Jeune Street

For those who thought that expanding guestworker programmes is a provocative development strategy, try this on for size. Paul Romer, of the world’s most important economists, has resigned from Stanford (and turned down the offer of chief economist at the World Bank) to promote new ideas about establishing ‘special administrative zones’ around the world:

One of a generation of technical economists that includes Ben Bernanke, Lawrence Summers, Jeffrey Sachs and Paul Krugman, he startled colleagues last year when he resigned a Stanford professorship in order to pursue “other interests” …

It turns out those “other interests” mainly entail a scheme to persuade nations around the world to adopt “special administrative zones,” managed in many cases by foreign governments, based on the model of Hong Kong, which, for 150 years, was administered from afar by Britain. “Hong Kong was the most successful economic development in history,” says Romer. The rules developed there over time were codified, copied and installed by the Chinese government in four special zones along the coast in the 1980s; the experiment worked so well that the system was adopted country wide.

Tyler Cowen's initial reaction is cautious enthusiasm:

I'm all for this idea (how would the Swiss do in Nigeria?), but I fear that Hong Kong is a cautionary tale in the other direction.  Due mostly to the pressures of nationalism, the world's most successful development experiment was ended without a second thought.  And its initiation was backed by brute colonial force.  Which country is most likely to allow another country to manage part of its territory in a new experiment?

Romer is planning a public launch of an institute to promote his ideas this summer, and he will be presenting them in more detail at a TED talk in Oxford this week.