Are Charter Cities Legitimate?

POVERTY and underdevelopment are among the most pressing problems of our time. It has been persuasively argued that transfers of wealth and knowledge alone cannot solve these problems—it is also necessary to put in place political and legal institutions that will stimulate growth and development. But how to establish such institutions in the least developed parts of the world where regimes are often “extractive” and have no desire to see change? Revolution is difficult, and often accompanied by instability and violence, as recent events in the Middle East show. Nor can those living under oppressive regimes easily move to more desirable locations, as the travails of illegal migrants journeying to America and Europe remind us daily. It is entirely reasonable to demand that the developed world permit greater inward migration, especially in the form of guest worker programs. Yet the numbers involved are staggering—a recent survey suggests that 640 million adults worldwide would like to migrate, principally to North America and Western Europe. This raises serious concerns about the cultural and financial implications, and hence about the political viability, of proposals that would permit sizable inflows. These constraints explain the appeal of Paul Romer’s much-discussed proposal to create charter cities—that is, “model” cities featuring economic and social institutions conducive to growth and development that are open to all willing to