Zones for Employment and Economic Development were an experimental approach to addressing Honduras’ endemic poverty, violent crime, and corruption established by the country’s government in 2013. Commonly known as ZEDEs (Zonas de Empleo y Desarrollo Económico), they were custom designed to incentivize the creation of charter cities, which would be allowed to operate under their own tax codes, regulatory structures, and legal systems. An antidote to the corrupt and incompetent Honduran state, the theory was that ZEDEs might create a stable legal and political environment to attract foreign investment, provide Hondurans jobs, and increase the country’s tax receipts. But in a surprise decision last month, the Honduras’ Supreme Court ruled ZEDEs unconstitutional, prohibiting the creation of new charter cities and implying existing ones could be retroactively declared illegal.
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