Check out this great post about Paul Romer’s charter cities concept by Ranil Dissanayake at Aid Thoughts, and The Atlantic article he cites. The key critique from Ranil:
I think a charter city is a terrible idea. In fact, it’s such such a terrible idea that I don’t think one would ever be established. To understand why, see The Atlantic article’s description of the obstacles Romer has faced in pitching the idea.
But the concept still bugs me because of the underlying premise, which Ranil skewers so wonderfully. That premise is the belief that the content of written laws, regulations, policies, institutions, etc. is paramount — and that the process by which they develop is less important, or even irrelevant. Economists seem especially prone to this mistake. The development industry as a whole has learned the importance of process, but it has struggled to operationalize the lesson. Actually making change in a world where process matters is hard.
That might explain why the charter cities concept seems to resonate with certain audiences: it promises simplicity. Why worry about current institutions, cultural context, etc. when you can wish it all away and start with a blank slate? If only life were so easy…