27 Jul 2010

For many decades politicians and academics have struggled to find ideas that can effectively deliver prosperity to the developing world. In recent years, and in particular since the publication of the World Bank's World Development Report in 2009, there is a growing consensus that the solution will have to involve more and better cities. The argument goes that in these the poor world's population would be able to benefit from the benefits of agglomeration.

There are however many problems that could potentially endanger the prospects for a successful urbanisation in poorer countries, such as: 1) a lack of appropriate urban infrastructures to cope with the growing population, 2) rural exodus and the associated loss of agricultural output, 3) a steep rise in crime rates or 4) the danger of accelerating the spread of infectious diseases due to inappropriate health care systems.

Recently the economist Paul Romer, famous for his work on endogenous growth theory, started promoting a controversial idea that in his opinion would help solve many of these issues: the creation of charter cities. You can read more about it by clicking here, where you'll find a link to an article he wrote for Prospect magazine. Also below there is a video where he explains his idea during one of the TED conferences.

The idea for the charter cities is that developing countries would give rich nations a portion of their country where the latter would then build cities from scratch, using cutting-edge technology. These cities would be managed by the foreign countries themselves and therefore would not be ruled by locally elected politicians. According to Romer citizens could however vote with their feet, deciding to leave if they were unhappy with the way the city was being managed. The economist argues that Hong Kong is an example of how something like this could work.

Hong Kong


Naturally this idea poses many questions, in particular the fact that this would be a form of new colonialism. This is what Aditya Chakrabortty argues in an op-ed published today (27/07/2010) in the Guardian, with the title 'Paul Romer is a brilliant economist – but his idea for charter cities is bad', that you can read by clicking here. Another (longer) piece on the same topic, with the title 'The Politically Incorrect Guide to Ending Poverty', published in The Atlantic, can be accessed here.

This is clearly a thorny issue, to which the Regional Studies community could definitely contribute. An important point to bear in mind is that Paul Romer, using his reputation and wealth, has been actively promoting this idea around the world, which means that sooner or later it might become a real possibility. Its implications however are yet to be seen.