Honduran ZEDEs: From National Politics to Local Democracy

Abstract

Special Economic Zones (SEZs) are generally lauded for their potential to increase economic growth, foster private investment, and create new jobs by introducing business-friendly institutions such as competitive tax and regulatory frameworks. However, a new generation of special zones is also being used to introduce democratic institutions into poorly governed countries. The economic success of the Dubai International Financial Center, Singapore, Hong Kong, and the Chinese SEZs inspired Honduran policymakers to amend the country’s Constitution in 2013 to allow for the creation of special Zones for Employment and Economic Development (ZEDEs), a new political subdivision of the State of Honduras with a constitutionally granted autonomy to adopt their governance structure and substantive law. However, unlike the Asian SEZs, Latin American special jurisdictions are bound by international law commitments to democratic governance and respect for human rights. This paper provides an overview of the democratic governance framework adopted by Próspera, the first Honduran ZEDE while comparing it to the mechanisms for political participation available at the national level. This paper explores the ZEDE regime’s potential to foster democratic change by introducing new and more effective legal mechanisms for Hondurans to exercise their civil and political rights through semi-autonomous local governments.