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Why the Fuss About Startup Cities?

By: Fergus Hodgson - @FergHodgson - Aug 28, 2013, 8:16 am

Some important topics require a nuanced and deeper understanding for one to report on them, at least to do so well, and are thus neglected in popular media. The progress of the “startup cities” concept — new, innovative, and competitive jurisdictions, also known as special development regions, free cities, and ZEDEs — is one such instance.

With this problem in mind, both misreporting and a simple lack of coverage, we have sought to make this initiative a topic of specialty here at the PanAmerican Post (see here and here). To better familiarize myself with the basic idea and to meet the people on the frontlines, I attended a conference on the matter in late July at Universidad Francisco Marroquín (pictured) in Guatemala City, hosted by the Startup Cities Institute.

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This week on Across the Americas, Zachary Caceres joins me to offer the necessary context for a wider audience. He organized the event in Guatemala and is the chief information officer for SCI, the leading advocacy and research organization on the topic, and a fitting expert.

While a time frame for realization is difficult to predict, the concept is advancing rapidly, he says.

“Things have moved far faster than anyone has anticipated or been prepared for.”

The initiative face two key challenges: overcoming political opponents, those who oppose the relinquishment or opening up of land for fresh starts and new jurisdictions, and then the practical questions of how to actually provide the right environment for those jurisdictions to flourish and grow as intended.

“Honduras is the furthest along, going in this direction,” Caceres shares, “and that’s in large part just because they very consciously had this idea in mind. . . [Legislators] realized that they were also part of the problem, holding back the country, and that legislating one thing after another forever, trying to fix this very dire situation, was going to be very hard. So they passed a series of reforms that would provide for something quite like startup cities to form.”

While many foreigners may be eager to move to a place like Honduras and join one of these new jurisdictions, Caceres says that to begin with he hopes to see the benefits go to the people already there.

“The pay-offs, I think, need to go to the people who are in the nation that’s being forward-looking enough to reform. . . [Also], generally speaking, for instance, in a country like Honduras or in a country like Bangladesh or Mozambique, the people there are mostly at the bottom of the economic ladder, and they need it a lot more than say an upper-middle-class [US] American who wants to become an expat.”

In the long-run, though, the potential associated with a relatively blank slate and room for jurisdictional innovation remains enormous.

“Over time, if this idea catches on and more and more countries begin to use it, I think you will see a lot of opportunities for people who are not say from Bangladesh or Mozambique or whatever country might do this, to move there and take part, in the same way that a lot of expatriates have moved to Singapore or Hong Kong to take advantage of the institutions there.”

Regarding the upcoming projects and future of SCI, Caceres says they “are expanding on basically every front you could possibly imagine,” including more scholarly content, fundraising, and distinguishing themselves from other conventional policy institutes and nonprofits. They are even starting their own nonprofit, entrepreneurial endeavors in an effort to build best practices for potential startup city jurisdictions, so they can get off the ground more seamlessly and responsibly.

Fergus Hodgson Fergus Hodgson

Fergus Hodgson was the founding editor in chief of the PanAm Post, up until January 2016, and he now studies finance at Tulane University in Louisiana and Francisco Marroquín University in Guatemala. Originally from New Zealand, he has also lived in Argentina, Canada, Colombia, Ecuador, Ireland, and the United States. Follow @FergHodgson and his Facebook page.