Can Charter Cities Transform Poor Countries?

Elsewhere at The Atlantic is an article about an international development idea that could change the face of human civilization:

Rather than betting that aid dollars can beat poverty, Paul Romer is peddling a radical vision: that dysfunctional nations can kick-start their own development by creating new cities with new rules--Lübeck-style centers of progress that Romer calls "charter cities." By building urban oases of technocratic sanity, struggling nations could attract investment and jobs; private capital would flood in and foreign aid would not be needed. And since Henry the Lion is not on hand to establish these new cities, Romer looks to the chief source of legitimate coercion that exists today--the governments that preside over the world's more successful countries. To launch new charter cities, he says, poor countries should lease chunks of territory to enlightened foreign powers, which would take charge as though presiding over some imperial protectorate. Romer's prescription is not merely neo-medieval, in other words. It is also neo-colonial.

Matt Yglesias argues that this actually isn't that radical:

...situations of ambiguous sovereignty aren't actually all that rare. The United States governs Puerto Rico, the District of Columbia, and other territories that don't have full voting rights under a series of ad hoc arrangements. Britain has Gibraltar, China has Hong Kong, France has New Caledonia, etc.

What's more, it's very common for people to be living in a democratic country that they aren't citizens of and can't vote in. Legal residents of the United States who moved here from Mozambique aren't horribly oppressed or put-upon, they're just immigrants. The real problem for would-be migrants from Mozambique is that Americans are resistant to the idea of letting an unlimited number of people move from Mozambique to the United States, and the citizens of other rich countries tend to be even more resistant. So a country might see it as serving its own interests to take a relatively uninhabited part of its territory and invite it to be administered by a rich and successful country that in the eyes of the world is a credible provider of good governance. Especially if the country in question--unlike the United States--isn't viewed as harboring grand geopolitical ambitions.

So suddenly you have a swathe of territory being administered by some earnest Norwegians in association with an international crew of policy wonks and a couple of entrepreneurs interested in opening sweatshop-type factories. Would everyone want to move there? Of course not. Would some people want to move there? Of course they would. And if the first couple of factories were successful, then there'd be more interest in setting up more firms and that would increase the value of the land providing the Norwegians with the money they need to keep the place growing and running.

I wonder how the police and court systems would work.