Sebastian Mallaby's article on economist Paul Romer and charter cities is worth a read:
When you listen carefully, you realize that much of what Romer is saying should not be controversial. A few development economists argue that geography is destiny, but most share Romer’s conviction that decent rules are paramount. After all, Asia accounted for fully 56 percent of world income in 1820, only 16 percent in 1950, and a substantial 39 percent in 2008; what changed over this period was rules, not geography. Equally, Romer’s contention that a developing country can achieve good government by importing the credibility of foreigners fits with mainstream thinking. When Panama or Ecuador decides to do business in dollars, or when Slovenia embraces the euro, each country is importing the credibility of a foreign central bank. Similarly, joining the World Trade Organization is a proven way to import the rich world’s tariff structure, intellectual-property rules, and domestic regulationsand, just as important, to persuade investors that the reform is permanent. Importing foreign election monitors or peacekeepers can compensate for weak political institutions or security forces. And so on.
But Romer is also urging us to reexamine assumptions about citizenship and democracy, and this is where he gets more radical.
In the kind of charter city he imagines, the governor would be appointed by Canada or some other rich nation, but the people who work there would come from poor countriesthe whole point, after all, is to bring the governance of the developed world to workers in undeveloped places. It follows that the workers in Romer’s charter city wouldn’t be citizens in the full sense. They would be offered whatever protections the founding charter might lay down, and they would have to take them or leave them. Rather than getting a vote at the ballot box, Romer is saying, the residents of a charter city would have to vote with their feet. Their leaders would be accountablebut only to the rich voters in the country that appointed them.