.. where most observers see a dysfunctional state, a few dreamers see hope for an experiment that may upend our notions of what a state can accomplish. For the last few years, libertarians and other futurists have gazed upon this misgoverned mess of mountainous jungle and imagined a clean slate for innovations in political and economic growth. Honduras, they believe, can become a laboratory for creating wealth-producing institutions that can then be replicated worldwide. The only catch: To become a 21st-century trailblazer, Honduras—or at least a small territory within it—must become, well, not Honduras.
The notion of carving out an area inside an existing country with its own set of laws—economically freer and less complicated for businesses and citizens to navigate—has been popularized under many names: charter cities, free cities, future cities, and LEAP (legal, economic, administrative, and political) zones. The notion of zones for trade and economic activity freer than the nation-states around them dates back as far as the Greek island of Delos in the second century B.C. and the Hanseatic League in the late Middle Ages. Hong Kong and other Chinese “special economic zones” are more direct ancestors.
The idea seems to be gaining steam in the early 21st century, with policy entrepreneurs from all over the political spectrum hatching their own versions. Each variant proceeds from the insight that bad government hurts an economy’s prospects more than most people realize, yet can be escaped easier than you might imagine. Good governance, the theory goes, can blossom even within a bad system.