CHARTER CITIES
It is worth emphasizing, however, that this evidence mainly comes from the United States or Europe. It could be that the developing world is quite different in this respect. Certainly, high-quality urban infrastructure is much more concentrated in a few cities in most of these countries, and a case could be made both for building more “high quality” cities and for making the few existing big cities more livable in order to promote economic growth.
This is a key policy focus of the World Bank. For example, a 2016 report on urbanization in India47 highlights “messy” and “hidden” urbanization, dominated by slums and sprawl. In essence, cities grow horizontally, by outgrowing their formal boundaries, rather than vertically through taller and better-quality buildings. In total, 130 million people in South Asia (more than the population of Mexico) live in informal urban settlements. Distances are long, traffic is impossible, and the pollution levels are extraordinary. This makes it more difficult to attract talent to cities, and also limits the effectiveness of cities as places of production and exchange. Better cities could potentially generate entirely new growth opportunities for the countries, without taking any growth away from elsewhere.Romer’s own focus for several years (even before his short and rocky tenure as the World Bank’s Chief Economist) was on the cities of the third world. It continues to be a priority of his. He wants these countries to build cities where creative people would want to come together and new ideas would be born out of the cross-pollination. Cities that would be business friendly but also genuinely livable—Shenzhen without the pollution and the traffic. Unusually for a successful academic, he believed and cared enough in his message to set up a nonprofit think tank to help in the creation of what he called “charter cities.” These would be giant protected enclaves (Romer wants hundreds of them around the world, each of them hosting eventually at least a million people) that live by Romerian rules within nations that do not.
There would be a contract by which the national government agreed that a third-party government, from a developed country, would enforce those rules. So far, there has been just one taker, the government of Honduras, which had plans to set up as many as twenty zones for employment and economic development (ZEDEs). Unfortunately, though it claimed inspiration from Romer’s ideas, the Honduran vision seemed closer to the banana enclaves the United Fruit Company and its competitors ran in the first part of the last century, where the company’s writ was law. They deviated from the project from the get-go when they decided not to use the oversight of a third-party government. It eventually turned out that the Honduran government was more interested in Romer’s name and fame than his counsel, and when it signed a deal with an American entrepreneur with a strong taste for totally unregulated capitalism to develop the ZEDEs, Romer walked out. This story suggests charter cities are unlikely to hold the key to sustained growth in developing countries for the very good reason that the internal political compulsions the charter is intended to hold at bay often have a way of biting back.More on the topic CHARTER CITIES:
- Banerjee Abhijit V., Duflo Esther. Good Economics for Hard Times. PublicAffairs,2019. — 403 p., 2019
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