Charter city (economic development)

A charter city is a type of city, proposed by economist Paul Romer, in which a guarantor from a developed country would create a city within a developing host country. The guarantor would administer the region, with the power to create their own laws, judiciary, and immigration policy outside of the control of the host country.[1]

For charter cities as a form of local government in many U.S. states, please see Charter city. For city status conferred by Royal Charter in the United Kingdom, please see city status in the United Kingdom.

According to Romer, international charter cities would be a benefit to citizens by giving them an additional option about what system of economic policies they want to live under. In his vision, charter cities would adopt more pro-business policies than the host county, including lower taxes, less regulations, and protection of property rights, which would encourage international investment. Romer gives Hong Kong as an example, which he argues encouraged economic growth.[2][3]

Thus far, two countries have at one point been receptive to Romer's idea. After a meeting of Romer with president Marc Ravalomanana of Madagascar in 2008, Ravalomanana considered the idea of creating two charter cities. However, the plan was scrapped when the political leadership that supported the idea was removed from power.[4] In 2011, the government of Honduras considered creating a charter city, though without the oversight of a third-party government. Romer served as chair of a "transparency committee", but resigned in September 2012 when the Honduran government agency responsible for the project signed agreements with international developers without knowledge of the committee.[5] In October 2012 the Honduran Supreme Court declared charter cities to be unconstitutional because the laws of Honduras would not be applicable there.[1][6]