In what is perhaps a dream come true for political science researchers, Honduras has agreed to let investors build three private cities inside its territory. In about six months the investors—business consortium NKG and the South Korean government—will supposedly begin to construct the first of three private city-states complete with their own police, government, legal parameters, and tax systems. The cities will be empowered to sign international agreements on trade and investment and set their own immigration policy. Honduran president Porfirio Lobo has given his full backing to the plan and the government signed the memorandum of agreement approving the project earlier this month.  Envisioned to be like other city-states such as Hong Kong and Singapore, the idea is a clear example of a neo-liberal experiment. 

Honduran Congress President Juan Hernandez said that NKG will invest $15 million to begin building basic infrastructure for the first model city and South Korea has given Honduras $4 million to conduct a feasibility study. The first city will be built in Puerto Castilla on the Caribbean coast and that the other two would be built in the Sula Valley and an area in southern Honduras. Hernandez added that the project in Puerto Castilla would create 5,000 jobs over the next six months and up to 200,000 jobs in the future.

These investments will provide a boost for the economy and give Honduras a much needed facelift for investors. The project’s aim is also to strengthen Honduras’ weak government and withering infrastructure.

In the midst of Mexico’s presidential election and the heated debate on who is the best candidate, we are reminded of the myopic and paternalistic view citizens still have of this emerging democracy. It is not uncommon to hear people saying they will vote for a candidate because he/she “is the one that will put an end to poverty” (or some other priority development issue) as if the responsibility and power to do so lies solely in an ever-powerful and almighty political leader.  

My intention is not to undermine the role government plays in paving the way for development and growth through policies that promote and attract investment and catalyze job creation and opportunities for economic transformation. But the fact is that our political leaders cannot and will not do it alone. For this reason, it is comforting to learn that MIT’s Technology Review recently awarded and recognized 10 innovative young (under age 35) Mexican individuals whose ideas and creations provide a beacon of hope for the country’s future value development.

Mexico needs more people like José Manuel Aguilar from Monterrey, whose participation in developing procedures and a biotechnological platform to make H1N1 vaccines more readily available throughout the country helped stop an immeasurable amounts of deaths during the 2009 crisis. Or 31-year-old Ana Laborde, whose company has developed a patented bioplastic with 70 percent made from Agave waste (the plant used for Tequila manufacturing) and is 100 percent recyclable. Inventions like these are a challenge the country’s mentality of being a provider of raw materials with little added-value to industrialized nations.

Peruvian Minister of Development and Social Inclusion Carolina Trivelli yesterday concluded a three-day visit to Washington DC during which she met with Under Secretary of State for Civilian Security, Democracy, and Human Rights Maria Otero, as well as other senior officials from the Departments of State, Education, Agriculture, and Health and Human Services. The purpose of Trivelli’s trip was to deepen the U.S.–Peru relationship on economic and social development issues. 

According to State Department sources, Trivelli’s delegation discussed a range of topics including early childhood education, nutrition, women’s empowerment, and boosting social inclusion for Indigenous and other marginalized groups.

An early outcome of Trivelli’s U.S. visit was the announcement of a $1 million commitment by the Inter-American Development Bank (IDB) for a three-year pilot program on early childhood education. Since taking power in 2011, President Ollanta Humala’s government has stressed the need to accelerate and improve assistance to those still living in conditions of extreme poverty. As head of the government ministry charged with achieving poverty-reduction goals, Trivelli hopes to attract increased development assistance from bilateral aid agencies and multilateral donors alike.

In October 2011, USAID convened a forum of business leaders to discuss the importance of public-private partnerships and specifically why PPPs are integral for international development. Panelists included representatives from Merck, Swiss Re America Holding Corporation and Cargill.

Two weeks ago I started a serialized essay on Latin America’s middle class that will appear every other week on the AQ blog. As I wrote at the time, Latin America’s middle class has received a lot of attention of late, including worry about its size, praise and high expectations for its growth and debate about its future. It’s also sparked a fair amount of speculation by businesses about its market potential.

But as I wrote two weeks ago, Latin America’s middle class is much more heterogeneous and, quite frankly, poorer and marginalized than many of us in developed countries would believe.  In the last post, I talked about the definition of the middle class.  In this one I talk about access to banking.  And not to give away the punch line: it’s lower than you think.  In later ones I’ll talk about wage security, education, access to health care, access to insurance, quality of housing, levels of satisfaction, and support for democracy.  But more about this in subsequent posts. 

Now it’s about the integration of Latin America’s middle class into the formal banking/financial system.

Consider this: according to an article that appeared in The New York Times on August 18, 2009, in New York City (notice how as a resident now I capitalize City as if to give it special meaning.  Why I don’t know.) “in the world’s banking capital, 12 percent of households do not have a bank account” compared with 8 percent nationally. 

That’s in New York and is a statistic that transcends socioeconomic groups—upper class, middle class and the poor. 

Consider this: in Latin America, in Mexico, for example, the middle class’s access to formal credit averaged just over 20 percent (in other words, just under 80 percent of the Mexican middle class did not have access to formal credit sources—banks, credit agencies, credit cards, etc.).  And in Peru under 18 percent had access to savings accounts.