The PanAm Post was kind enough to publish a piece I wrote about private cities around the world. Below is an excerpt.
First, private cities could provide better administration of public goods (e.g. security, roads, sewage, and clean water), because the income of the developer is linked to his ability to attract residents. City owners are incentivized to provide valuable goods and services.+
The second, and more important reason, is that private cities incentivize institutional change. Economic freedom leads to economic growth, which increases the value of the land on which the city resides, benefiting the developer. As such, private-city owners have a strong incentive to lobby their central or state governments for a degree of institutional autonomy to increase their competitiveness.
The Honduran ZEDEs, though not as far along as projects mentioned in the piece have the most potential as they have the most institutional autonomy. Honduras has even inspired their neighbors, El Salvador and Costa Rica to begin to consider laws of their own to allow institutionally autonomous zones.
The spread of private and/or institutionally autonomous cities is happening faster than I expected.