NCPA - National Center for Policy Analysis

Honduras Will Create Model Cities Based on Free Market

February 17, 2011

The Honduran Congress is expected to soon pass an amendment to the constitution that would clear the way to put "model cities" based on free market principles into action, says the Wall Street Journal.

The idea is simple:

  • A sizable piece of unpopulated government land is designated for use as a model city.
  • A charter that will govern the city is drafted and the Congress approves it.
  • A development authority is appointed by the national government.
  • The authority signs contracts with the investors who will develop the infrastructure.
  • The city opens for business under rules that act as a magnet for investment.

Can it work?  The critics -- who interestingly enough seem to be mostly failed planning or development "experts" -- say it is unlikely because, well, this is Honduras.  But the chief architect of the plan, 35-year-old Octavio Sánchez, is not deterred.  

  • He points out that both Japan and Chile were once proclaimed culturally incapable of development.
  • He also argues that history is on Honduras's side: Separate legal systems inside cities generated untold prosperity as far back as the 14th century in Northern Europe's Hanseatic League and more recently in places like the Chinese city of Shenzhen.

Source: Mary Anastasia O'Grady, "Honduras's Experiment with Free-Market Cities," Wall Street Journal, February 14, 2011.

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