Are Charter Cities a Good Idea?
Image credit: Tim Marrs, published Dec 10th 2011 “Hong Kong in Honduras” The Economist.
This blog post was co-written by the entire class in an hour and a half in Google Document on September 13, 2012.
Economist Paul Romer, in his TED talk, presents how countries create necessary opportunities for economic development without radical change through his concept of charter cities. Charter cities offer an innovative vision for addressing poverty in developing areas by creating a foundation for improved access to jobs, education and necessities. To change these societies, we must change their institutions. Institutions are the formal and informal enforcement of laws, customs and norms that govern how a society works. A charter city would be developed on uninhabited land, governed by its own rules that set a precedent for international partnerships to explore investments and provide housing for foreign and native people.
Benefits of charter cities will be realized by both the host country and its investors. The host country will benefit from the development of infrastructure and decreased emigration, while investors will benefit from a new market (these investors will likely be private, since countries would not want to be viewed as imperialistic). The rules of the relationship between the host country and investors would be set forth in a treaty. In theory, this would lead to efficiency and sustainability along with minimal conflicts between governments and citizens. This could be the next step to improving the quality of living worldwide, as it allows a great choice for people everywhere and includes positive aspects of globalization.
Charter cities may reduce poverty in the long-run if they are able to overcome many practical issues. Conflicts of interest can create problems. Foreign investors, interested in their own profit, would build the infrastructure. Will they create the correct public goods necessary for agreeable living space? Or will they only be interested in extraction of resources? Centralized urban planning is notorious for its inability to create vibrant cities; it is essential to balance quality civic amenities and commercial space to create attractive infrastructure and institutions. How will charter cities take local cultures and customs of the native people into consideration? Will these clash with the foreign immigrants who would move into a successful city?
Romer intends to create cities for emigrants from poor countries, but by multiplying the destinations, the problem of “brain-drain” isn’t solved. Romer claims that the first immigrants will not get rich but that their children will have the opportunity to succeed through education. These cities may or may not actually offer the promised improvements.
Any place that promises investors quick growth is subject to the problems of abandoning failed ideas. Batam, an island near Singapore is filled with half-built hotels and other unfinished infrastructure since investors left when they ran out of money to finish their projects. Thus, Batam has become poverty-stricken without hope of future development. In many developing countries, like Honduras, governments are unstable and cannot provide security to foreign investors. A coup might end the special development zone, therefore chasing all investors out of the country.
Other factors that might hold a city back include its design, location, and relative industry.
On September 4, 2012 Honduras signed an agreement for a public-private partnership with several investors including the U.S. development firm MKG Group to start work on a city within 6 months. This, thus is about to become the first planned site of a charter city. Will it live up to Romer’s hopes? Or will it become yet another impoverished urban area?
Discussion (0) | September 14th, 2012 Categories: Institutions
