Creating the First Honduran ZEDE: Lessons in Political Economy, Institutional Design, and Governance Systems

Abstract

This paper is a case study of the creation of the first ZEDE (Zones for Economic Development and Employment) in Honduras, the Próspera ZEDE. We provide a detailed accounting of the process by which the first ZEDE was formed, how its governance structures came to be, and what challenges and difficulties it faced. We draw from this experience lessons about institutional formation, political economy in the process of special jurisdiction formation, errors made in the formation process, and generalized lessons for future efforts. While the authors led the effort described in the case study, we focus on an objective factual accounting of what occurred as well as the internal reasoning processes by which decisions were made in an effort to transparently highlight lessons learned and contribute unique insights to the institution-building literature.