SHENZHEN, a MODEL for HONDURAS? - VisualPolitik EN - YouTube

Here’s a question for all of you, what brand is your mobile phone?

I guess many of you will answer Apple, Samsung or Huawei.

How do I know?

Well no, I’m not psychic or anything like that.

I just know because year after year these three companies have lead sales in the global

mobile phone market.

Together they sell approximately half of all smartphones in the world.

Although, due to recent events, things could change a lot.

The point is, folks, that we’re talking about a huge market.

It’s estimated that in 2018 the number of smartphone users reached the staggering figure

of 3 billion people.

China tops the list of most users worldwide, almost 780 million Chinese use a smartphone

every day.

And not only that.

China has also become a key player in the industry.

For example, it’s the country of origin of some of the largest smartphone manufacturers

in the world.

We’re talking about companies like Huawei and ZTE.

So, do you know where in China these devices are manufactured?

Yes, in the city of Shenzhen, better known as China’s Silicon Valley.

We’ve already told you about this incredible place in several videos.

And we have also told you how in just 40 years, Shenzhen has gone from being a small fishing

town to becoming a megacity that specializes in advanced technology.

It’s one of the fastest growing places on the planet.

In case, if you haven’t seen them, I’ll leave a link to several related videos in

the description.

And, it isn’t just Chinese companies like Huawei or ZTE, even Apple and Samsung work

with a lot of suppliers in this city.

This means that practically all of us are, in one way or another, dependent on Shenzhen.

We use this city’s products constantly, every day 24/7.

In other words, we all have a little bit of Shenzhen in our hands!

Now, how exactly did this enormous transformation take place?

Is it a unique case in the world?

And the most important question, what on earth has Shenzhen to do with Honduras, one of the

poorest countries in the Americas, if not the world?

Listen up

(THE SEED OF CHANGE)

We told you here on VISUALPOLITIK, at the beginning of the 1980s, the then Chinese president,

Deng Xiaoping created a “Special Economic Zone” on the border with Hong Kong, in Shenzhen.

It was the first of many areas that would later spread throughout China.

Now, just a moment, many of you may be thinking: what exactly is a Special Economic Zone?

Well, folks, a Special Economic Zone is basically a defined geographical area within a country

where the rules for doing business are different, usually much less restrictive, than in the

rest of the country.

These zones, folks, were designed as a way to boost trade and investment.

They have clear geographical limits; different rules and regulations; and their own administrative

system.

In short, we’re talking about territories designed to target business, production and

investment.

So in China’s case, these places became capitalist havens within a completely socialist

model.

And, do you know what?

They were a huge success.

The opening of these economic zones attracted a huge amount of investment, of both Chinese

and foreign capital.

All this investment attracted thousands of immigrants and drove the construction of factories

and homes.

By the mid-1990s, Shenzhen already had three million inhabitants and an extraordinarily

dynamic economy.

The process continues to this day.

Shenzhen currently has 12 million residents, which rises to 15 million during the summer

and fall season when factories work exhaustively to meet the demand for electronic gifts for

Christmas.

Santa Claus, folks, can’t forget all the smartphones, drones and latest generation

gadgets that are sold during the Holiday Season as if there were no tomorrow.

However, China hasn’t been the only country to bet on this model.

Another example can be found in the United Arab Emirates, especially in the Emirate of

Dubai.

If you’re a fan of this channel, you would have heard us talking about this in other

videos.

For example, there’s Jebel Ali or Dubai’s Financial Center.

The latter not only has its own regulations, but also its own courts.

It also includes reduced bureaucracy, fewer taxes, a lot of legal security and simple

procedures to do business.

What more could you want?

Well, the fact is that the strategy to diversify the UAE economy beyond oil was based fundamentally

on these Special Economic Zones, of which there are currently more than 45 throughout

the country.

The result?

The Emirates have had the highest economic growth in the entire region since 1980.

During this time, its GDP has multiplied by no less than ten.

Now, just a second.

Does this mean that opening Special Economic Zones is a recipe for success?

Well, sadly that doesn’t seem to be the case.

For a Special Economic Zone to really work, it needs to meet certain requirements:

It needs to manage itself with complete autonomy; have good infrastructure; there needs to be

a lot of legal security; a lot of economic freedom; low taxes, little bureaucracy and

enough land to expand.

So far, we have seen two success stories: China and the UAE.

Now, can we find a case where this strategy has failed?

Of course.

In a way, India has historically been an example not to follow.

Allow me to explain.

India established its first Special Economic Zones back in the 1960s, much earlier than

China.

In fact, it could be considered a pioneer in the strategy.

However, in spite of its head start, by the year 2000 there were barely seven zones operating

throughout the country, with much, much more modest results than those of the Chinese example.

Why?

Well, folks, these areas didn’t manage to eliminate bureaucracy, they didn’t work

autonomously, they had limited space and operated with too many restrictions.

Basically, instead of Special Economic Zones, they were shelled areas.

That’s one of the reasons China has grown much more than India in recent decades.

Now, just a second.

If you’ve made it this far you’re probably thinking: Simon, what on earth does all this

have to do with Honduras?

Well... listen up.

