talking point | the blog at

Paul Romer’s Charter City Model

Posted in Development by teslik on August 6, 2009

cityscapeUpdate: After reading this post, check out our follow-up examining the arguments that have been made against Paul Romer’s charter city idea.

Stanford’s Paul Romer, in a new Ted talk, presents an idea for overcoming politically entrenched rules that derail economic development.

He starts with a question:  Why do teenagers in African country X  have cell phones – a relatively advanced technology – but not electricity – a much more basic one?

The answer, Romer says, is bad rules. For instance, the electric company in country X might operate under a rule where it has to sell electricity at a very low subsidized rate. It therefore cuts services because it is losing money on every unit of electricity it sells. The president of X, seeing the distortionary effects of this pricing dynamic, might be inclined to change this rule, but might also face opposition from companies and consumers, who protest to keep the bad rule in place because it keeps their electricity cheaper.

This is the age-old dilemma of politics getting in the way of policy. The challenge, Romer says, is to try to develop a framework for changing stubborn rules. You can’t simply do it by mandate, as becomes readily apparent to the president of X, because political pressure will get in the way.  So how do you get around bad rules?

Romer proposes an idea that essentially writes existing sovereign politics out of the picture. He recommends thinking on the scale of the city and developing new special administrative regions with good rules that can be expected to attract investors, businesses, and inhabitants alike. Such charter cities would be “opt-in,” as it were. The preexisting civic structure, bad rules and all, would be left to operate in parallel, and people and businesses and investors would choose to participate in the charter economy only if they decided the opportunities there were more valuable than, say, a lower electricity bill under the subsidies of the old system.

Romer’s strategy is more complicated than I can do justice to in a few paragraphs. But one basic takeaway is quite simple—governments would often be better off trying to create avenues around political roadblocks than trying to push through them. I’m curious what applications this basic idea might have in the United States, where economists commonly complain about the impossibility of getting good legislation pushed through Congress intact.

Addendum: This blog post provides good background on Romer’s research and his plans for spreading and eventually applying the charter cities idea.

8 Responses

Subscribe to comments with RSS.

  1. […] További információ Paul Romer “charter city” koncepciójáról: Paul Romer’s Charter City Model […]

  2. said, on April 16, 2013 at 8:57 pm

    hello there and thank you for your info –
    I have definitely picked up something new from right here.
    I did however expertise a few technical issues using this website, as I experienced to reload the web site many times previous
    to I could get it to load properly. I had been wondering if
    your hosting is OK? Not that I’m complaining, but sluggish loading instances times will often affect your placement in google and can damage your high quality score if advertising and marketing with Adwords. Well I’m adding this
    RSS to my email and could look out for much more of your respective exciting content.
    Make sure you update this again soon.

  3. seo said, on April 26, 2013 at 9:43 am

    Thank you for sharing your thoughts. I really appreciate your efforts and
    I am waiting for your further post thanks once again.

  4. aneh said, on May 22, 2013 at 11:13 pm

    Every weekend i used to visit this web site, as
    i wish for enjoyment, as this this site conations truly nice funny data

  5. conference room.conference rooms said, on July 12, 2013 at 11:07 pm

    Hi there to all, how is everything, I think every one is getting more from this web site, and your
    views are nice designed for new visitors.

  6. Conference room for rent said, on July 19, 2013 at 9:00 am

    I have been surfing online more than three hours nowadays, yet I by no means discovered any interesting article like yours.
    It’s beautiful price enough for me. In my opinion, if all site owners and bloggers made good content material as you did, the net can be much more helpful than ever before.

  7. Sidney said, on July 19, 2013 at 4:01 pm

    Fantastic site you have here but I was wondering if
    you knew of any discussion boards that cover the same topics
    talked about here? I’d really like to be a part of online community where I can get feed-back from other knowledgeable individuals that share the same interest. If you have any recommendations, please let me know. Thank you!

  8. hipnosis ericksoniana said, on May 22, 2015 at 9:34 pm

    l es un caballero, neimaer y me dio el poder del di.
    On the other hand the one who gets indulged into every one of these activities is called as the hypnotist
    this also takes place in the presence in the subject matter.
    I attempt to present everything inside a step by step means for sure, so that you can understand without the difficulty.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: