Panama is one of the fastest growing economies in Latin America, but there is a consensus that policies are needed to transform its growth into an inclusive and sustainable development path and that more should be done to spur innovation and productivity growth. Since the 2000s, the country has started to design and implement policies to promote innovation and has set up a mechanism to monitor implementation. This study analyses the recent economic and innovation trends and the innovation policy in the country, focusing, in particular, on the implementation of the National Strategic Plan for Science, Technology and Innovation (PENCYT) 2010-2014, with a view to identifying lessons to improve the innovation policy.