Introduction to Charter Cities

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We are living through the final period of urbanization in human history, with approximately 78 million new residents being added to cities annually. These new urban residents are concentrated in countries in the Global South, which often lack the critical infrastructure and effective governance needed to accommodate rapid urban expansion. The choices made today about how new urban spaces are constructed and governed will have significant economic and social impacts for generations to come. As such, it is crucial to get governance “right” before new urban spaces are filled, after which point change becomes not only more difficult, but also much more costly.

Charter cities—new cities with new rules—are one of the best tools to ensure urbanization brings about rapid and sustained economic development. Governance is a key determinant of economic performance. By improving governance through deep regulatory and administrative reforms, charter cities can create a competitive business environment that enables the entrepreneurship and investment needed to spur sustained economic growth.

Building a new city on greenfield land allows charter cities to establish a streamlined and high-capacity administration largely autonomous from the pre-existing political institutions of the host country. Such high capacity will in turn allow the charter city administration to provide both the rule of law and the public goods necessary to support well-functioning markets—differentiating it from the low state capacity that pervades the Global South. Through this blank slate approach to governance reform, charter cities can overcome the political barriers that commonly stifle reform efforts in pre-existing jurisdictions.

The purpose of this paper is to provide an introduction to charter cities, as well as to outline how to begin to think about their implementation. The paper begins by giving an overview of the challenges that charter cities can help solve, namely urbanization and governance. Next, it presents the historical context that motivates the work of the Charter Cities Institute. It then provides details on existing new city developments that the Charter Cities Institute has been working with directly. Lastly, it outlines six key aspects of a charter city: the city’s governance structure, policies, site selection, urban planning, anchor tenant selection, and steps to mitigate the risk of expropriation.

Charter cities are a powerful tool for development whose time has come. We hope that this comprehensive introduction will spark a revitalized interest in charter cities within the international development community and help bridge the gap between this community and new city developers. The Charter Cities Institute stands ready to continue building the ecosystem for charter cities and to provide technical assistance to charter city projects.