Considering Charter Cities

I’ll keep my eyes peeled for news of charter cities, having read this interview in Freakonomics with Paul Romer, who ‘recently resigned his tenured teaching position at Stanford to devote his full energies to the challenge.’ Charter cities are basically ‘special zones within developing countries with better rules and institutions’. I’ve long believed in some sort of privatization of public services in developing countries (not easy I know – privatization still needs to somehow ensure universal access to primary education, for starters, which is tricky), and I think the concept of charter cities in many ways is an extension of what I’ve been thinking of. It’s a very tricky concept, however: one commenter has pointed out that in practice, this will not work in the global South because of its attendant problems of land deficiency in high-demand areas: the poor are forced to give up their land, rendering them homeless, and attempts at compensation rarely work. 

One comment, by someone called Chris, was particularly insightful I thought:

Seems to me this is basically what Federalism is, was and should be. According to the US Constitution states and cities have a large degree of autonomy. Thus various political systems become laboratories. This would be strengthened in this country if the Federal government’s power were curbed. Other nations should also adopt a similar system.

Great sentiment, but again, in practice, it just does not work. A case in point in a country like India which does have a federal (in addition to a unitary) form of government, is the state of Bihar, which is really a failed state.

There are other considerations too: the aesthetics of urban planning, and investment and returns (who funds it and what do they get in return) – Romer discusses very interesting but difficult situations for funding:

In poorer countries that don’t have the same kind of credibility with international investors, a more interesting but controversial possibility is that two or more countries might sign a treaty specifying the charter for a new city and allocate between them responsibilities for administering different parts of the treaty.

Oh, the can of worms that can be opened when multiple countries enter into an agreement like that!

It is a tremendous challenge indeed. As I said, I’ll be watching with interest.