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?
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.
Average Yearly Income, 1980:
Average Yearly Income, 2017:
Singapore GDP per Capita, 1960:
Singapore River October 1976
Singapore GDP per Capita, 2018:
Hong Kong 1980
Hong Kong GDP per Capita 1980:
Hong Kong Now
Hong Kong GDP per Capita 2018:
UAE GDP 1980:
$75 billion USD
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:
- 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
- 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
- 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.
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.
and learn more about Charter Cities.