(THE HONDURAN EXPERIMENT, REALITY OR FICTION?)

Folks, Special Economic Zones are very popular in the world of international trade.

Since the 1980s, they’ve sprouted up like weeds.

In 1986, the International Labor Organization reported 176 areas in 47 countries, and in

2006 there were already more than 3,500 in 130 countries.

Currently in Latin America, it is estimated that there are more than 300 Special Economic

Zones.

More than half of these are in Central America.

Of course, as you can imagine, with much more restrictive conditions than in China’s case.

You know, Latin governments love to control everything... or at least they try to.

However, folks, there is a country that has put a plan on the table to change this situation.

That country is Honduras.

Honduras is one of the poorest countries in the entire region.

A country where the vast majority of the population lives in poverty, which has enormous rates

of violence and where every year tens and tens of thousands of people try to escape

in search of a better life, usually to the United States.

‘I have to try’: New migrant caravan leaves Honduras and heads for the United States.Washington

Post)

Violence and gangs obscure life in Honduras, America Economía)

Well folks...

In recent years Honduras has presented an ingenious plan to try to change this situation.

A plan in which the American economist Paul Romer, winner of the Nobel Prize in Economics

of 2018, has played a prominent role.

The strategy consists of creating “Zones of Employment and Economic Development”

throughout the country.

Now, what exactly are the ZEEDs?

Well, folks, along the same lines that we talked about and given that things don’t

work in Honduras, ZEEDs are a kind of experiment aimed at jump-starting economic activity so

it can grow from scratch in some areas of the country.

That is, ZEEDs will be areas in the Honduran national territory that will have special

regulations and their own institutions to guarantee security – both physical and legal

– and more ease to do business.

As everything would start from scratch, it wouldn’t be necessary to change the entire

national system, which seems impossible due to all the existing interests.

The idea is that these ZEEDs will attract a lot of investment and create many jobs,

so that they can create a change in the rest of the country.

As happened with China’s Special Economic Zones.

The ZEEDs will have their own legal personality, will be administered autonomously and are

authorized to establish their own policies and regulations.

And not only that.

They will also have their own police, their own independent courts and operate under the

tradition of Anglo-Saxon law, known as “common law”.

Additionally, these areas’ land will be the property of the state, but its administration

will be borne by the ZEEDs themselves, which will define how that land can be accessed

or developed.

All in a competitive framework, so that companies and investors can have the land they need

for their projects without having to face heavy urban regulations that could slow development.

That way, each special zone can specialize in different activities or be organized in

different ways to not only compete with the rest of the world but also to compete with

each other, something that would force its administrators to copy and improve the best

existing policies to attract investment, attract talent and ultimately boost the country’s

development.

Smart right?

We can imagine financial centers, logistics centers, special tourist areas and even autonomous

cities.

Wait, autonomous cities?

Yes, you heard that right: why limit these special zones only to companies?

Why not try to build coexistence models that can work better than the mess that currently

exists in Honduras?

These are known as “Free cities”, something we’ll be talking about extensively here

on VisualPolitik.

So, don’t forget to subscribe and click the bell to keep up with all our new videos.

But just a second before you start ringing the bells.

Folks, this may sound like a very, very attractive project, but isn’t it surprising that it’s

actually the Honduran political elite who’s leading this process?

Isn’t that suspicious?

Honduran President’s Brother, Arrested in Miami, Is Charged With Drug Trafficking.

New York Times)

Well, that’s actually what Paul Romer himself thinks.

He decided to distance himself from the project.

Why?

Well, because he thinks that the Honduran elite doesn’t really want to promote competition

and investment, they want to have a territory that will only benefit them.

They have passed a new law that crosses my bright red line.

It removes all possibility of electoral accountability for the people who run the zone.

This was not in the law that I supported.

[...]

I can’t tell if what we are watching is a farce or a tragedy.

It could end up as farce because I can’t imagine a thoughtful investor would go in

and invest under these circumstances, in a place controlled by a crony aristocracy.

Paul Romer)

And he isn’t the only doubter.

This project’s evolution has raised many doubts, the ZEEDs could even end up simply

being an instrument so that the oligarchs as always can take over more sections of the

country and play with them at whim.

The lack of transparency and the country’s social conflicts don’t seem to reflect the

image of ​​a government that seeks to promote development.

That’s why the initial buzz has been replaced by disenchantment and suspicion.

Basically, we’re presented with a fantastic idea, and possibly a terrible execution.

In any case, the ZEEDs are projected to start at the end of 2019.

If they manage to consolidate them and move forward respecting the spirit of freedom,

competition and equality of opportunities with which the Special Economic Zones were

born, we could be facing a total change of course for Honduras.

But, at this point, it’s hard to be optimistic about this.

In short, the question is, is Honduras really serious about creating a model of fully autonomous

ZEEDs without political interference?

Will Honduras become Central America’s Shenzhen or will it become another failed case like

India?

Whatever the result, we’ll be watching the progress here, on VisualPolitik.

So I really hope you enjoyed this video, please hit like if you did, and don’t forget to

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Don’t forget to check out our friends at the Reconsider Media Podcast - they provided

the voiceover in this episode.

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