New growth theorist Paul Romer is into city-states. He sees them as a mechanism for accelerating Third World development and lifting rural populations out of poverty. It's an intriguing, if complicated, idea. Michael Perelman posts Stewart Brand's (of Whole Earth Catalog fame) synopsis (tip-of-the-hat to Mark Thoma for the pointer).
[D]eveloping countries could invite instant Hong Kongs--new cities in new locations run by experienced governments such as Canada or Finland. They would enrich the country where they are built as special economic zones while also rewarding the distant government that makes the investment of building the new city state and installing a set of fair and productive rules. Over time, as with Hong Kong, the new city is turned over to the host country.
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