Infrastructure & Cities

Charter Cities in developing economies

January 19, 2011

Global

January 19, 2011

Global
Anonymous Writer

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Poor governance and corruption are often cited as barriers to growth in developing countries, which are also home to some of the world's fastest-growing cities. But, as any policy expert or development specialist will tell you, retrofitting for good governance is extremely difficult to do. Corruption is hard to weed out once it is embedded in urban institutions, business models and cultures. One new concept in urban planning—called Charter Cities—explores ways in which good governance and freedom from corruption may be built into new cities from the very start, by outsourcing their development. The idea behind Charter Cities is that by building special reform zones, using unoccupied pieces of land and establishing charters to govern them, governments could quickly adopt new systems of rules that might be very different from those that exist in the rest of the country.

"Just as developing countries have learned that they can import technology, countries could leverage systems of governance that are working," says Paul Romer, an economist and senior fellow at the Stanford Center for International Development and the Stanford Institute for Economic Policy Research, and the Henry Kaufman Visiting Professor at NYU's Stern School of Business.

Professor Romer and his team have developed several Charter Cities scenarios. In one, Australia and Indonesia join forces to create a new regional manufacturing hub. Another suggests that Canada could develop a Hong Kong in Cuba, by modifying the existing treaty between Cuba and the US to shift control to Canada. A Canadian administrator would establish and enforce legal protection and institutional stability for the territory.

"Once you've appointed this strong executive, it could look a lot like Hong Kong," says Professor Romer. "In Hong Kong civil service and regulatory traditions were brought in to some extent along with expatriates, but to a large extent they were developed by training people from the region."

Strong governance would attract foreign investors and residents to the city, while suburbs would emerge on the Cuban side of the city boundary. As in the case of Hong Kong, the territory would eventually be returned to Cuban control, with a special administrative treaty shaping how the city would be governed.

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