Charter Cities Attempt to Reduce Poverty by Providing Options

Hong Kong at night from Victoria PeakThe dominant trend in international development right now is to provide individuals with greater means to climb out of poverty on more or less their own terms.

NYU development economist Paul Romer has pioneered what may be the latest, and perhaps craziest, idea in this trend.  What if we provide individuals with greater means to select which government they live under?

His idea is for poor countries to set aside a portion of unoccupied land big enough to build a “charter city.”  Charter cities would grow to approximately 10 million and operate largely under their own laws  without interference from any other government.

According to Romer, charter cities would have two positive effects:

First, they would provide the poor with options.  Currently, if people live in countries that are corrupt or just plain poorly governed, they have few alternatives. Most countries that could offer them a better life, frankly, don’t want them.  Charter cities would have an explicit aim of attracting poor people from the area and implementing a world-class government.

Second, Romer says that the cities would motivate other governments in the region to improve.  Because people in the area would have more choice concerning which government to live under, corrupt governments or governments that don’t respect human rights would need to change to prevent losing too many residents to charter cities.  Also, those governments could learn from what works in the charter cities and implement their own reforms based on that knowledge.

Cities like this have popped up in the past.  One example is Hong Kong, which provided an opportunity for many mainland Chinese to escape the cultural revolution in the 1960s (in which over 20 million people died).  Under its British government, Hong Kong unleashed tremendous prosperity in an impoverished region.

Unlike Hong Kong, Romer’s charter cities would not be taken by force and colonized by England.  Nevertheless, many critics are still concerned that the cities would impose too much of an outside, Western influence on the developing countries because they would likely be modeled after wealthier nations in the West.

Romer counters that impoverished people should have the ability to live under governments based on principles that have proven successful elsewhere, and that everyone who lives in them will do so voluntarily.

The biggest challenge, of course, may be finding a nation that will agree to cede sovereignty over a portion of its land, even if only for a limited period of time.

Learn more: 
On the charter city idea in general, see this excellent article in the Atlantic or this Ted Talk with Paul Romer.

On the latest attempts to implement a charter city in Honduras, check out these reports in The New York Times, Associated Press, Al Jazeera, and This American Life.


4 Responses to “Charter Cities Attempt to Reduce Poverty by Providing Options”
  1. Tangled Web says:

    So excited that you will be posting Michael! This topic is fascinating to me and I know it’s your area of expertise. I look forward to learning more. I recently heard this episode of Planet Money focusing on Romer and the attempt to build a charter city in Honduras. I’m sure you heard it! Readers may find it interesting to learn more about the possibilities and the pitfalls.

  2. What about the possiblility of “chartering” existing cities. If a Hong Kong style financial government especially the free wheeling style under the British,were installed in Detroit with no taxes and little irf any regulation, I’m sure that within 5 years it would be one of the most dynamic cities in the world.

    • MCM says:

      Interesting point. Some countries have done something similar to what you propose, though in a much more limited fashion, with “Special Economic Zones” (SEZ). China has relied on them heavily over the last several decades to attract foreign investors who would otherwise consider the Chinese government too risky. Shenzhen, one of the oldest SEZs, grew from approximately 350,000 people in 1982 to over 10 million in 2010. SEZs are also popping up in India now.

      Since you mentioned Detroit, earlier this year, a developer proposed purchasing Belle Isle, which is a state park in the middle of the Detroit river, and turning it into an independent city-state. You can read about it here: The website for the proposal is here:

      I’ll discuss privately governed city-states like Belle Isle in a later article. Romer’s idea should be distinguished from these, however, because his proposal would implement more accountability mechanisms. It would rely on international partners and more democratic participation, for example.

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