I’ve been fascinated by the concept of “charter cities” since I first saw Paul Romer’s talk on Ted.com (watch it here) describing the idea. The basic premise is that governance is transferable and that rather than waiting for nations to get their act together, they can set up cities that essentially outsource government. These cities can then gradually influence the rest of the country (think Hong Kong to China).

While the idea sometimes gets discussed in academic circles, it looks like it might actually be implemented in Honduras over the coming years. The government in Honduras voted to allow for the creation of autonomous zones, not held to local or federal laws, and Future Cities Development, Inc., has signed a non-binding memorandum of understanding to build a city in one such zone starting next year.

Interestingly enough, Future Cities is run by Patri Friedman, the grandson of libertarian economist Milton Friedman, and the company is largely built upon the ideas his grandfather discussed as an economist.

I think it will be very interesting to follow this development. Building cities from scratch is not new, but the idea of autonomous zones where companies compete for citizens is definitely new. Companies competing for citizens to drive up land values is certainly interesting, and academically it is what nations do, but how this will work outside the classroom remains to be seen.

Thanks to Greg Lindsay’s blog for bringing this to my attention.