based, heavily weighted toward banking, commerce, and tourism, due to its key geographic location. The handover of the canal and military installations by the U.S. has given rise to new construction projects. The Martín Torrijos (son of Omar Torrijos) administration has undertaken controversial structural reforms, such as a fiscal reform and a very difficult Social Security Reform. Furthermore, a referendum regarding the building of a third set of locks for the Panama Canal was approved overwhelmingly (though with low voter turnout) on October 22, 2006.
The Panamanian currency is the balboa, fixed at parity with the United States dollar. In practice, however, the country is dollarized; Panama mints its own coinage but uses U.S. dollars for all its paper currency. Panama is one of three countries in the region to have dollarized their economies, the other two being Ecuador and El Salvador.
The high levels of Panamanian trade are in large part due to the Colón Free Trade Zone, the largest free trade zone in the Western Hemisphere. Last year the zone accounted for 92 percent of Panama's exports and 65 percent of its imports, according to an analysis of figures from the Colon zone management and estimates of Panama's trade by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
Panama fares decently in tourism receipts and foreign direct investment as a percent of GDP (the fourth-highest in Latin America in both categories) and Internet penetration (eighth-highest rate in Latin America).
Despite the large revenues from the Panama Canal and tourism, the World Bank reports that the Republic of Panama continues to have poverty–affected areas, 95 percent of which are from indigenous property, owing in part to lack of close governmental contact. 
Income inequality is also a big problem in this country. According to the Inter-American Development Bank, Panama has one of the worst levels of income inequality in the continent, even though it is one of the wealthiest countries in Central America.
Because of its historical reliance on commerce, Panama is above all a melting pot. This is shown, for instance, by its considerable population of people of Chinese origin. Many Chinese immigrated to Panama to help build the Panama Railroad in the nineteenth century, although larger numbers have immigrated over the last few decades mostly as economic immigrants. At least 6 percent of Panama's population are of full or partial Chinese descent. A term for "corner store" in Panamanian Spanish is el chinito (the little chinese man), reflecting the fact that many corner stores are owned and run by Chinese immigrants.
Many languages, including seven indigenous ones, are spoken in Panama, although Spanish is the official and dominant language. English is now a second official language, is spoken natively by the West Indian (mainly of African origin) population, and is a second language for many professionals.
More than half the population lives in the Panama City-Colón metropolitan corridor. Panama City was enriched by the past century of American influences in terms of additions to the country's Latin culture, economics (the U.S. was involved in development of roads, schools and medical care), and international trade by the nearby Panama Canal, once under U.S. jurisdiction.
Panama is rich in folklore and popular traditions. Brightly colored national dress is worn during local festivals and the pre-Lenten carnival season, especially for traditional folk dances like the tamborito. Lively salsa—a mixture of Latin American popular music, rhythm and blues, jazz, and rock—is a Panamanian specialty, and Rubén Blades its best-known performer. Indian influences dominate handicrafts such as the famous Kuna textile molas. Artist Roberto Lewis' Presidential Palace murals and his restoration work and ceiling in the National Theater are well known and admired.
There are seven indigenous peoples in Panama:
The first six years of primary education are compulsory, and in 2007 there were about 357,000 students enrolled in grades one th