Tuesday, May 1, 2012

Canada steps up

In an Op-ed piece in the Globe and Mail, Paul Romer, acknowledging the principle that “the primary roadblock to prosperity in the developing world [is] weak governance” lays out a new agreement between the governments of Canada and Honduras to go forward with his proposal for “charter cities,” laying plans to build a city in Honduras that will be governed by Canadian laws and institutions. The project

offers a new way to think about development assistance, one that, like trade, relies on mutually beneficial exchange rather than charity. It’s an effort to build on the success of existing special zones based around the export-processing maquila industry. These zones have expanded employment in areas such as garments and textiles,  … but they haven’t brought the improved legal protections needed to attract higher-skilled jobs. By setting up the rule of law, the RED can open up new opportunities for Canadian firms to expand manufacturing operations and invest in urban infrastructure.

By participating in RED governance, Canada can make the new city a more attractive place for would-be residents and investors. It can help immediately by appointing a representative to a commission that has the power to ensure that RED leadership remains transparent and accountable. It also can assist by training police officers.
As someone who has experienced firsthand the difficulties of improving discrete institutions in an environment that is wholly foreign and largely dysfunctional, I am intrigued by this idea, and impressed that the government of Honduras is willing to cede some degree of sovereignty in order to provide more opportunities for its citizens.
Using the examples set by experiments like Hong Kong and Singapore, without the more unfortunate aspects of colonialism, the idea seems very promising, and I will be watching it closely. It offers the possibility of greater “buy-in” from the Hondurans, who, like our forebears, can move to the new city in search of economic opportunity. In a way, it is like emigrating to Canada without leaving Honduras, and it is not hard to envision a future in which the Race for Africa or the voyages to North and South America are repeated, but at the request of natives trying to make a better life for themselves and their children. And it also offers Canadian firms an opportunity for reduced labor and organizational costs in a more stable and predictable framework.
Nothing is certain, but the idea is definitely worth exploring.

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