A report by the Development Bank of Latin America and the Caribbean (CAF) reveals that Panama has low levels of effective decentralization, despite a growing number of municipalities since the 1980s. The study, presented in Brasilia, uses the OECD and UCLG definition of subnational governments, excluding Panama's corregimientos due to lack of full autonomy.
Panama's expansion of municipalities hasn't led to functional decentralization. The country ranks with Chile, Nicaragua, and Venezuela in having very limited regional autonomy, with low scores on the Regional Authority Index (IAR). Public spending per capita by local governments is only 0.7% of national GDP per capita, among the lowest in the region. Investment remains highly centralized.
The report also addresses Panama's indigenous comarcas. While they possess certain rights like land management, their co-governance structure prevents classification as autonomous governments. High spatial segregation of indigenous populations is observed, limiting their inclusion in local development decisions.
The report highlights several structural barriers: