To understand how the future might look, we need to understand the past. Specifically, we must understand the past as it is unfolding into the present and the future. In that vein, we begin this analysis looking to understand a few of the historical trends in governance. In the end, we will conclude by putting forth a future state of governance provision that we believe logically follows from what we have observed in the past.

Special Economic Zones (SEZs) have become an increasingly popular trend among countries seeking to stimulate economic growth, attract foreign investment, and boost exports. SEZs are designated areas within a country where business and trade laws differ from the rest of the nation. They typically offer more liberal economic policies and regulatory environments, aiming to foster a more business-friendly setting that can drive investment, industrial development, and economic reform.

Initially popular in East Asian countries, the SEZ model has since spread globally. Countries in Africa, the Middle East, Latin America, and Eastern Europe have established SEZs as tools for economic development. SEZs vary in their structure and focus. Some are geared towards manufacturing, others towards services or high-tech industries. There are also free trade zones, export processing zones, and technology parks, each with specific objectives and target industries.

SEZs often serve as testing grounds for new policies and reforms. Governments use them to experiment with deregulation, labor market reforms, tax incentives, and streamlined administrative procedures before implementing these policies nationwide. As more countries adopt SEZs, there is increased sharing of best practices and learning from both successes and failures. This knowledge exchange is leading to the evolution of SEZ policies and strategies to maximize their effectiveness.

SEZs are increasingly being integrated into broader national economic strategies, rather than being standalone projects. This integration aims to ensure that the benefits of SEZs contribute to the overall economic development of the country.

Increasing Autonomy

The trend of Special Economic Zones becoming more autonomous is another notable development in global economic policy. This shift reflects a growing recognition that greater autonomy can enhance the effectiveness of SEZs in driving economic growth, attracting investment, and fostering innovation.

One of the most significant aspects of increased autonomy in SEZs is a regulatory sandbox. This involves giving SEZs greater latitude in setting their own legal and administrative frameworks, distinct from the national laws. The idea is to create a more business-friendly environment that can attract investors and spur economic activity.

More autonomous SEZs often have their own governing bodies or administrative units. This localized governance can make decision-making processes faster and more responsive to the needs of businesses operating within the zone. It also allows for tailored policies that suit the specific focus of the SEZ, whether it’s manufacturing, finance, technology, or another sector.

Autonomy in fiscal matters is another critical aspect. SEZs may have the authority to set their tax regimes, including corporate tax rates, customs duties, and VAT policies. These preferential tax treatments are a major draw for foreign and domestic investors.

In some cases, SEZs have been granted the authority to formulate their labor laws. These can include flexible labor regulations, different wage structures, or distinct labor dispute resolution mechanisms, aimed at making the zones more attractive for investment while often sparking debates about workers’ rights. On the other hand, such debates are generally centered around the divergence in regulation rather than actual material outcomes for workers in SEZs.

Enhanced autonomy can also extend to land use and property rights within SEZs. This might include streamlined processes for land acquisition, development rights, and property leasing, making it easier for businesses to establish and expand their operations.

Greater autonomy can lead to more effective SEZs that serve as engines for economic growth, technological advancement, and job creation. Increased autonomy can make SEZs more attractive to foreign and domestic investors seeking a more favorable business environment. With the right mix of policies, autonomous SEZs can become hubs for innovation, especially in technology and high-value industries.

Private Governance

The trend toward privatization in the management and operation of Special Economic Zones reflects a third significant shift in how these zones are conceptualized and administered. This approach involves entrusting private entities with the responsibility of developing, managing, and operating SEZs, a task traditionally handled by government agencies.

One of the primary arguments for the private management of SEZs is that the private sector often brings more efficiency, innovation, and responsiveness to market demands. Private companies can be more adept at adapting to changing economic conditions and more efficient in managing resources.

Private firms often have specialized expertise in the development and operation of SEZs. They also have a more flexible capacity to mobilize capital for infrastructure development, which can be a significant hurdle for government-run SEZs. Finally, they are subject to the constraints of profit and loss, leading to a market-based allocation of resources and efficiency.

By involving private players, governments can reduce the fiscal burden associated with developing and maintaining SEZs. This approach allows limited public resources to be allocated to other critical areas. Private operators can bring in global best practices and establish connections with international business networks, enhancing the competitiveness of SEZs.

The trend towards more private governance around the world is a significant shift in how public services and traditional government domains are managed and operated. This trend, often simply referred to as privatization, involves transferring the responsibility for certain services or functions from the public sector to private entities. This movement is rooted in various ideologies and practical considerations but most recently it functions as a result of the simple ability of the private market to provide superior outcomes even in industries commonly considered to be the core of government.

