Adam Davidson on the Special Zone in Honduras

NPR’s global economics correspondent, Adam Davidson, writes about charter cities and the Honduran Special Development Region in this week’s New York Times Magazine. As always, Adam’s column is well-worth reading in its entirety. The piece does raise a couple of questions about the special zone project in Honduras, which we address below.

Q: Is the Honduran government putting land in the Special Development Region up for sale to foreigners?
A: No. Though attention-grabbing, the headline that the editors chose for Adam’s piece — “Who wants to buy Honduras?” — in no way reflects the actual specifics of the Honduran proposal for a Special Development Region (known locally as la RED). If and when the Honduran Congress approves a physical boundary for the RED, the responsibility for managing the land within it will be given to an autonomous RED government. The land itself will remain part of sovereign Honduran territory, albeit under the different system of rules in the RED. In managing the land, the RED government will lease parcels to private developers, all of whom will be subject to the authority of the independent RED government. What the Hondurans envision is a fiscal arrangement in which land leases help to finance the provision of public goods in the RED, much as they do in Singapore or Hong Kong.

Q: In what sense is this Paul Romer’s project? 
A: Press accounts, including Adam’s, sometimes refer to “Romer’s charter city” in Honduras. It’s easy to understand why, as Romer has been a close consultant on the project in Honduras. But this description may generate two points of confusion that are worth clearing up:

1. Dating back to the Maduro administration (2002-2006), policy experts like Octavio Sanchez have been thinking about the potential for larger-scale special zones in Honduras. Though the RED incorporates core principles of the charter city concept, the Hondurans have had to go much further in spelling out specifics. In the choice of these detailed specifics, it was the Hondurans who took the lead, devising new and interesting details as they drafted the enabling legislation, details that Romer and his team had not considered before working with Honduras. The RED truly is a Honduran initiative.

2. Adam’s piece does not in any way suggest that Romer will profit from the development of the RED, nonetheless it’s worth reiterating that neither Romer nor anyone on his small team of advisors has or will have a financial stake in the RED. The team’s work in Honduras is pro-bono, it does not accept consulting fees or expense reimbursement from the Honduran government.