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As in previous years, Panama’s rate of economic growth in 2012 was the highest in Latin America. Panamanian government is led by political entrepreneurs who have managed to maintain and build on the momentum of the Panamanian economy, but who have not been capable of controlling the excesses of an exclusionary political system and of a weak rule of law. Economic inequality and political exclusion have stirred violent protests in 2012 that seem rather inexplicable in the light of the economic boom. This paper suggests that conflict and economic growth are closely related and that, contrary to the popular opinion, what harms Panamanian politics is the economy.