Sunday, June 07, 2009

Building bridges

Michael Perelman recently shared a great proposal from famed growth economist Paul Romer. Romer, whose work on endogenous growth theory stresses the importance of rules and technology, notes that Hong Kong -- whose ideas and institutions were used in part as a template for reform throughout China -- has been the "most successful economic development program in history." It's been so successful, in fact, that Romer thinks we ought to try replicate it, by creating "Bridge Cities," special zones in developing counties administered by experienced governments like Canada or Finland.

While I desperately hope that Romer's project is successful, I have doubts about whether either side will agree to the deal. Both the developing countries ceding sovereignty and the developed countries brought in for their expertise are likely to have qualms. Even so, however, there's a broader lesson here that points to a simple and accessible policy. 

Poor countries are most miserable when they lack any "bridge" to the developed world. It's critical that they have quality technocrats and entrepreneurs, able to navigate both the idiosyncrasies of their home country and the web of institutions and technology that bring prosperity to rich nations. Unfortunately, this isn't easy -- how can someone trapped in poverty possibly learn to administer a modern educational system, or lure English-speaking investors to his impoverished, isolated country?

In many cases, there is only one possibility: he can learn by spending time in a developed nation. And that's why a welcoming attitude to foreign students, along with openness to immigrants from all corners of the world, is so important.

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