Comeback of the Charter City? · alex franz

Comeback of the Charter City?

The latest edition of Dru Riley’s excellent trends.vc newsletter drew my attention towards the interesting topic of charter cities.

The concept is quite simple: prosperity and well-being of a country (or any community) are generally based upon having a good set of rules that allow its subjects to prosper and live well. As nations are usually to too big to have sudden changes in their existing rules, smaller organizational levels (i.e. cities) are better equipped to adopt new rules. Enter charter cities: establish a patch of uninhabited land (thereby not forcing existing inhabitants to live there) and create an environment that enables citizens agreeing with the new rules to move there, work productively and live happily. Everybody wins. Examples such as Singapore, Hong Kong and Shenzhen have shown that relatively small communities can adopt new rules that enable them to live well, drive economic growth and lift prosperity. Everybody wins.

In his 2009 TED Talk Paul Romer talks about this topic in more detail and has since been involved in pitching the idea to leaders around the world, notably in South America (Honduras) and Africa (Madagascar). In the case of Honduras, the initial plans for the establishment of a charter city were scraped after political and judicial objections. I was surprised to learn that the planned Próspera Charter City is actually about to launch after all. Located on the island of Roatán just off the coast of Honduras it’s promising to provide a platform for sustainable growth.

Charter cities reloaded?

Despite some of some projects picking up steam, it seems that the creation of new Charter cities has not succeeded on a large scale judging by lack of new projects - but there are some other developments towards changing rules and policies on state and city levels to stimulate economic growth. Many jurisdictions have started to change their rules in response to the COVID pandemic, especially in regards to legislation around employment. By accelerating the adoption of remote-first employment structures, workers become more flexible in terms of where they choose to live and work from. We have seen some interesting trends emerging with multiple countries establishing economic free trade zones or special visa catered towards attracting remote workers such as Dubai, Portugal or Tulsa, Oklahoma?. Can we see this as the next iteration of the idea of charter cities? Adopting new rules to become more attractive (after sustaining economic damage through COVID-related measures such as lock-downs).

The poster child for cities looking to transform themselves is Miami with its ambitious leader Mayor Francis Suarez. He is effectively running the city like the CEO of a tech startup: assembling a great team around him (including hiring the city’s CTO), frantically engaging with investors, founders and talent to come to Miami - with the vision to build a technology hub and “the most crypto competitive city on the planet.”

I am curious to see how this trend will play out in other cities and countries around the world. Sadly, I am not seeing much hope for Europe and especially Germany at the moment. The lack of visionary politicians has been evident for the past few years or so. There have been no major investments in public and technological infrastructure in the past decade despite soaring tax-revenues and healthy fiscal budgets. The government’s lacklustre and clumsy performance regarding the vaccine-rollout and the general sense of complacency are symptoms of an overly bureaucratic system that is devoid of real leadership.

I am curiously keeping an eye on grassroots movements like the Creator Town and what they are going to achieve in the coming years - maybe even in Europe.