Paul Romer’s “Charter Cities”

Some of you may have heard of Paul Romer – he’s an economist who’s done work on the role of technology in economic growth.  An extremely crude version of the idea is that the reason the Malthusian dilemma does not apply is because we invent technological improvements that improve our lives faster than population growth eats up all available resources – resulting in economic growth.  However, technologies cannot produce growth unless the right rules are in place – rules like patents, property rights, contract enforcement, etc.  These two kinds of ideas, technology and rules, are the stuff of human progress.

Romer has this new idea called “Charter Cities” that seems directly relevant to political scientists.  He has a blog devoted to the idea here, and he was asked to speak about it at TED Global a few weeks ago.  The idea is simple in outline, but complex in the details.  Essentially, he wants to create lots of Hong Kongs.  While under British colonial rule, Hong Kong developed a set of rules that encouraged economic growth and development in a way radically different from the rules in mainland China.  China noted the economic success of Hong Kong and created other “special economic zones” that were exempted from some laws and regulations applied more generally in China, and these areas fueled much of the 8-9% growth China has experienced over the last 30 years.  Romer argues that having cities CREATED on the basis of growth promoting rules is a more likely instrument of economic development in the third world than reform.  And all of us, Americanist or comparativist, can agree that reform is very, very, difficult.

Of course, Hong Kong was a colony, and we can’t repeat colonialism.  Furthermore, there is the not insignificant issue that what he’s asking for is for someone (Framers) to create the laws of a polity, rather than the actual citizens.  This isn’t prima facie democratic, but this problem is also solved by creating cities rather than reforming them.  People would have the choice of whether to move there or not – that’s what prevents these from being despotic.  He makes the point that he envisions these being created on uninhabited land.  This would usually require some form of eminent domain, but not always.  For example, he offers up Guantanamo Bay as an ideal site for one of these charter cities once the U.S. realizes the P.R. losses from maintaining the base there exceed any strategic benefit.  (On a side note, I just learned there is actually a small area between Sudan and Egypt that is both uninhabited and unclaimed. If you want it, it’s yours.  Or, one of these cities could be put there.)

I think this is a very interesting idea.  Hong Kong and Singapore used something like this to become economic dynamos long before the rest of Asia started growing.  However, it’s difficult to see how this can function without some sort of benevolent autocrat of the Lee Kuan Yew variety.  Eventually, the immigrants will want some say in politics, even if it’s just local matters, but this will have a tendency to spread to all politics/”rules” until the original rules are threatened, at which point the thing unravels.

Could this possibly work?

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About Jake Wobig

I teach international relations and comparative politics at Wingate University in Wingate, North Carolina
This entry was posted in Comparative Politics, Markets, Theory. Bookmark the permalink.

One Response to Paul Romer’s “Charter Cities”

  1. Can this work? No. History indicates that unregulated markets lead to wild swings in economic activity. While economic growth is important in some instances, stability is also important to society. Some regulation of business activity is necessary to assure long term stability in the growth that occurs.

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