However, I donât think my estimates of growth are substantially different from the average economist. Even Esther Duflo and Abhijit Bannerjee, economists known for their support of RCTs, positively reference charter cities in their recent book.
Full excerpt (page 181 /â 414) including all mentions of âcharter citiesâ (emphasis added by me):
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 âhigh qualityâ 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 âmessyâ and âhiddenâ 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.
Romerâs own focus for several years (even before his short and rocky tenure as the World Bankâs 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 livableâShenzhen 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 âcharter cities.â 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 Romerâs 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 companyâs 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 Romerâs 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.
Iâll opine that this reference doesnât seem as positive as Mark had me thinking. In particular, I assumed that they would say something to support Markâs claim that âI donât think my estimates of growth are substantially different from the average economistâ and they did not.
Additionally, Iâll note that their criticism that âcharter 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 backâ seems like a poor reason not to invest in more charter city experiments. Duflo and Bannerjee seem to be drawing this conclusion merely on Romerâs one failed experiment and itâs not at all clear from that that all charter city efforts must be doomed to fail in the same way. Even if most failed in that way, if you could setup a significant fraction of charter cities well such that a significant fraction of charter cities did generate significant growth, that would likely be very much worth doing despite not being the result 100% of the time.
Full excerpt (page 181 /â 414) including all mentions of âcharter citiesâ (emphasis added by me):
Iâll opine that this reference doesnât seem as positive as Mark had me thinking. In particular, I assumed that they would say something to support Markâs claim that âI donât think my estimates of growth are substantially different from the average economistâ and they did not.
Additionally, Iâll note that their criticism that âcharter 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 backâ seems like a poor reason not to invest in more charter city experiments. Duflo and Bannerjee seem to be drawing this conclusion merely on Romerâs one failed experiment and itâs not at all clear from that that all charter city efforts must be doomed to fail in the same way. Even if most failed in that way, if you could setup a significant fraction of charter cities well such that a significant fraction of charter cities did generate significant growth, that would likely be very much worth doing despite not being the result 100% of the time.