It’s interesting to me that your takeaway is that pushing for governance innovation is cheaper in existing polities rather than newly created polities. If your definition of “cheaper” factors in the cost of building new cities, then I get your point. I think there are good reasons to discount that cost that are discussed in the report, but regardless, do you think there is something unique about German institutional arrangements that allows for cities to better overcome collective action problems?
Cities in the US and most (all?) developing countries seem to really struggle with overcoming the collective action problems that stand in the way of achieving anything that isn’t extremely marginal. For example, it seems as though if there were significant public support for infrastructure project X or major policy reform Y in <pick an African megacity> that it’s pretty unlikely that the project can be attempted, let alone successfully completed.
Maybe it’s a function of state capacity? High capacity states (I think of Germany as having greater state capacity than the US, for instance) are better equipped to overcome collective action problems than low capacity states because they can credibly commit to a course of action and then efficiently execute on that vision.
Anyway, glad to hear you’re interested in charter cities!
Great post, thanks for taking the time to put this together.
One thing I would add on to your argument in Section 4 is the work of Gollin, Jedwab, and Vollrath (blog, paper) on “urbanization without industrialization.” What they document is that there are essentially two types of urbanization—resource-led and industrialization-led. In the former, you see a higher share of the population going into low value-added services, what they call “consumption cities”. This is especially true in much of Sub-Saharan Africa, with the result being rapidly growing cities without the historically observed rise in living standards or productivity. There’s also a related story here with work by Gelb, Meyer, Ramachandran, and Wadhwa on African labor costs and manufacturing, which argues that there’s been limited manufacturing in the continent, outside of Ethiopia, in part because labor costs are already too high to compete with SE Asia and elsewhere.
You mention India and China—I think comparing the two provides about as close as you can get to a natural experiment comparing manufacturing-led growth and services-led growth. Starting from a similar baseline in 1990 (which itself is instructive in just how bad the License Raj was given the Great Leap Forward and Cultural Revolution, but that’s a separate point), the divergence in GDP per capita is stunning. Bangladesh overtaking India and Pakistan over the past decade is also I think an instructive case in the value of an effective manufacturing-led growth strategy.