This is surely an idea whose time has come. It is about establishing a clear cut Graft
Free Zone in the countries receiving foreign aid. It has long been apparent that it is graft
that grinds a population into poverty and keeps it there. Take that out of the equation and even shanty towns show us this. What is so apparent though is the also the
life blood of whatever local elite actually exists. This same elite has a stranglehold on power
and will always be opposing change.
Breaking this vicious cycle needs to be done just this way by
establishing protected enclaves. It is
the lesson drawn from all the reformers and the success stories out there. In time success lifts all boats and it all
begins to grow out of the trap.
That Honduras is trying it out is welcome and hopefully we can create
an international template that can be deployed everywhere.
Urban prosperity in the RED
PAUL
ROMER AND OCTAVIO SANCHEZ
From Wednesday's Globe and
Mail
Published Wednesday, Apr.
25, 2012 2:00AM EDT
With the near unanimous
support of its Congress, Honduras recently defined a new legal entity: la
Región Especial de Desarrollo. A RED is an independent reform zone intended to
offer jobs and safety to families who lack a good alternative; officials in the
RED will be able to partner with foreign governments in critical areas such as
policing, jurisprudence and transparency. By participating, Canada can lead an
innovative approach to development assistance, an approach that tackles the
primary roadblock to prosperity in the developing world: weak governance.
Many people from around the
world would like access to the security and opportunity that Canadian
governance makes possible. According to Gallup, the number of adults worldwide
who would move permanently to Canada if given the chance is about 45 million.
Although Canada can’t accommodate everyone who’d like to move here, it can help
to bring stronger governance to many new places that could accept millions of
new residents. The RED in Honduras is the place to start.
With half of its population in
urban areas, Honduras is among the poorest and least urban countries in Latin
America. About four million Hondurans now live in cities, a number the United
Nations expects to more than double by 2050. The Honduran government sees this
rapid urbanization as an opportunity for inclusive growth and reform.
Honduran congressional support
for the RED reflects a clear understanding of the challenges the country faces.
Inefficient rules are the major obstacle to peace, growth and development.
These rules are difficult to change, especially in a society that suffers from
fear and mistrust. Building a new city on an undeveloped site, free of vested
interests, with trusted third parties, is one way to fast-track reforms that
might otherwise take decades to achieve.
Canadians are increasingly
aware of the limits of traditional aid but remain committed to the principle
that supporting international development is not only in Canada’s national
interest but is the right thing to do. Recent trade agreements with Peru, Colombia,
Panama and Honduras demonstrate that Latin America remains high on Canada’s
development agenda.
The RED offers a new way to
think about development assistance, one that, like trade, relies on mutually
beneficial exchange rather than charity. It’s an effort to build on the success
of existing special zones based around the
export-processing maquila industry.
These zones have expanded
employment in areas such as garments and textiles, with substantial investment
from Canadian firms such as Gildan, but they haven’t brought the improved legal
protections needed to attract higher-skilled jobs. By setting up the rule of
law, the RED can open up new opportunities for Canadian firms to expand
manufacturing operations and invest in urban infrastructure.
By participating in RED
governance, Canada can make the new city a more attractive place for would-be
residents and investors. It can help immediately by appointing a representative
to a commission that has the power to ensure that RED leadership remains transparent
and accountable. It also can assist by training police officers.
The courts in the RED will be
independent from those in the rest of Honduras. The Mauritian Supreme Court has
agreed in principle to serve as a court of final appeal for the RED, but Canada
can play a strong complementary role. Because the RED can appoint judges from
foreign jurisdictions, Canadian justices could hear RED cases from Canada and
help train local jurists.
Oversight, policing and
jurisprudence are just a few of the ways in which Canada can help. Effective
public involvement will also be required in education, health care,
environmental management and tax administration. Such co-operation can be based
on a fee-for-service arrangement in which the RED pays Canada using gains in
the value of the land in the new reform zone.
The world does not need more
aid. As the Gallup numbers show, it needs more Canada – more of the norms and
know-how that lead to the rule of law, true inclusion and real opportunity for
all. Because only people who want to live under the RED’s new system of rules
would choose to move there, Canada’s presence would not only be welcome but
legitimate.
