Success & the City How Charter Cities Could Transf He Dev World April 2012

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  A Macdonald-Laurier Institute Publication April 2012 By Brandon Fuller and Paul Romer How charter cities could transform the developing world Success and the City  The Macdonald-Laurier Institute exists to: Board of Directors Chair  :  Rob Wildeboer , Chairman, Mar-tinrea International Inc., Toronto  Managing Director  : Brian Lee Crowley  , former Clifford Clark Visiting Economist at Finance Cana-da  Secretary  : Lincoln Caylor , Partner, Bennett  Jones, Toronto Treasurer  : Martin MacK-innon , CFO, Black Bull Resources Inc., Halifax; Directors  :  John Beck  , Chairman and CEO, Aecon Construction Ltd., Toronto; Erin Chutter , President and CEO, Puget Ventures Inc., Vancouver; Navjeet (Bob) Dhillon , CEO, Mainstreet Equity Corp., Calgary; Keith Gillam , former CEO of VanBot Construction Ltd., Toronto;  Wayne Gudbranson , CEO, Branham Group, Ottawa; Stanley Hartt  , Chair, Macquarie Capital Markets Canada ; Rick Peterson, President, Peterson Capital, Vancouver; Peter  John Nicholson , former President, Canadian Council of Academies, Ottawa;  Jacquelyn Tayer Scott  , past President & Professor, Cape Breton University, Sydney. Advisory Council Purdy Crawford  , former CEO, Imasco, now Counsel at Osler Hoskins;  Jim Din-ning  , former Treasurer of Alberta; Don Drummond  , Economics Advisor to the TD Bank, Matthews Fellow in Global Policy and Distinguished Visiting Scholar at the School of Policy Studies at Queen’s University; Brian Flemming  , international lawyer, writer and policy advisor; Robert Fulford  , former editor of Saturday Night magazine, columnist with the National Post  , Toronto; Calvin Helin ,  Aboriginal author and entrepreneur, Van-couver; Hon. Jim Peterson , former federal cabinet minister, now a partner at Fasken Martineau, Toronto; Maurice B. obin , the Tobin Foundation, Washington DC. Research Advisory Board  Janet Ajzenstat  , Professor Emeritus of Poli-tics, McMaster University; Brian Ferguson , Professor, health care economics, University of Guelph;  Jack Granatstein , historian and former head of the Canadian War Mu-seum; Patrick James , Professor, University of Southern California; Rainer Knopff  , Professor of Politics, University of Calgary; Larry Martin , George Morris Centre, University of Guelph; Chris Sands , Senior Fellow, Hudson Institute, Washington DC;  William Watson , Associate Professor of Economics, McGill University. ã Initiate  and conduct research identifying current and emerging economic and public policy issues facing Cana-dians, including, but not limited to, research into defence and security, foreign policy, immigration, economic and fiscal policy, Canada-US relations, regulatory, regional development, social policy and Absrcinal affairs; ã Investigate  and analyse the full range of options for public and private sector responses to the issues identified and to act as a catalyst for informed debate on those options; ã Communicate  the conclusions of its research to a national audience in a clear, non-partisan way; ã Sponsor  or organize conferences, meetings, seminars, lectures, training programs and publications using all media of communication (including, without restriction, the electronic media), for the purposes of achieving these objects; ã Provide  research services on public policy issues, or other facilities, for institutions, corporations, agencies and individuals, including departments and agencies of Canadian governments at the federal, provincial, regional and municipal levels, on such terms as may be mutually agreed, provided that the research is in furtherance of these objects.  Table of Contents The authors of this document have worked independently and are solely responsible for the views presented here. The opinions are not necessarily those of the Macdonald-Laurier Institute, its Directors or Supporters. Foreword iExecutive Summary 1Sommaire 2Introduction 3The Urbanization Project 3Managing Political Risk 4Charter Cities 4Migrating to Better Rules 5Structure of a Charter City 7Reconciliation in Honduras 8RED Governance 9An Anchor in Strong Institutions 12Canada: Uniquely Positioned 13Seizing the Opportunity Created by Rapid Urbanization 14 What Specic Role for Canada? 15 The World Wants More Canada 16Authors’ Biography 17  i Success and the City: How charter cities could transform the developing world Foreword It is rare when a truly “new” idea emerges in the field of international development and rarer still when the idea has the potential to engender massive change. This is why the idea of creating a Charter City in Honduras, presented  by Paul Romer and Brandon Fuller, is so important.While the idea is not new in the sense of never having been seen, it is new in the sense of uncovering the importance and potential of something that has been overlooked. Romer and Fuller’s idea, in short, is to try and replicate the key elements of the dynamic that existed between Hong Kong and the People’s Republic of China when it took over the city and its highly effective institutions and organisations and use these to test models that were transplanted to China and eventually helped to spur massive economic growth and reductions in poverty. That institutions – the norms and structures or “rules of the game” that determine how organizations and individuals co-exist and prosper or work at cross purposes and stagnate – are critical for development has not been a secret to the international development community. Figuring out how to create successful institutions, however, has  been a mystery. The typical small-scale interventions of even the largest development agencies simply lack the scale and persistence to create wider, sustainable change. A program, or even programs, to train staff at a ministry or conduct seminars for chambers of commerce or fund scholarships simply will not cut it. Whole new sets of ministries and new chambers and new judiciaries and other organizations are needed. On the other hand, the transfer of knowledge of institutions and familiarity with their function is occurring globally, and on a massive scale, through migration. Tens of millions of people from societies with poor institutions have elected to leave and in so doing have chosen to opt into societies with institutions that work and that offer them a chance to earn a living and offer more to their families. More than just money, these diasporas are also sending and bringing home new ideas for  businesses, for education, and understanding and expectations for how societies and rules should function to allow economic growth and freedom. Though these transfers are having impacts at the family, neighbourhood, and village levels the impacts are still too disaggregated, too slow, and too atomized to have impact at the national or even regional level and to create macro level self-sustaining change.The idea to establish a charter city as presented by Romer and Fuller offers a potential new path around both of these sets of obstacles.Creating city-sized institutions and organisations is a scale that is small enough to be do-able yet large enough to have impact. Such a city can also accelerate and concentrate the transfer of knowledge and practice that is occurring through globalisation and migration and do so without forcing the poor to make the enormous economic and human sacrifices that migrating to North America or Europe requires.
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