UNDERSTANDING THE POLITICAL ECONOMY OF SUCCESSFUL STATE-OWNED ENTERPRISE MANAGEMENT: A CASE STUDY OF THE PANAMA CANAL AUTHORITY

The Panama Canal turnover was not expected to end well. As the U.S. Senate deliberated upon the Panama Canal treaties in 1977, opponents painted a grim portrait of the canal’s future under Panamanian control. They warned of a toxic combination of Panamanian incompetence, malfeasance and greed. A common argument portrayed Panama as a politically unstable tropical backwater. To make matters worse, the threat of Soviet domination loomed. How could a poor country of 3.6 million people operate and maintain a complicated and internationally vital waterway? Very well, it turned out. This dissertation evaluates how Panama exceeded the alarmingly low expectations of its critics. In doing so, it details and analyzes the doomsday projections regarding the December 31, 1999 Panama Canal turnover. The research situates those concerns in the context of academic literature on state-owned enterprise management, and questions whether such profound skepticism was warranted in the case of Panama. To evaluate Panama’s performance operating the canal, the dissertation reviews a range of published material, including independent analyses of Panama’s canal management, as well as internal evaluations. It also provides independent qualitative and quantitative reviews of Panama’s record, including comparisons to the U.S. canal administration, interviews, a survey by the author of executives at multinational shipping companies, and a Panama national public opinion poll by the author. The dissertation adopts a case study approach and relies upon process tracing and thick description to determine the factors that contributed to Panama’s successful canal management. The analytic narrative is not chronological. It begins with a general discussion of state-owned enterprises; evaluates Panama’s canal management; explores the roots of Panama’s success; explains why predictions of Panama’s performance proved wildly inaccurate; and identifies risks to the Panama Canal Authority’s continued efficiency. The dissertation concludes by highlighting potential best practices for other countries operating consequential state-owned enterprises