If you’re familiar with Honduras, you’ll know the country has more than its share of challenges. In addition to the 2009 constitutional crisis—a conflict between different branches of government—the nation struggles with the world’s highest murder rate, drug trafficking, and systemic corruption.
However, all of that may change with the implementation of an innovative idea: free cities. The Honduran congress has set into the nation’s constitution “Special Development Regions” (Las Regionales Especiales de Desarollo) (REDs), with the goal of allowing Honduras to become a business mecca, a Hong Kong of Central America.
The idea is to wipe the slate clean of governmental failure and allow for a fresh start in specific parts of the country. These largely autonomous regions will take proven approaches from around the world to write their own laws, have their own courts, and even handle their own immigration policies. The leaders of each region will also compete with the others to attract constituents and investors.
Promoted by the Free Cities Institute in conjunction with Guatemala’s Universidad de Francisco Marroquín, this initiative has drawn attention and optimism from The Economist magazine—and with good reason. With minimal taxes in each region (Article 55.), no taxes from the Honduran government, an eager labor force, and no barriers to entry, investors and potential residents are set to rush to the opportunity.
Recent history also affirms that, with freedom to trade and invest, the world’s poorest nations can rapidly become the most prosperous. Singapore, South Korea, and Taiwan, for example, all did that in just forty years. And Japan did so even after suffering destruction in World War II.
In fact, justified excitement about the initiative means that the locations under consideration remain a secret. Carlos Pineda, one of three CoAlianza commissioners overseeing the REDs, has said that eight locations are under review, with three likely to receive final approval from the Honduran congress. However, if he were to reveal them, people would already be seeking to purchase real estate there, as they predict rapidly increasing property values.
Investors won’t have to wait long, though. Pineda foresees the locations open for planning and construction in just six months.
Then, if successful, this initiative would have positive ramifications far beyond Honduras. First, it would hold oppressive governments accountable. A vote with one’s feet is more powerful than a vote at the ballot box, so we may well see people from here and other parts of the world departing for Honduras. Second, other nations—including Belize, the Dominican Republic, Guatemala, Panama, Rwanda, and Senegal—are considering similar initiatives. In a few decades, we may well see thriving and competing free cities dotting the globe and bringing prosperity to many.
For extended audio discussion of this issue, including interviews with Carlos Pineda and Michael Strong, cofounder of the Free Cities Institute, please click here.
UPDATE 10/19/2012: Unfortunately, the Honduran Supreme Court declared Special Development Regions unconstitutional, and therefore this project won’t continue. However, it’s possible other countries could pursue similar projects in the future.
About Fergus Hodgson
