Romer’s Charter Cities v. Colonization, Imperialism, and Colonialism: A General Characterization

Paul Romer’s radical idea of chartering cities to stimulate long run economic growth and development has provoked a hot debate, not all supportive. Some of the opposition argues that the charter-city model is an antiquated idea that conjures up brutal images of failed (neo)colonialism. This essay characterizes colonization, imperialism, and colonialism in order to shed extra light on why and how effects of chartering a city are dissimilar to the effects of colonization, imperialism, and colonialism. The characterization finds that while colonization, imperialism, and colonialism share strong historical affinities, no such connections can reasonably be made to the charter-city idea. A key assumption (requirement) of the charter-city model is voluntary participation of all players. Colonization, imperialism, and colonialism were forceful and repressive systems which relied on both government cohesion and administered prices, and were therefore inefficient. Monopoly gains (rents) from colonization, imperialism, and colonialism came at the expense of reduced consumer surplus elsewhere. Success depended on monopoly rents from the trade in “objects.” Under charter cities the potential benefits to the urbanization and the economic growth of developing countries are huge. The charter-city model requires voluntary agreements. By overcoming the twin problems of consensus building and commitment utilizing market mechanisms, charter cities generate gains from the exchange of ideas. Evidence is starting to emerge suggesting that people understand that charter cities are not tentacles of (neo)colonialism; they promise real benefits if only policy makers decide to break old rules.