Wednesday, July 28, 2010

The logic of charter cities

Via Mark Thoma, I see that Aditya Chakrabortty is savaging Paul Romer's charter cities proposal in the Guardian:
Trouble is, the idea stinks. With little track record in dealing with poor countries, Romer has come up a grand scheme for lifting Africa and Asia out of poverty. What they need to do, he argues, is give up a big chunk of their land to a rich country. Policy experts from Washington can take over a patch of Rwanda, and invite along GM and Microsoft and Gap to come and set up factories. Poor countries give up their sovereignty in return for the promise of greater prosperity...

You think this is colonialism? For Romer, that "kind of emotion . . . can get in the way" (see what he did there? You have emotions; the elite economist has evidence). Sure, the poor people living and working in these new charter cities wouldn't necessarily have any democratic privileges such as the right to vote, but they could vote with their feet. And in the meantime, the Africans or the Asians would get the undoubted benefit of all this huge western expertise.
I agree that charter cities are a political longshot, but this isn't fair at all. Poor countries absolutely should not give up a "big chunk" of land to Western powers, and Romer isn't proposing that they should. Instead, the idea is to cede a small slice of currently undeveloped land to foreign administration. In this scenario, no one is forced to give up their rights—you're only under foreign administration if you voluntarily choose to move to the affected territory.

Just as importantly, this minimizes interference with the existing power structure. No regional administrator or bureaucrat is removed from office in favor of Westerners; foreign influence is confined to a previously empty patch of land. The idea is to avoid the opposition from entrenched interests that so often cripples attempts at reform. If this logic sounds unduly speculative, keep in mind that a similar idea has been a critical part of economic reforms around the world, including the spectacularly successful Special Economic Zones of mainland China.

In the end I still think charter cities are unlikely, if only because no Western nation has much incentive to be the benevolent administrator. But before we start crying about resurgent imperialism and ceding a "big chunk" of land to the West, we ought to understand what Romer is really proposing.

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