Charter Cities – An Idea Whose Time has Come or Should Have Gone?

With doubts cast on the effectiveness of aid in its many forms (Easterly 2006), Paul Romer’s concept of charter cities sounds like a breath of fresh air. This concept is straightforward enough. It has four elements. First, because major reform or change is not easy on a nationwide scale in a developing country, any change must be undertaken on a smaller scale to have a chance of success. Second, rules matter. Within an environment that gives the beneficiaries of change freedom of choice, these rules must be transparent and incentivise, in short, ‘better’ than what the developing country has. Third, whoever lives under these rules, be he/she an existing resident or a new arrival, has the power of choice – to do what he/she wants to do, subject of course to these rules. Finally, the government of the developing country must also have the power of choice – to select whoever it wishes to administer the territory in which the desired changes are to be made.