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Panama was inhabited by several indigenous tribes prior to settlement by the Spanish in the 16th century.Panama broke away from Spain in 1821 and joined a union of Nueva Granada, Ecuador, and Venezuela named the Republic of Gran Colombia.The earliest discovered artifacts of indigenous peoples in Panama include Paleo-Indian projectile points.Later central Panama was home to some of the first pottery-making in the Americas, for example the cultures at Monagrillo, which date back to 2500–1700 BC.It is bordered by Costa Rica to the west, Colombia (in South America) to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south.

Blending all of the above together, Panamanians believe in general that the word Panama means "abundance of fish, trees and butterflies".

This is the official definition given in social studies textbooks approved by the Ministry of Education in Panama.

However, others believe the word Panama comes from the Kuna word "bannaba" which means "distant" or "far away".

Some believe that the country was named after a commonly found species of tree (Sterculia apetala, the Panama tree).

Others believe that the first settlers arrived in Panama in August, when butterflies abound, and that the name means "many butterflies" in an indigenous language.

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