New growth theorist Paul Romer is into city-states. He sees them as a mechanism for accelerating Third World development and lifting rural populations out of poverty. It’s an intriguing, if complicated, idea. Michael Perelman posts Stewart Brand’s (of Whole Earth Catalog fame) synopsis (tip-of-the-hat to Mark Thoma for the pointer).
[D]eveloping countries could invite instant Hong Kongs – new cities in new locations run by experienced governments such as Canada or Finland. They would enrich the country where they are built as special economic zones while also rewarding the distant government that makes the investment of building the new city state and installing a set of fair and productive rules. Over time, as with Hong Kong, the new city is turned over to the host country.
May 23rd, 2009 at 3:01 pm
I think that it is definitely an interesting idea. There was an interesting article that I read about a year ago in Fast Company that described a person who created a corollary to Malcolm Gladwell’s the World is Flat concept. The author claimed that the world was really turning into ’spikes’ of knowledge, technology, and talent rather than flat. These spikes were grouped around cities like San Francisco, Beijing, Singapore, New York, Chicago, Hong Kong, Sydney, etc where laws and conditions were favorable to innovation and capital. The author went on to say that as time goes on these spikes attract even more human talent, creating a virtuous circle. Those countries that created the greatest number of spikes would thus have the strongest economies, and said that it should be every government’s goal to create these city-state innovation centers much like Mr. Romer describes.
July 13th, 2009 at 10:20 pm
Peter Hall, former head of the Fabian Society in the UK, advanced a similar “Freeport Solution” in the late 1970s as an idea to breathe life into Britain’s then ailing economy. His proposal inspired the enterprise zone initiatives advanced by conservative governments in the UK and USA during the 1980s.
Since then, Openworld (www.openworld.com) has worked on a range of similar initiatives in areas of poverty and high unemployment. Success-sharing free zones can apply a portion of the land value gains resulting from transparency-enhancing business climate reforms with social ventures, including microvouchers for eLearning and eHealthcare. Far from being colonialism era-enclaves, the zones can be privately developed under competitive global tenders, with developers obliged under “build-operate-transfer” style concession agreements to convey assets to workers, residents, and learning/health care institutions of the sponsoring countries.
As public sector bureaucracies reach their fiscal limits, the new generation of free economic zones can pioneer sustainable institutional innovations that can replicate and scale far beyond their initial boundaries. Contractual, transnational systems for ensuring world-class dispute resolution and other crucial services can bring rapid growth to now-troubled areas, and set the stage for an updated version of the Hanseatic League to compete with failed and failing state institutions.
The new cities that Paul Romer envisages can emerge as magnets for knowledge workers and other mobile creatives who will be increasingly shortchanged by sclerotic, bankrupt, and increasingly kleptocratic governments.
Best,
Mark Frazier
Openworld, Inc.
“Awakening assets for good”
@openworld (twitter)