An Introduction to Charter Cities

What are Charter Cities? Why do they matter? What can we learn from contemporary cities?

What is a Charter City?

A charter city is a city granted a special jurisdiction to create a new governance system.
A charter city is a city granted a special jurisdiction to create a new governance system. The purpose of the special jurisdiction is simple but powerful; it allows city officials to adopt the best practices in commercial regulation.

As the successes of Singapore, Hong Kong, Shenzhen, and Dubai illustrate, by improving governance, it’s possible for cities to achieve prosperity more quickly than ever before. Inspired by such success, charter cities offer a set of policy reforms for new cities to create the institutions required for sustained economic growth.

Shenzhen 1980

Average Yearly Income, 1980:
$137 USD

Shenzhen Now

Average Yearly Income, 2017:
$13,997 USD

Singapore 1960

Singapore GDP per Capita, 1960:
$428 USD

Singapore River October 1976

Singapore Now

Singapore GDP per Capita, 2018:
$64,582 USD

Hong Kong 1980

Hong Kong GDP per Capita 1980:
$5,700 USD

Hong Kong Now

Hong Kong GDP per Capita 2018:
$46,193 USD

Dubai 1980

UAE GDP 1980:
$75 billion USD

Dubai Now

UAE GDP 2017:
$689 billion USD

Though the scope of reforms to commercial regulation in each new charter city will depend on political context, common features of charter cities include:

Greenfield Site
  • Building on undeveloped land allows city developers to avoid the political challenges of implementing a new governance system in an existing city
  • Attracting private investment for the infrastructure build out to limit the financial risk of the host country
Independent Administrative Entity
  • Public-private partnership between the real estate developer and the host country
  • Retains a wide range of freedom to improve the business environment
  • Establishes both a taxing authority and a revenue-sharing agreement with the host country
  • Authority to establish commercial courts
Potential Areas for Reform under the Blank Slate in Commercial Regulation
  • Business registration
  • Property registration
  • Education law
  • Transportation law
  • Labor law
  • Energy law
  • Financial law 
  • Healthcare law
  • Building codes and construction permits

Governance is a key determinant of a country’s economic trajectory. Unfortunately, politics often prevents needed reforms from being implemented at the national level. Because charter cities cover limited geographic areas, their administrations can pursue deeper reforms than would otherwise be possible.

Why?

We believe that charter cities have the potential to lift tens of millions of people out of poverty.

Decades of research have shown that sustained economic growth is the primary determinant of a country’s standard of living. Economic growth, however, requires access to well-functioning institutions. Improving institutions is the most effective way to lift people out of poverty.

Charter cities are a public policy tool to help emerging markets develop the institutions that can serve as the foundation for economic success. They allow countries to experiment with new policies designed to attract business, foster economic growth, create jobs, empower small business, and support historically disadvantaged groups. By fostering an innovation-friendly environment, charter cities enable better institutions and economic growth.

“Charter cities are simultaneously political projects and business proposals.” 
Founder and Executive Director Dr. Mark Lutter

‍Singapore, Shenzhen, Hong Kong, and Dubai, despite pursuing different developmental strategies, all demonstrate that it’s possible for cities to grow from impoverished to world-class cities in two to three generations. The rapid development of these cities has lifted 800 million people out of poverty. It is this stunning success which has inspired the Charter Cities Institute to replicate their development models.

Giving historically legally isolated communities access to better laws is a necessity for long term economic development. Charter cities provide their residents with access to sustainable and efficient legal systems. This makes it easier for them to start businesses, removes barriers to entry, and protects them from corruption and discrimination.


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