What Happened?
Honduras recently signed an agreement to build three private cities from scratch, led by an international group of investors.
So What?
The deals provide even more validation that the outsourcing trend is here to stay. More importantly, the projects are seen as an engine for growth in a small country that is in desperate need of economic vitality.
Why Outsource?
According to media reports, the project goals are twofold:
- Economy—The Honduran economy is in disarray. The project is intended to “bring badly needed economic growth” to the Central American country; reports estimate that project could employ up to 5,000 over the next six months “and up to 200,000 jobs in the future.”
- Politics—The project is also aimed a strengthening Honduras’ weak government, which is “overwhelmed by corruption, drug-related crime, and lingering political instability after a 2009 coup.”
Model City
The project will take place in a “special development region,” and will have the legal right to establish and run local infrastructure, including schools, hospitals, the courts, and even the police. The city will even be empowered to sign international agreements on trade, and set its own immigration policy.
Charter Cities
According to a recent article in Fast Company, these “special development regions” are the brainchild of a New York University economist named Paul Romer, who proposed charter cities to generate reform and growth in the developing world.
The Project
A consortium of investors called MKG Group is said to have signed an agreement to lead the project, headed by Michael Strong.
U.S. Analog?
Though we don’t have built-from-the-ground-up “charter cities” in the U.S., there are several communities that have literally outsourced the entire administrative function to third parties. The poster child for this is Sandy Springs, Georgia, which was recently featured in a New York Times article. Gov1 constantly tracks outsourcing developments and trends; you can always find the latest updates under “Outsourcing and Privatization” in the left-hand column.