Water supply, electricity, and public transportation are good examples of traditional government domains that have seen significant privatization. Private companies are often tasked with operating and maintaining these essential services, sometimes leading to more efficient management but also raising concerns about access and affordability. Some countries have moved towards privatization in healthcare, with private entities playing a larger role in providing medical services. This can range from privately-run hospitals and clinics to insurance-based models of healthcare funding.

Privatization in education includes the expansion of private schools and universities, as well as public-private partnerships in managing public educational institutions. The trend also includes the growth of for-profit educational services and online learning platforms. Services like waste management, park maintenance, and some emergency services (like ambulance services) are increasingly being outsourced to private companies in many municipalities around the world.

There is a growing trend of involving private entities in the provision of social services, including housing, welfare programs, and unemployment services. Interestingly, we have even seen this occur in the realm of national defense and war-making, with the famous Blackwater and now Wagner Groups out of the US and Russia respectively. This is not to say that such activities are in any way productive or good, but simply to illustrate the scope of the trend toward increased privatization.

Governance as a Service

The trend toward more private governance is reshaping the relationship between the state and the market in many domains traditionally reserved for the government.

Governance as a Service (GaaS) is an emerging concept in the realm of public administration and political science, reflecting the increasing incorporation of technology and private sector principles into the governance process. This trend is part of the broader movement towards digitalization and privatization in various aspects of governance. GaaS involves the outsourcing of certain governmental functions and services to private companies, especially those that are technology-driven, to improve efficiency, reduce costs, and enhance service delivery.

GaaS heavily relies on technological solutions such as cloud computing, big data analytics, and artificial intelligence to manage and deliver public services. This approach allows for more efficient data management, decision-making processes, and service delivery. Unlike traditional models of public service delivery, GaaS offers modular and scalable solutions. Governments can choose specific services based on need and scale up or down as required.

GaaS puts a strong emphasis on the user experience, borrowing from the private sector’s customer service models. This approach aims to make interactions with government services more user-friendly, responsive, and accessible. By outsourcing to specialized service providers, governments aim to reduce operational costs and improve efficiency. GaaS models often employ a pay-as-you-go approach, which can be more cost-effective than maintaining extensive in-house capabilities.

Governance as a Service represents a significant shift in how public services are conceptualized and delivered. It embodies the intersection of technology, privatization, and public administration, offering opportunities for more efficient and user-friendly governance.

Competition in the Governance Market

The trend of new countries emerging over the past 50 to 100 years is a reflection of global shifts in political, social, and economic landscapes. This trend has been influenced by decolonization movements, the dissolution of empires and federations, and the drive for self-determination among various ethnic and cultural groups. Below is a table of some countries that have been established in the last century, along with their year of creation and the primary reasons for their formation.

CountryYearReason for Creation
India1947Independence from British colonial rule
Pakistan1947Partition from India and independence from British rule
Israel1948Established as a homeland for Jews following WWII
PRC1949Establishment of a communist state after the Chinese Civil War
North Korea1948Division of Korea after WWII
South Korea1948Division of Korea after WWII
Vietnam1945Independence from French colonial rule, later reunification in 1976
Singapore1965Separation from Malaysia
Bangladesh1971Independence from Pakistan after the Bangladesh Liberation War
Czech Republic1993Peaceful division of Czechoslovakia (Velvet Divorce)
Slovakia1993Peaceful division of Czechoslovakia (Velvet Divorce)
Eritrea1993Independence from Ethiopia after a long independence war
South Sudan2011Independence from Sudan after a long civil war and a referendum
Croatia1991Declaration of independence from Yugoslavia
Slovenia1991Declaration of independence from Yugoslavia
Bosnia & Herzegovina1992Declaration of independence from Yugoslavia
Montenegro2006Independence from the State Union of Serbia and Montenegro
Serbia2006Following breakup of the State Union of Serbia and Montenegro
Kazakhstan1991Independence following the dissolution of the Soviet Union
Ukraine1991Independence following the dissolution of the Soviet Union
Belarus1991Independence following the dissolution of the Soviet Union
Uzbekistan1991Independence following the dissolution of the Soviet Union
Turkmenistan1991Independence following the dissolution of the Soviet Union
Georgia1991Independence following the dissolution of the Soviet Union
Armenia1991Independence following the dissolution of the Soviet Union
Azerbaijan1991Independence following the dissolution of the Soviet Union
Kyrgyzstan1991Independence following the dissolution of the Soviet Union
Tajikistan1991Independence following the dissolution of the Soviet Union
Moldova1991Independence following the dissolution of the Soviet Union
Latvia1991Independence following the dissolution of the Soviet Union
Estonia1991Independence following the dissolution of the Soviet Union
Lithuania1990Independence following the dissolution of the Soviet Union
Timor-Leste2002Independence from Indonesia and a UN-sponsored referendum
Palau1994Independence from the United States-administered UN trusteeship

In the context of these newly formed countries, we can observe a specific trend. In terms of land area, the average size of nations has generally been decreasing. This trend is primarily due to the breakup of large empires and countries into smaller sovereign states. For example, the dissolution of the Soviet Union in 1991 and the breakup of Yugoslavia in the 1990s resulted in the creation of numerous smaller countries.

