The capital of Panama is Panama city.
Panama City is at 8 degrees north and 80 degrees west. It connects the Atlantic Ocean to the Pacific Ocean. The Panama Canal is known all over the world because ships that need to get things from the East Coast to California do not have to go all the way around South America. The Panama Canal is a ten hour short cut that people use to save money and time. They can just go through the Panama Canal. It is much faster.
The canal saves ships a 20,000 Km trip around the coast of South America!
Panama is in Central America. The location of Panama City is important because it is near the Panama Canal.