The ZEDEs as a Sudden Change


I was talking with a Honduran businessman the other day, who was saying that the ZEDEs are nothing new. In the past the big fruit companies got land for growing, then set up housing, schools, and hospitals — company towns, in other words. He saw the ZEDEs as just another form of the same: a big Korean company comes in, builds a factory, schools, etc.

So we then talked about Hong Kong as an example, how the rules were different and that then led to incremental, sustainable development. And we said how even though the ZEDEs might well host a company town, they are not at all dependent on some big multinational swanning in and taking over, rather they allow rules that allow local entrepreneurs to flourish. By the time we finished I think he saw things in a different light.

This is typical thinking, not just here but around the world: things are either cyclical or path dependent — which just shows how few people have read or understood Nassim Taleb, or the thinkers that came before him … or history.


Taleb’s analogy of a turkey before Christmas comes to mind. If the turkey does a regression analysis of its life, it would show a positive trend: the humans keep feeding and housing it, so therefore it feels more and more secure as time goes on. The longer something happens the more likely it is to happen, right? Of course, for the turkey, that’s not true. There are actions outside of its view: the appetites of humans who are bringing its sudden downfall ever closer.

That’s often true for us as well. Not that many of us stand to get eaten, but often the times when we are most confident of our job security or house price is just before it all goes south.

But can the reverse be true? Can the moment of most extreme pessimism be just before a sudden, positive reversal of fortunes? I can’t think of a coherent argument why not.

I suppose it all depends on the hidden forces outside of the subject’s view. In the Honduran context — and people in Honduras have long had an understandable tendency to be pessimistic — we could say that there are things that, if not hidden, are at least obscured to most people. The ZEDE idea is in the public domain, but then the public have never had reason to consider the power of institutional reform, and any discourse is seen through past history and pessimism. If you were to talk about the idea with someone from Dubai, they would get it instantly.

An idea is one thing, effective implementation is another. But for the ZEDEs it seems each day brings us closer to realization. The recent publishing of the names for the Committee for the Adoption of Best Practices shows yet another huge leap. You couldn’t wish for a better list of free-market reformers. If the goal is nothing less than the eventual creation of the best place in the world to do business, and therefore create jobs, then this must be close to the ideal group of people to allow it to happen.

For those who follow this, these are clues; these are those lighter hints of that sudden break to bright blue skies. For those who don’t, then all they see is the same old gloom. This could rapidly change, and such rapid change is not unprecedented.

In 1987, I was a messenger in London. One of my jobs was to wait in the visa line at the Soviet consulate, and it was here that I met a man — an academic studying the Soviet Union — who told me that the USSR and the Eastern bloc would fall in the next two years. This left the teenaged me incredulous; I was of the generation that had lived all my life under the cold-war and the threat of the four-minute warning; it seemed impossible. Yet two years later the Berlin Wall fell, and he was proved most resoundingly right.

I don’t know the Central American equivalent to dancing on a wall in bleached jeans — I’d imagine something more stylish — but we shall find out soon enough. Because this could be the fall of corruption, the fall of poverty, the final laying to rest for the ghosts of the banana republics. For this region, it really is that important.

This article first appeared on

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