With rates of urbanization increasing, the idea of “Enterprise Cities” is gaining ground as countries to rethink their approach to economic policy and the best strategies to promote broad-based job creation and growth.
Driven by industrialization and the search for better jobs, millions of people are moving from the countryside into cities. This is proving challenges for governments as it creates increased demand for public services and expensive infrastructure projects to meet the needs of citizens. Globalization is also increasing competition among countries to attract multinational companies and foreign direct investment.
Widespread reluctance to implement comprehensive reforms, as well as burdensome legal and regulatory regimes, are impediments to economic growth and entrepreneurship, leaving developing countries in a difficult situation.
Special zones with autonomous regulatory systems that bolster competition and foster the growth of competitive markets are one way to cut through the gridlock and bring prosperity to the burgeoning cities of the developing world.
Shanker Singham, Managing Director of the Competitiveness and Enterprise Development at Babson College, shares his thoughts on this innovative approach to foster economic development in a recently released Economic Reform Feature Service article.
Singham highlights the creation of Enterprise Cities around the world as a strategy to create jobs and drive innovation. Enterprise Cities, akin to Free Trade Zones, are special jurisdictions with pro-business legal and regulatory policies and are governed through a public-private partnership between the government and developer.
Countries like Honduras are already passing legislation aimed at attracting high levels of foreign direct investment and creating employment opportunities for the local population through the implementation of these policies. In this way, Enterprise Cities can overcome market distortions, created by vested interests, and create a better business environment with a level playing field and expanded access to opportunity.
Article at a glance
- The process of globalization and increased rates of urbanization are forcing countries to rethink their approach to economic policy.
- Widespread reluctance to implement comprehensive reforms and burdensome legal and regulatory regimes are impediments to economic growth and entrepreneurship.
- Enterprise Cities, akin to free trade zones, are one possible solution to this problem. These are special jurisdictions with investor-friendly legal and regulatory policies that create the pre-conditions for entrepreneurship and stimulate competition-based growth.
Teodora Mihaylova is a Research Assistant at CIPE.