The mid-20th century witnessed the end of colonial empires, with colonies gaining independence and becoming sovereign nations. This process created many new countries, particularly in Africa and Asia, which were often smaller in land area compared to the vast colonial territories controlled by European powers.

The recognition and establishment of numerous small island nations, particularly in the Pacific and the Caribbean, have also contributed to reducing the average size of countries in terms of land area.

The trends of city-states and semi-autonomous regions present another intriguing aspect of global geopolitics and governance. These entities represent unique models of governance, blending the forces of national sovereignty and localized control. Their roles and significance have evolved over time, influenced by historical, economic, and political factors.

Semi-autonomous regions are areas within a country that have been granted a degree of self-governance, often due to cultural, ethnic, or historical reasons. Examples include Hong Kong (China), Kurdistan (Iraq), and Greenland (Denmark).

These regions often have distinct cultural or ethnic identities different from the dominant groups in their parent countries. Their semi-autonomous status is typically a result of historical agreements, conflicts, or compromises.

Some semi-autonomous regions leverage their special status to develop unique economic models. For instance, Hong Kong has been a global financial center with a separate economic and legal system from mainland China.

In addition, the global trend toward urbanization has increased interest in the city-state model, particularly regarding efficient city management, sustainability, and economic specialization. As a result of these factors, both city-states and semi-autonomous regions have become increasingly relevant in a globalized world. They often serve as hubs for innovation, trade, and cultural exchange. City-states and semi-autonomous regions offer unique models for governance, economic development, and cultural preservation. They provide valuable case studies in managing urban spaces, regional autonomy, and cultural diversity.

Secession

The next trend is secessionist movements. Secessionist movements around the globe have been a prominent feature of the international political landscape, particularly in the post-Cold War era. These movements are driven by a variety of factors including ethnic, linguistic, cultural, economic, or political grievances. The trend in secessionist movements is complex and varies greatly depending on regional contexts and global dynamics.

There has been an increase in the number and visibility of secessionist movements since the late 20th century. The dissolution of the Soviet Union and Yugoslavia, as well as the decolonization processes, have contributed to the emergence of new nations and a rise in regional autonomy demands.

Many secessionist movements are rooted in ethnic or cultural identities. Groups that feel marginalized, oppressed, or culturally distinct from the dominant national identity often seek greater autonomy or independence. Examples include the Kurds in the Middle East, the Catalans in Spain, and the Uighurs in China.

Economic disparities and the perception of unequal resource distribution often fuel secessionist sentiments. Regions that are economically prosperous but feel their wealth is disproportionately redistributed to the central government may seek independence to retain more control over their resources, as seen in the case of Scotland and the UK.

In some cases, the impetus for secession is a response to political repression, lack of representation, or civil rights violations. Secessionist movements often emerge in contexts where there is perceived or real political disenfranchisement.

Secessionist movements represent a significant and ongoing trend in global politics, reflecting deep-rooted issues related to identity, governance, and resource distribution. They pose considerable challenges to national and international political structures, often requiring delicate balancing acts between self-determination, territorial integrity, and regional stability.

The table shown below summarizes notable secessionist movements around the globe over the last half-century, indicating their time period, the country they sought independence from, and whether the attempts were successful:

MovementTime PeriodParent CountrySuccess
Bangladesh Liberation1971PakistanSuccessful

Scottish Independence

2014, ongoing

United Kingdom

Not Successful (ongoing)

Catalan Independence

2017, ongoing

Spain

Not Successful (ongoing)

Kosovo

2008

Serbia

Successful

Eritrean Independence

1991

Ethiopia

Successful

South Sudanese Independence

2011

Sudan

Successful

Crimean Crisis (Annexation by Russia)

2014

Ukraine

Successful (Disputed)

Quebec Sovereignty

1980, 1995

Canada

Not Successful

East Timorese Independence

2002

Indonesia

Successful

Montenegrin Independence

2006

State Union of Serbia and Montenegro

Successful

Brexit

2020

European Union*

Successful

*While the EU is not a sovereign entity, the process of exit from the Union is, to a large extent, analogical to other, more traditional secessionist movements.

