Since the 1950s, Panama has been in the midst of massive urban expansion. In 1960 slightly more than one-third of the total population was classified as urban; by the early 1980s, the figure had risen to 55 percent. Between 1970 and 1980, overall population increased by 2.5 percent per year, urban population by 2.8 percent, and the metropolitan population surrounding Panama City by 3.7 percent. Regional cities shared in the general urban expansion: the number of people in Santiago grew at 4.1 percent annually; David, 3.7 percent; and Chitré, 3.3 percent. Economically depressed Colón lagged with an annual increase of less than 0.5 a percent. Economic activity and population density in Panama were concentrated along two main axes: the Pan-American Highway (also known as the the Inter-American Highway) on the Pacific corridor from La Chorrera to Tocumen and the Trans-isthmian Highway from Panama City to Colón.
Far and away the most significant focus of urban development was the path following the former Canal Zone that stretches from Colón on the Atlantic coast to Panama City on the Pacific. In the mid-1980s, the region accounted for more than half the total population of the country and over two-thirds of all those classified as inhabitants of cities. It also included most nonagricultural economic activity: 76 percent of manufacturing, 85 percent of construction, 95 percent of transportation, and 84 percent of communications. Growth was not spread evenly throughout the region, and since the 1950s, Panama City and its environs had eclipsed Colón. Colón remained the only significant urban center on Panama's Atlantic coast, but by the early 1980s, substantial numbers of that city's business and professional community had emigrated in response to Panama City's expanding economy.
In terms of sheer numbers, most of the urban expansion was concentrated in slum tenements and, since the 1950s, in squatter settlements around the major cities. As was the case in most urban trends, Panama City led the way. In 1958 there were 11 identifiable slums or squatter settlements housing 18,000 people associated with the city; by the mid-1970s, there were some 34 slum communities and their population had mushroomed more than five-fold. Surveys indicated that 80 percent of slum and squatter settlement inhabitants were migrants to the city.
Many of the tenements took the form of two-story frame houses built as pre-World War I temporary housing for the canal labor force. They continued to be occupied, although in the early 1980s they were in an advanced state of decay. When one part of a building collapsed, slum dwellers continued to live in those sections of the building that remained standing. The structures were frequently condemned, which merely added to their attractiveness for impoverished city dwellers, because the rent therefore dropped to nothing. Squatter settlements offered their own inducements. If squatters were able to maintain their claims to land, the settlements tended to improve and gained amenities over time. Because they were essentially rent-free, they gave their inhabitants considerable advantages over costly and over-crowded, if more centrally located, tenements. A substantial portion of the squatters settled on government land, and there were numerous programs to permit them to purchase their housing sites. The Torrijos regime allocated funds for low-income housing projects, and there were efforts to upgrade the amenities available to the urban poor. By the 1980s, about 96 percent of the urban population had access to potable water and nearly 70 percent had electricity. Despite indications of some slowing in the rate of rural-urban migration in the 1980s, migrants represented a major strain on public services and the economy's ability to generate employment.
Although rural society was relatively homogeneous and simple in the social distinctions it made, urban Panama was not. It was ethnically and socially diverse and highly stratified. City dwellers took note of ethnic or racial heritage, family background, income (and source of income), religion, culture, education, and political influences as key characteristics in classifying individuals.
But, in the late 1980s, the boundaries among the elite, the middle class, and the lower class were neither especially well defined nor impervious. The ambitious and lucky city dweller could aspire to better significantly his or her social and economic status. Neither were the distinctions between rural and urban inhabitants absolute. City and countryside were linked in numerous ways; given the frequency with which migrants moved, this year's urban worker was last year's and (not uncommonly) next year's peasant. There was considerable social mobility, principally from the lower to the middle class and generally on an individual rather than a group basis. Wealth, occupation, education, and family affiliation were the main factors affecting such mobility.
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