Cayman Islands to have a Healthcare City

Reuters:

A renowned Indian heart surgeon has struck a deal to build a 2,000-bed healthcare city in the Cayman Islands to target American patients and insurers searching for deeply discounted medical care.

The British Caribbean territory agreed to the deal with Dr. Devi Shetty, a low-cost healthcare pioneer renowned as Mother Teresa's heart surgeon. The Caymans fulfilled its part of the bargain last week by passing legislation that caps medical negligence claims at U.S.$600,000.

The tiny, affluent territory west of Jamaica has 55,000 residents and is under pressure from Britain to diversify its economy and move away from its tax haven image.
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U.S. insurers and employers are under pressure to reduce costs for high-tech procedures for heart, cancer, orthopedics, nuclear medicine and organ transplants, Shetty said. "It will be much easier for insurance companies to buy an air ticket and ask them to go to the Cayman Islands and get a heart bypass done and have a two-week beach holiday and come back at perhaps less than 50 percent of the cost," he said.
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The average cost for a heart bypass is $144,000 in the United States, five times higher than neighboring Mexico at $27,000. Costa Rica charges $25,000 and Colombia $14,800 for the same procedure, the Medical Tourist Association said. Even with the higher cost of doing business in the Cayman Islands, Shetty estimates a heart bypass will cost less than $10,000.

Honduras takes a tip from Dubai

The Wall Street Journal reports:

Thanks to the jet engine, Dubai has been able to transform itself from a backwater into a perfectly positioned hub for half of the planet's population. It now has more in common with Hong Kong, Singapore and Bangalore than with Saudi Arabia next door. It is a textbook example of an aerotropolis, which can be narrowly defined as a city planned around its airport or, more broadly, as a city less connected to its land-bound neighbors than to its peers thousands of miles away. The ideal aerotropolis is an amalgam of made-to-order office parks, convention hotels, cargo complexes and even factories, which in some cases line the runways. It is a pure node in a global network whose fast-moving packets are people and goods instead of data. And it is the future of the global city.
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This hasn't been lost on Paul Romer, the Stanford University economist overseeing the development of an instant city in Honduras. He proposes building "charter cities" in impoverished states with new laws, new infrastructure and foreign investors—free trade zones elevated to the realm of social experiment. Mr. Romer sold Honduran President Porfirio Lobo on the idea in November and has stayed on as an adviser. Last month, the Honduran Congress voted to amend the country's constitution to allow the pilot project to proceed.
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In making his case to the Honduran public, Mr. Romer pitched the city as an aerotropolis. "Honduras could be the hub that brings Central America and Latin America into the world-wide network of air traffic," he wrote. "Central America will eventually have a major hub. It's a question of where, not if." Without air connections to the outside world, his charter city will stagnate. "If you're going to take the next step from assembling garments to assembling iPads," he told me, "you've got to have a major airport, or you'll never beat Shenzhen."

Here's more from Romer on the Honduras project:

To implement this vision, the Honduran National Congress has already passed an amendment to the constitution that gives the government the power to create special development regions (which based on the name in Spanish, are abbreviated as REDs). The amendment passed with 126 votes in favor from a total of 128 members of Congress (one abstention and one vote against.) The nearly unanimous vote sends a strong signal about the breadth of support for this new initiative. The National Party, the party of the government and the President (who is elected separately), has about 70 seats in Congress. Members of all parties supported the amendment, including members from rival factions within the opposition Liberal Party.

To become a part of the constitution, the amendment must be passed again in the new Congressional session, which has already begun.

Here are the key points in the amendment:

• The government of Honduras has the option to create one or more REDs, but in no way locks them into to doing so.

• To create an RED and establish its basic system of governance, the amendment requires that the Congress pass a piece of enabling legislation that they call a Constitutional Statute. This requires a two-thirds majority to pass. A subsequent Congress can change this enabling legislation only with the same two-thirds majority and approval by referendum from the citizens living in the RED.

• The REDs would be areas with their own legal personality and jurisdiction, their own administrative systems and laws. An RED can also negotiate international treaties with partner countries or organizations. Congress would need to ratify these international treaties with a simple majority.

• Judges for its judicial system will be nominated by the governing authority in theRED but subject to approval by a 2/3rds majority in the Congress. The judicial arrangement would allow the use of an external body that acts as the court of final appeal for judicial decisions from the zone.

• Laws developed by the governing authority of the RED require a ratifying vote by the Congress. This vote would be a simple vote to approve or reject. Approval requires only a simple majority. (This is similar to the BRAC rules that govern military base closures in the United States.)

Most important among the immediate next steps is a public discussion about the merits of establishing the first RED, its location, and the specifics about how foreign governments can assist in its governance. The government is already working to raise awareness of the effort both in Honduras and internationally. The international efforts will focus on potential partner countries, major investors, firms and individuals with special expertise, and influential supporters in the broad community of people concerned with economic development.

At the same site is more about Romer and the charter cities concept. The Emirates Economist has previous posts on charter cities. Click on the label below.

Sentence of the day

"The state was too intrusive in Brasília and almost non-existent in Dubai." - economist Paul Romer.

That's from his article in Prospect Magazine in which he is explaining his big idea of charter cities.

Context of the sentence:

Other urban economists fear new cities will repeat the unimpressive history of government-planned ones like Brasília, or Dubai’s recent bust. But these are both extreme examples. The state was too intrusive in Brasília and almost non-existent in Dubai. Hong Kong is the middle ground, a state ruled by laws not men, but one that leaves competition and individual initiative to decide the details.

Translation: Government was very much involved in Dubai's development but rather than over planning, there was under planning. And great uncertainty about law, especially property law.

Nonetheless, too much is made of Dubai's faults. After all, the expatriates came to Dubai by choice. And the vast bulk of these are coming from countries where economic prospects are dim because government incompetence and corruption.

Crossposted to UAE Community Blog.

What does Paul Romer think of Dubai?

The economist Paul Romer is the proponent of charter cities. In a nutshell:

As you’d expect from the name, a charter city is a city governed by a charter. Sounds simple, but it’s a surprisingly powerful way to let people choose to move someplace that is well governed.
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Imagine that the United States and Cuba agree to disengage by closing the military base [Guantanamo Bay] and transferring local administrative control to Canada. Canada works with Cuba to draft a charter for this special zone and promises to enforce its terms. Under this charter, a new city blossoms. It does for Cuba what Hong Kong, administered by the British, did for China; it connects Cuba to the global economy. To help the city flourish, the Canadians encourage immigration.

So what does he think of Dubai? Chris Blattman paraphrases Romer's view:

...unlike Dubai (which proves a city can be built anywhere) we’ll let the workers bring their families, have equal rights, and stay.

That's not to say Dubai is bad, it is just that it doesn't fit the model Romer has in mind. All workers come to Dubai because it offers them better opportunities than they can find at home. And I have to say, that for many of these workers the better opportunities exist because governance in Dubai is superior to governance in their home country. If better governance doesn't come to your country, go where this is better governance. Even it is temporary and you don't have equal rights.