Central America: Panama Canal

Pick a Region:. . Central America:. . Panama Canal

Not only is the Panama Canal important to Panama for income and jobs, but it is also considered to be vitally important to the United States economy. Many U.S. exports and imports travel through the Canal daily (over 10% of all U.S. shipping goes through the Canal). Exports represent jobs for U.S. citizens because the products were made by U.S. workers. Imports enable U.S. consumers to receive needed products.

Since the United States is the only superpower in the world, the United States is interested in keeping the global economy running smoothly. If world trade is disrupted, it can lead to worldwide economic problems. Therefore, any disruption in the flow of goods through the Panama Canal could directly hurt the U.S. and global economies. For instance, if England were selling products to Peru, England's economy would suffer if the Canal were not operating. Without access to the Canal, the cost of exports from England to Peru would significantly increase because England would have to regain the added expenses involved in sailing around South America. Because of increased prices, Peru could not afford to purchase as many products from England, which in turn would decrease England's revenues gained from exports. Decreased revenues means that England would have less money available to purchase products from the United States and other countries. A "domino effect" would be set in motion as the United States and other countries experienced similar problems with their exports and imports. This example illustrates the economic importance the Panama Canal has to the U.S. and global economies.

If one considers the thousands of ships full of goods that pass through the Canal every year and the impact that closing the Canal would have on the world economy, one can understand the economic importance of the Canal. Therefore, keeping the Canal open is directly and indirectly important to the United States and to the global economy.