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People of African descent account for 15 percent of the population.

These "Afro-colonials" descend from slaves who were imported in colonial times. The "Afro-Antillean" group descends from Caribbean residents who came to work on the construction of the Panama canal.

The urban elite is primarily Creole, mostly of Spanish descent.

There are also populations of Spanish, Italian, Greek, and Jewish origins.

In 1977, after lengthy negotiations, President Jimmy Carter signed a treaty that abolished the Canal Zone as a colonial enclave, arranged for Panamanian ownership of the canal in the year 2000, and provided for the closing of American military bases.

In 1925, the United States intervened in a revolt by Kuna Indians on the northeast Atlantic coast and established a tribal reserve. In the 1930s, the United States' military hired Kuna laborers to work at army bases.

Outside the city walls was a neighborhood of free blacks living in thatched structures.

A few neighborhoods of upper-class walled villas have appeared.

There is a longtime Chinese community, and a small Hindu community lives in the capital, Panama City.

The largest demographic group is the interioranos ("interior people"), who are classified as "Hispano-Indians." This group is largely mestizo (mixed European and native American), and its members consider themselves the "real Panamanians." Some interioranos grade imperceptibly into an acculturated native American population known pejoratively as cholos, who refer to themselves as naturales ("natives").

Survivors of the burning of Panama City in 1671 rebuilt a walled bastion on a rocky promontory to the west.

This became the home of the colonial administration and the Creole elite, who lived in two-story mansions.

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