ZEDEs Could Be the Key to Reducing Latin American Migration to the US

Latin America, already badly affected by the pandemic, today faces a sharp increase in poverty coupled with an exodus of its citizens to elsewhere in the world. Limited employment opportunities, a rising cost of living and rampant inflation are driving more Latin American migrants to the US. In October 2022, US Customs and Border Protection reported 2.3 million migrant apprehensions at the southern border in the last year. The regions troubles have been meant that many migrants are fleeing north to the US creating an influx of educated Latin Americans fleeing difficulties back home.

This reality makes the backlash against economic development zones in Honduras – referred to as Employment and Economic Development Zones also known as ZEDEs more troubling. In Honduras, ZEDEs can implement much needed pro-growth economic policies that attract and enable foreign investments to flow into the country. ZEDEs offer a unique opportunity to attract investment, create jobs, and promote economic growth in a country that desperately needs it.

Honduras is one of the poorest and most unequal countries in the Western Hemisphere and desperately needs foreign investment if the country is to get its economy back on track following the COVID-19 pandemic. In this context, President Xiomara Castro’s mission to repeal the law that gave birth to ZEDEs raises concerns that could set a dangerous precedent that would enable any organization that economically benefits Hondurans to be systematically dismantled. This move could lead to severe political instability, the loss of foreign investment and jobs, and the reversal of decades of economic growth.

While some critics argue that these zones undermine sovereignty, they fail to acknowledge that Honduras has long struggled with corruption, political instability, and an inadequate legal system that has stifled economic development. ZEDEs aim to address these issues by creating a separate, self-governed zone with its own legal framework, judicial system, and dispute resolution mechanisms.

A key provision of the ZEDE law that is often overlooked is that 90% of day labor opportunities in these zones must be offered to Honduran citizens. This is a crucial aspect of the law, as it ensures that local residents benefit from the economic activity generated by the zones. By prioritizing local employment, ZEDEs can help to address the chronic unemployment and poverty that have long plagued Honduras.

In a country where the official unemployment rate is around 7.95%, ZEDEs offer an opportunity to create formal jobs with fair wages and benefits. This is particularly important in light of the economic devastation wrought by the Covid-19 pandemic, which has hit Latin America particularly hard. The creation of new jobs through the ZEDEs can help to address this crisis by providing an income for families and contributing to the country’s overall economic recovery.

It is crucial that policymakers in the region embrace policies that promote economic growth, job creation, and prosperity, especially given the economic devastation caused by the Covid-19 pandemic. Prospera, a ZEDE on the island of Roatan, is an example of the potential of such zones. It leverages the island’s tourism industry and investments in healthcare infrastructure, light high-tech manufacturing, FinTech innovation, and residential and commercial real estate development. Private investors have already committed tens of millions of dollars to these efforts, with the hope of sparking robust economic activity that will create desperately needed jobs and incomes and foster optimism about the region’s economic future.

Xiomara Castro’s attempt to eradicate ZEDEs in Honduras is a short-sighted decision that could threaten the country’s economic future and drive more Latin American migrants to the US. It is not surprising that Americans’ satisfaction with immigration into the US has fallen to the lowest reading in a decade according to a Gallup Poll from last month. But by supporting innovative approaches like ZEDEs, policymakers can take important steps toward building a brighter economic future for their citizens. ZEDEs present a unique opportunity for economic growth and development in Honduras, but their true potential may never be fully realized if Castro’s government seeks to block them.

[Photo by Tomas Castelazo, via Wikimedia Commons]

Ramón Hernández is a freelance writer and researcher focusing on Latin American economic policies, based in Honduras. The views and opinions expressed in this article are those of the author.

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