Why is Panama City the country’s largest urban area?

Panama City is the country’s largest urban area primarily due to its role as a major center for economic and social opportunity, which has driven significant internal migration since the mid-20th century. As the national capital, the city serves as a hub for financial services and activities associated with the Panama Canal.12

The city’s growth was further accelerated by the construction of the canal between 1904 and 1914, which transformed it into a modern, polyglot center. Today, its economy remains heavily dependent on canal traffic and its status as an international finance hub. Additionally, the city’s infrastructure—including its proximity to the port facilities at Balboa and its connectivity via the Pan-American Highway—continues to support its position as the primary destination for those seeking better living and economic conditions. Approximately two-fifths of the national population resides within its metropolitan area.21