CGD Policy Blogs

 

Three Questions about Honduras's New Charter City

This is a joint post with Milan Vaishnav.

One of the biggest experiments in development economics is about to begin on Honduras's Northern Coast. Honduras has altered its constitution to open the way to ceding a large tract of land to build a new "Special Economic Zone", modeled on NYU economist Paul Romer's idea of charter cities -- new cities, built up from scratch, where first-world institutions and third-world immigrants can meet and do business.

Paul Romer’s Bold New Idea for Charter Cities

The Wonkcast is taking a brief summer vacation. We've selected this show from our archives- it was originally posted on April 23, 2010.

The planet's population will swell by two to three billion people over the next few decades. Where will all those people live? My guest on this week's Global Prosperity Wonkcast has a bold new idea. Paul Romer is a senior fellow at the Stanford Institute for Economic Policy Research, a non-resident fellow here at the Center for Global Development, and one of the world’s leading growth economists. He is proposing brand new cities—he calls them ‘charter cities’—built from the ground up with sound rules designed to promote swift development.

The two ideas at the heart of Paul's proposal are, first, that good rules are fundamental to development and, second, that new cities might be able to draw their rules, people, and land from different sources. He argues that inadequate property rights, legal systems, and other types of rules hold back development in poor countries. If the residents of a poor country could choose to live in a new city, governed by the rules of a well-functioning country, they might benefit enormously. If good rules are in place, Paul says, where that city is located doesn’t matter much.

Evolutionary Rule Changes Won’t Necessarily Doom a “Charter City”: An Analogy With the Dynamic Rules of “Open-Source Chess”

On Monday March 15, Paul Romer gave an impassioned presentation here of his proposal that donor countries add a new tool to their toolkit for helping the world’s poorest – the establishment of “charter cities”.  As you can learn in more detail here, such cities are conceived as contracts between three parties: a poor country which provides the land, one or more rich countries which establish the rules and norms and invest in the infrastructure and entrepren