Charter Cities: Development Model or Neocolonialism?

Abstract

Facing the problems of corruption, inefficient bureaucracy, a lack of property rights or of the rule of law in developing countries, Paul Romer, the current Chief Economist of the World Bank, has chosen a radical approach when he provided advice to the Honduran government in 2010. His idea was to establish a new constitution of the regional administrations and the legal framework in areas of developing countries where no settlements exist. To establish such a special administrative region, so called Charter City, a developing country requires a partner country which already enjoys credibility in terms of a functional administrative order. A high level of trust is presupposed, because the Charter City will be highly independent from the state ruling government. In fact Romer assumes that it is far easier to establish a new framework under the condition of good governance in a region which will attract citizens and investors than to change an existing system. Certainly the possibilities of a far-reaching independence contain some fundamental problems at the same time. The cultural heritage of a society and the country-specific characteristics might oppose the new order. Even when no one should be forced to live in a Charter City such problems will occur, because not only the region will change but also the rest of the country will be affected in the long term. In this context the activities of a partner country could be seen as an act of paternalism. The paper deals with the theoretical background of trust and compatibility in international administrative cooperation such as Charter Cities.