State Capacity, the Fiscal System and Submission: Panama 1903-1945

Abstract

Panamá is an exceptional case of state building under the control of an imperial power that occupied its most valuable territory and exercised the monopoly of force. The development of a tax capacity by liberal governments and maintained by nationalistic regimes was accompanied by popular mobilizations that allowed it to gain a growing autonomy from the United States. The organization of a police force in the forties and of the National Guard afterwards gave it back the monopoly of force, still influenced by the U.S authority. However, the strength of the Panamanian state was compromised by an unequal tax regime that hardly touched the economic surplus of the society and by a public administration corrupted by patronage that was incapable of collecting and spending public resources in an adequate manner.

Keywords: Panama, economic history, fiscal accounts, state building

JEL Classification: N16, N26, N46