By working together, Canada
and Honduras can do what traditional aid can’t: offer people a chance to live
and work in a safe and well-run city, one that provides economic opportunities
for Canadians and Hondurans alike, and one that has the potential to inspire
reform in the rest of Honduras and throughout the region.
Paul Romer is a professor of
economics at the New York University Stern School of Business. Octavio Sanchez
is chief of staff to the President of Honduras. Prof. Romer is co-author of a
recent paper for the Macdonald-Laurier Institute on charter cities,
economic development and Canadian opportunities.
Paul Romer’s charter cities
project – some efforts by Honduras beginning to show
http://mostlyeconomics.wordpress.com/2011/12/12/paul-romers-charter-cities-project-some-efforts-by-honduras-beginning-to-show/
In Mar-11, I had posted how
Honduras has become the first country to allow Paul Romer’s
experiment of charter cities.
There is some more work since
then. Honduras has created RED which are special development regions
where these cities can come up. In Jul-11, Congress passed a
constitutional statute that defines the governance structure for the RED.
In February of 2011, the
Honduran Congress passed a constitutional amendment that gives the government
the power to create Special Development Regions (“las Regiones Especiales de
Desarrollo” or RED in spanish). In July of 2011, the Congress passed a
constitutional statute that defines the governance structure for the RED.
Though part of sovereign
Honduran territory, a RED has its own administrative systems and laws.
Initially, governance in the RED will be directed by a governor who is
accountable to a nine person Transparency Commission. The constitutional
statute that legally defines a RED can only be modified with a two-thirds
majority vote in Congress and approval by referendum from the people living in
the RED.
A RED can only be established
if the Honduran Congress votes to approve its boundary. Though there are many
possible sites for a RED in Honduras, the Congress has not yet voted to approve
the boundary for a particular site.
The first site has been
identified as per this economist article (HT: Tyler Cowen). It
is Trujillo in north of Honduras next to Caribbean Sea:
TRUJILLO is a sleepy
backwater, but one with a lot of history. The beautiful bay surrounded by
lagoons and mountains on the northern coast of Honduras was where Christopher
Columbus set foot on the American continent during his fourth voyage in 1502.
But in a few decades, it might be known for something entirely different: being
the Hong Kong of the West. Scores of skyscrapers and millions of people could
one day surround the natural harbour. The new city could dominate Honduras,
today one of the poorest and most crime-ridden countries in Central America,
becoming a magnet for most of the region’s migrants.
The prospect may sound fantastic,
but this is the goal of an ambitious development project that Honduras is about
to embark upon. In a nutshell, the Honduran government wants to create what
amounts to internal start-ups—quasi-independent city-states that begin with a
clean slate and are then overseen by outside experts. They will have their own
government, write their own laws, manage their own currency and, eventually,
hold their own elections.
The article points to
challenges and issues for the first charter city. A must read.
Meanwhile they have appointed
members of Transparency Commission which will oversee the operations
of this project:
Last July, the Honduran
National Congress passed aconstitutional statute that defines the
governance structure for la Región Especial de Desarrollo (RED), or the Special
Development Region, in Honduras. The statute calls for the creation of a
Transparency Commission, a body that will help to ensure that the process
governing the development of the RED remains open, honest, and free of
corruption.
On December 6, President
Porfirio Lobo appointed the initial members of the Transparency Commission:
1.
George Akerlof – Professor of Economics at
the University of California at Berkeley, Senior Resident Scholar at the
International Monetary Fund, and Nobel Prize Winner
2.
Harry Strachan – Former President of INCAE
Business School, Director Emeritus at Bain & Co., and Managing Partner at
Mesoamerica Partners and Foundation in Cost Rica
3.
Ong Boon Hwee – Former Chief Operating
Officer of Singapore Power and Former Brigadier General in the Singapore Armed
Forces
4.
Nancy Birdsall – President and Co-Founder
of the Center for Global Development , former Senior Associate at the Carnegie
Endowment for International Peace, and former Executive Vice President at the
Inter-American Development Bank
5.
Paul Romer (Commission Chair) – Professor
of Economics at the New York University Stern School of Business
It is a nine member commission
and first job is to identify the right people to fill the committee positions.
How about Ed Glaesar on the board?
Easily one of the largest
experiments in growth and development economics. People are already criticising
it for bringing back colonial times, so will be watching the developments
closely looking for any opportunity to speak against the project..
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