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Panama, officially the Republic of Panama, is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the west, Colombia to the southeast, the Caribbean to the north and the Pacific Ocean to the south. The capital is Panama City. Explored and settled by the Spanish in the 16th century, Panama broke with Spain in 1821 and joined a union of Nueva Granada, Ecuador, and Venezuela, named the Republic of Gran Colombia. When the latter dissolved in 1830, Panama and Nueva Granada remained joined. Nueva Granada later became the Republic of Colombia.
With the backing of the United States, Panama seceded from Colombia in 1903, allowing the Panama Canal to be built by the U.S. Army Corps of Engineers between 1904 and 1914. In 1977, an agreement was signed for the complete transfer of the Canal from the United States to Panama by the end of the century.
Revenue from canal tolls represent today a significant portion of Panama's GDP. Panama has the third- or fourth-largest economy in Central America and it is also the fastest growing economy and the largest per capita consumer in Central America. In 2010 Panama ranked 4th among Latin American countries in terms of the Human Development Index, and 54th in the world in 2010. As of 2010, Panama is the second most competitive economy in Latin America as well according to the Global Competitiveness Index from the World Economic Forum (WEF). Panama's jungle is home to an abundance of tropical plants, animals and birds – some of them to be found nowhere else in the world.
Panama is located in Central America, bordering both the Caribbean Sea and the Pacific Ocean, between Colombia and Costa Rica. It mostly lies between latitudes 7° and 10°N, and longitudes 77° and 83°W (a small area lies west of 83°). Some people consider the territory east of the Panama Canal as part of South America although this is rare. Its location on the Isthmus of Panama is strategic. By 2000, Panama controlled the Panama Canal which connects the Atlantic Ocean and the Caribbean Sea to the North of the Pacific Ocean. Panama, at 75,515 km2, is ranked 118th worldwide on the basis of land size. For comparison, Panama is slightly smaller than the U.S. state of South Carolina or slightly larger than the Canadian province of New Brunswick.
The dominant feature of the country's landform is the central spine of mountains and hills that forms the continental divide. The divide does not form part of the great mountain chains of North America, and only near the Colombian border are there highlands related to the Andean system of South America. The spine that forms the divide is the highly eroded arch of an uplift from the sea bottom, in which peaks were formed by volcanic intrusions.
The mountain range of the divide is called the Cordillera de Talamanca near the Costa Rican border. Farther east it becomes the Serranía de Tabasará, and the portion of it closer to the lower saddle of the isthmus, where the Panama Canal is located, is often called the Sierra de Veraguas. As a whole, the range between Costa Rica and the canal is generally referred to by geographers as the Cordillera Central.
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