reality most expats bring little or nothing with them preferring to sell their possessions in the states and buy new ones that may be more appropriate to their new climate.  Panama currently also grants a haven from property tax for the first x number of years. (x is currently 20).  This exemption is subject to change but presently will save you about $200-$800 per year over a similiar home in Costa Rica.  So the savings you may get through the current Pensionado program in Panama would potentially be offset by a couple traveling to the states once or twice per year at higher airfares.  So let's compare some other considerations.

Crime: The 2009-2010 UNDP Human Development Report for Central America shows the homicide rate in Panama in 2008 was 19 per 100,000 inhabitants; much higher than the 2007 statistics, estimated at 13 per 100,000 inhabitants, and the 2000 figures that showed 10 per 100,000 inhabitants.

"Unfortunately, Panama had an impressive jump," said Hernando Gómez Buendia, coordinator of the report.

The report revealed that Panama is below Honduras, El Salvador, Guatemala, and Belize, which showed rates of 58, 52, 48 and 32 homicides per 100,000 inhabitants, respectively. Nonetheless, Panama is the country that observed the greatest increase in crime statistics across the region, according to the report.

Costa Rica showed a homicide rate of 11 per 100,000, up from 9 in 2007.  The figure is 10 per 100,000 in the US.   

 

Geography of Panama

Location: Middle America, bordering both the Caribbean Sea and the North Pacific Ocean, between Colombia and Costa Rica
Coordinates: 9 00 N, 80 00 W
Area: total: 78,200 sq km
water: 2,210 sq km
land: 75,990 sq km
Area comparative: slightly smaller than South Carolina
Land boundaries: total: 555 km
border countries: Colombia 225 km, Costa Rica 330 km
Coastline: 2,490 km
Maritime claims: contiguous zone: 24 NM
exclusive economic zone: 200 NM
territorial sea: 12 NM
Climate: tropical maritime; hot, humid, cloudy; prolonged rainy season (May to January), short dry season (January to May)
Terrain: interior mostly steep, rugged mountains and dissected, upland plains; coastal areas largely plains and rolling hills
Elevation extremes: lowest point: Pacific Ocean 0 m
highest point: Volcan de Chiriqui 3,475 m
Natural resources: copper, mahogany forests, shrimp, hydropower
Natural hazards: occasional severe storms and forest fires in the Darien area
Environment current issues: water pollution from agricultural runoff threatens fishery resources; deforestation of tropical rain forest; land degradation and soil erosion threatens siltation of Panama Canal; air pollution in urban areas; mining threatens natural resources
Geography - note: strategic location on eastern end of isthmus forming land bridge connecting North and South America; controls Panama Canal that links North Atlantic Ocean via Caribbean Sea with North Pacific Ocean

Population of Panama

Population: 3,309,679 (July 2008 est.)
Age structure: 0-14 years: 30.3% (male 492,403/female 472,996)
15-64 years: 63.4% (male 1,025,898/female 998,926)
65 years and over: 6.3% (male 94,122/female 106,974)
Median age: 26.1 years
Growth rate: 1.6%
Infant mortality: 16.37 deaths/1,000 live births
Life expectancy at birth: total population: 75.22 years
male: 72.68 years
female: 77.87 years
Fertility rate: 2.68 children born/woman
Nationality: noun: Panamanian(s)
adjective: Panamanian
Ethnic groups: mestizo (mixed Amerindian and white) 70%, Amerindian and mixed (West Indian) 14%, white 10%, Amerindian 6%
Religions: Roman Catholic 85%, Protestant 15%
Languages: Spanish (official), English 14%
note: many Panamanians bilingual
Literacy: definition: age 15 and over can read and write
total population: 92.6%
male: 93.2%
female: 91.9% 

Government

Country name: conventional long form: Republic of Panama
local long form: Republica de Panama
Government type: constitutional democracy
Capital: Panama
Administrative divisions: 9 provinces (provincias, singular - provincia) and 1 territory* (comarca); Bocas del Toro, Chiriqui, Cocle, Colon, Darien, Herrera, Los Santos, Panama, San Blas*, and Veraguas
Independence: 3 November 1903 (from Colombia; became independent from Spain 28 November 1821)
National holiday: Independence Day, 3 November (1903)
Constitution: 11 October 1972; major reforms adopted 1978, 1983 and 1994
Legal system: based on civil law system; judicial review of legislative acts in the Supreme Court of Justice; accepts compulsory ICJ jurisdiction, with reservations
Suffrage: 18 years of age; universal and compulsory
Executive branch: chief of state: President Martin TORRIJOS Espino (since 1 September 2004); First Vice President Samuel LEWIS Navarro (since 1 September 2004); Second Vice President Ruben AROSEMENA Valdes (since 1 September 2004); note - the president is both the chief of state and head of government
head of government: President Martin TORRIJOS Espino (since 1 September 2004); First Vice President Samuel LEWIS Navarro (since 1 September 2004); Second Vice President Ruben AROSEMENA Valdes (since 1 September 2004)
cabinet: Cabinet appointed by the president
elections: president and vice presidents elected on the same ticket by popular vote for five-year terms (not eligible for immediate reelection; president and vice presidents must sit out two additional terms (10 years) before becoming eligible for reelection); election last held 2 May 2004 (next to be held on 3 May 2009); note - beginning in 2009, Panama will have only one vice president.
Legislative branch: unicameral National Assembly (formerly called Legislative Assembly) or Asamblea Nacional (78 seats; members are elected by popular vote to serve five-year terms); note - in 2009, the number of seats will change to 71
Judicial branch: Supreme Court of Justice or Corte Suprema de Justicia (nine judges appointed for 10-year terms); five superior courts; three courts of appeal