Decentralization Through Emerging Technologies

A final trend we must consider is the trend of technology enabling greater decentralization. Driven by innovations in various fields, this trend is reshaping how businesses operate, how governments function, and how individuals interact with each other and with institutions.

Bitcoin enables decentralized financial systems. It obviates the need for financial intermediaries such as banks and monetary policy monopolists like central banks. Blockchain-based smart contracts may automate and enforce agreements without the need for centralized authority, significantly impacting fields like law, finance, and real estate.

Technologies like BitTorrent have popularized decentralized file sharing, reducing reliance on centralized servers. P2P networks enable decentralized marketplaces for goods and services, allowing direct interaction between buyers and sellers without central platforms.

Technology in energy enables the creation of microgrids, small-scale power grids that can operate independently, democratizing energy production and distribution. Open source projects represent a decentralized model of software development, relying on community collaboration rather than centralized planning. Nostr creates a decentralized form of communication.

All of these are powerful examples of the trend toward decentralization, and such a trend presents opportunities for more democratic, efficient, and resilient systems across multiple societal domains.

Future Outlook

Having considered these trends: 1. More SEZs in more countries, 2. Increasingly autonomous SEZs, 3. Increasingly privately operated SEZs, 4. More private entities entering the traditional realm of government, 5. Governance being viewed and treated as a service, 6. The creation of more sovereigns and semi-autonomous jurisdictions that are smaller in size, 7. The increasing push by minority groups for self-governance, secession, or local autonomy, and 8. Technology enabling and promoting more decentralization in numerous arenas, we now turn towards a view of the future.

A clear direction emerges from the combination of these trends. The future of governance may well be centered around smaller polities, increasingly acting as service providers competing to provide a higher quality product at a lower cost. The push for representation at the increasingly local level is leading not just to the emergence of new sovereigns but also to the creation of semi-sovereign regions and networks. Technology is working in the background to enable all of this, whether it be in enforcing property rights, serving as money (Bitcoin), or enabling computing and communication.

The Special Economic Zone and Special Administrative Region (SAR) models have the potential to contribute to the development of polycentric governance systems. Polycentric governance refers to a complex form of governance involving multiple overlapping, self-governing centers of decision-making authority, each operating under its own set of rules but within the overarching rules of the larger system.

SEZs often have a certain degree of autonomy in decision-making regarding economic policies, regulatory frameworks, and administrative procedures. This localized autonomy can introduce a layer of governance that operates differently from the national framework. As SEZs become more autonomous this trend will exacerbate.

The presence of multiple SEZs within a country, each with its unique focus and regulatory environment, can lead to a polycentric economic governance model, where different economic policies coexist and compete within the same national economy. By allowing for localized autonomy and diverse approaches to governance within a broader national framework, they can offer a more adaptable and resilient model of governance that can meet various local and national needs.

While this may not hold for every country around the world, it seems increasingly self-evident that as governments continue to struggle under mountains of debt, increasingly high (but underenforced) tax rates, and mediocrity becoming the norm, private enterprise will step in to pick up the slack. Given that governments are not quick to cede power, they will likely remain in the picture to some degree but will come to the table to find arrangements with private operators, giving them special autonomy and legal jurisdiction under the conditions of continued adherence to their sovereignty.

While we do not know what the end state of these developments may look like, it seems that the trends described above will continue to strengthen. This would then naturally lead to a new world of numerous competing “Hanseatic Leagues” around the world cooperating in some fashions, and competing in others. These leagues will likely differ in their autonomy as well as their relationship with their host-state sovereigns. While most will simply be internally autonomous, some might even be fully sovereign.

This widening network of competing polities may seem haphazard at first, leading to an uncertain future. Nevertheless, I would argue that such a vision is actually a very optimistic one for humankind. In fact, we can find great precedents for this. The very reason for the success of the European continent in the first place since the Middle Ages was the kaleidoscope of small and competing jurisdictions and polycentric governance between local authorities, the monarch, and the Catholic Church.

Given all this, while it is hard to know exactly how our future governance will look, I have painted here a picture based on several trends that are observably occurring. These trends are a result of human ingenuity and a push for increasing self-governance, for taking charge of one’s own life rather than delegating it to others. The result will be more liberty-oriented competition in governance, and, as a consequence, greater economic growth, prosperity, and happiness for everyone involved, combining into a better future for us all.

This blog post is an amended version of an article originally published in Escape Artist Insiders Magazine in January 2023. Visit their website for more articles, information and advice on becoming an expat or digital nomad.

Cover image: New Year’s celebrations in a Free City as imagined by Midjourney AI