My thoughts are from Paul Romer’s (bio) radical idea about charter cities (TED link). He talked about building cities with good rules (institutions) which drives people to move there and businesses to grow, finally accelerating urbanization process in underdeveloped areas around the world. According to Prof. Romer, we need rules which offer more choices to people and more choices to leaders in order to change bad rules. The government can be too strong (North Korea) or too weak (Haiti) to ensure the provision of public goods (in Romer’s case, electricity).
The idea seems to be borrowed from China’s Shenzhen. The Chinese government was able to carry out the Special Economic Zone (SEZ) policy and replicate successful models because 1) China was very big and Shenzhen was relatively poor, so failure is bearable, and 2) the economic and political structure of Chinese cities are highly similar to promote good practices around the country.
Prof. Romer mentioned three necessary conditions for setting up a charter city:
1) the charter, i.e. a set of rules that are beneficial to the development of economy and welfare of people;
2) a piece of uninhabited land to which the people can opt to go;
3) collaboration between countries (which offers a choice for the leader).
The first question that came to me was: “How is this different from colonialism?” Prof. Romer suggested in his speech that this idea differed from colonialism in that the latter had “an element of coercion and condescension”. But even if the theory works fine, there might be ideological barriers in some developing countries, as was the case when China first created its SEZs.
The second question is:”Once a charter city succeeds, is the experience applicable to other underdeveloped regions?” China’s SEZs could be replicated because the Chinese government at local levels are similar to each other (relics from the three departments six ministries system 三省六部制度 in ancient time and decentralization of power in modern time). China itself is like a huge laboratory. But few other countries share these characteristics with China. The basic administrative organs are pre-existing before any kind of charter is built and they can be destructive to the functioning of a charter city. How to coordinate a balance between the new rules and the existing ones will be a great challenge for charter city program.
More info on charter cities is available here.