Economy

Panama's dollarized economy rests primarily on a well-developed services sector that accounts for two-thirds of GDP. Services include operating the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism. Economic growth will be bolstered by the Panama Canal expansion project that began in 2007 and should be completed by 2014 at a cost of $5.3 billion (about 30% of current GDP). The expansion project will more than double the Canal's capacity, enabling it to accommodate ships that are now too large to transverse the transoceanic crossway and should help to reduce the high unemployment rate. The government has implemented tax reforms, as well as social security reforms, and backs regional trade agreements and development of tourism. Not a CAFTA signatory, Panama in December 2006 independently negotiated a free trade agreement with the US, which, when implemented, will help promote the country's economic growth.

GDP: $34.81 billion (2007 est.)
GDP growth rate: 6.4%
GDP per capita: $10,700
GDP composition by sector: agriculture: 6.8%
industry: 15.6%
services: 77.6%
Inflation rate: 2.9%
Labor force: 1.39 million
note: shortage of skilled labor, but an oversupply of unskilled labor
Labor force - by occupation: agriculture: 20.8%
industry: 18%
services: 61.2%
Unemployment: 9.8%
Electricity production by source: fossil fuel: 37%
hydro: 61.3%
other: 1.7%
nuclear: 0%
Industries: construction, brewing, cement and other construction materials, sugar milling
Agriculture: bananas, rice, corn, coffee, sugarcane, vegetables; livestock; shrimp
Exports: bananas, shrimp, sugar, coffee, clothing
Export partners: US 18.3%, Spain 15.6%, Germany 7.9%, Greece 4.1%
Imports: capital goods, foodstuffs, consumer goods, chemicals
Import partners: Japan 36.2%, China 16.5%, US 11.4%, Singapore 10%
Currency: balboa (PAB); US dollar (USD)
Currency code: PAB; USD

SOURCES: The CIA World Factbook, U.S. Department of State, Area Handbook of the US Library of Congress

Geography of Costa Rica

Location: Middle America, bordering both the Caribbean Sea and the North Pacific Ocean, between Nicaragua and Panama
Coordinates: 10 00 N, 84 00 W
Area: total: 51,100 sq km
water: 440 sq km
note: includes Isla del Coco
land: 50,660 sq km
Area comparative: slightly smaller than West Virginia
Land boundaries: total: 639 km
border countries: Nicaragua 309 km, Panama 330 km
Coastline: 1,290 km
Maritime claims: continental shelf: 200 NM
exclusive economic zone: 200 NM
territorial sea: 12 NM
Climate: tropical and subtropical; dry season (December to April); rainy season (May to November); cooler in highlands
Terrain: coastal plains separated by rugged mountains including over 100 volcanic cones, of which several are major volcanoes
Elevation extremes: lowest point: Pacific Ocean 0 m
highest point: Cerro Chirripo 3,810 m
Natural resources: hydropower
Natural hazards: occasional earthquakes, hurricanes along Atlantic coast; frequent flooding of lowlands at onset of rainy season and landslides; active volcanoes
Environment - current issues: deforestation and land use change, largely a result of the clearing of land for cattle ranching and agriculture; soil erosion; coastal marine pollution; fisheries protection; solid waste management; air pollution
Geography - note: four volcanoes, two of them active, rise near the capital of San Jose in the center of the country; one of the volcanoes, Irazu, erupted destructively in 1963-65

Population of Costa Rica

Population: 4,195,914 (July 2008 est.)
Age structure: 0-14 years: 28.3% (male 590,261/female 563,196)
15-64 years: 66% (male 1,359,750/female 1,329,346)
65 years and over: 5.7% (male 108,041/female 124,667)
Median age: 26.4 years
Growth rate: 1.45%
Infant mortality: 9.7 deaths/1,000 live births
Life expectancy at birth: total population: 77.02 years
male: 74.43 years
female: 79.74 years
Total fertility rate: 2.24 children born/woman
Nationality: noun: Costa Rican(s)
adjective: Costa Rican
Ethnic groups: white (including mestizo) 94%, black 3%, Amerindian 1%, Chinese 1%, other 1%
Religions: Roman Catholic 76.3%, Evangelical 13.7%, Jehovah's Witnesses 1.3%, other Protestant 0.7%, other 4.8%, none 3.2%
Languages: Spanish (official), English
Literacy: definition: age 15 and over can read and write
total population: 96%
male: 95.9%
female: 96.1%

Government

Country name: conventional long form: Republic of Costa Rica
local long form: Republica de Costa Rica
Government type: democratic republic
Capital: San Jose
Administrative divisions: 7 provinces (provincias, singular - provincia); Alajuela, Cartago, Guanacaste, Heredia, Limon, Puntarenas, San Jose
Independence: 15 September 1821 (from Spain)
National holiday: Independence Day, 15 September (1821)
Constitution: 7 November 1949
Legal system: based on Spanish civil law system; judicial review of legislative acts in the Supreme Court; has accepted compulsory ICJ jurisdiction
Suffrage: 18 years of age; universal and compulsory
Executive branch: chief of state: President Oscar ARIAS Sanchez (since 8 May 2006); First Vice President Laura CHINCHILLA (since 8 May 2006); Second Vice President (vacant); note - the president is both the chief of state and head of government
head of government: President Oscar ARIAS Sanchez (since 8 May 2006); First Vice President Laura CHINCHILLA (since 8 May 2006); Second Vice President (vacant)
cabinet: Cabinet selected by the president
elections: president and vice presidents elected on the same ticket by popular vote for a single four-year term; election last held 5 February 2006 (next to be held in February 2010)
Legislative branch: unicameral Legislative Assembly or Asamblea Legislativa (57 seats; members are elected by direct, popular vote to serve four-year terms)
Judicial branch: Supreme Court or Corte Suprema (22 justices are elected for eight-year terms by the Legislative Assembly)

Economy

Costa Rica's basically stable economy depends on tourism, agriculture, and electronics exports. Poverty has remained around 20% for nearly 20 years, and the strong social safety net that had been put into place by the government has eroded due to increased financial constraints on government expenditures. Immigration from Nicaragua has increasingly become a concern for the government. The estimated 300,000-500,000 Nicaraguans estimated to be in Costa Rica legally and illegally are an important source of (mostly unskilled) labor, but also place heavy demands on the social welfare system. Foreign investors remain attracted by the country's political stability and high education levels, as well as the fiscal incentives offered in the free-trade zones. Exports have become more diversified in the past 10 years due to the growth of the high-tech manufacturing sector, which is dominated by the microprocessor industry. Tourism continues to bring in foreign exchange, as Costa Rica's impressive biodiversity makes it a key destination for ecotourism. The government continues to grapple with its large internal and external deficits and sizable internal debt. Reducing inflation remains a difficult problem because of rising import prices, labor market rigidities, and fiscal deficits. Tax and public expenditure reforms will be necessary to close the budget gap. In October 2007, a national referendum voted in favor of the US-Central American Free Trade Agreement (CAFTA).

GDP: $45.77 billion (2007 est.)
GDP growth rate: 4%
GDP per capita: $11,100
GDP composition by sector: agriculture: 8.8%
industry: 29.9%
services: 61.4%
Inflation rate: 13.8%
Labor force: 1.82 million
Labor force - by occupation: agriculture: 20%
industry: 22%
services: 58%
Unemployment: 6.6%
Budget: revenues: $2.722 billion
expenditures: $3.195 billion
Electricity production by source: fossil fuel: 1.5%
hydro: 81.9%
other: 16.6% 
nuclear: 0%
Industries: microprocessors, food processing, textiles and clothing, construction materials, fertilizer, plastic products
Agriculture: coffee, pineapples, bananas, sugar, corn, rice, beans, potatoes; beef; timber
Exports: coffee, bananas, sugar; pineapples; textiles, electronic components, medical equipment
Export partners: US 30.3%, Netherlands 13.1%, UK 7.9%, China 7.7%
Imports: raw materials, consumer goods, capital equipment, petroleum
Import partners: US 43.2%, Japan 5.8%, Mexico 5.5%, Brazil 4.6%, Venezuela 4.5%
Currency: Costa Rican colon (CRC)

SOURCES: The CIA World Factbook, U.S. Department of State, Area Handbook of the US Library of Congress

Unicef's basic indicators on health, nutrition, education, economic condition, demographics and life expectancy puts Costa Rica WAY ON TOP.  Here are links to both countries for you to compare

http://www.unicef.org/infobycountry/costarica_statistics.html

http://www.unicef.org/infobycountry/panama_statistics.html

 

 

   

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