# Charter City A **charter city** is a new city given its own legal and regulatory system, separate from the country around it, on the theory that better rules will attract investment and residents. The idea began in development economics. It was taken up by libertarian investors, tested in Honduras, and is now being lobbied for in the United States. ## Romer's proposal Economist [[Paul Romer]] introduced the charter city in a 2009 TED talk. His argument was that poor countries stay poor because of bad rules, and that rules are easier to start fresh than to reform. Two countries would cooperate: a host would supply land and people, and a trusted foreign guarantor would supply and enforce the rules. [[Hong Kong]] under British administration was his model. In legal terms a charter city is an ambitious kind of [[Special Economic Zone]]. His first attempt, in Madagascar, ended when the president who backed it lost power. Critics from the start called the idea neocolonialism. ## Honduras Honduras was the real test. After a 2009 coup, President Porfirio Lobo's government invited Romer in, and in early 2011 Congress amended the constitution almost unanimously to allow "special development regions." Romer chaired a transparency commission meant to oversee them. It came apart within two years. Romer resigned in 2012, saying the government was making deals in secret, and that October the Supreme Court struck the law down. A 2013 replacement, the ZEDE law, went ahead without a foreign guarantor or Romer. Its best-known zone, [[Próspera]], is run by a private company backed by [[Pronomos Capital]]. Honduras repealed that law too in 2022, and its Supreme Court ruled the framework unconstitutional in 2024. ## What changed along the way | | Romer's version (2009) | The version that got built | |---|---|---| | Who sets the rules | A foreign government acting as guarantor | A private operator | | Stated purpose | Lifting poor countries out of poverty | Returns for investors and choice for mobile residents | | Accountability | To two governments | To the operator's charter and to arbitration | | Champions | Development economists | The [[Charter Cities Institute]], [[Pronomos Capital]], [[Free Private Cities]] advocates | ## Coming home In 2025 the Charter Cities Institute and allied groups began lobbying to create the same kind of zone on U.S. federal land under the name [[Freedom Cities]]. Operators of Próspera lobbied alongside them through the [[Freedom Cities Coalition]]. ## Why it's on the map The charter city is the respectable ancestor of the [[Network State]]. It gave the exit projects a vocabulary from economics and a Nobel laureate's name, even after the laureate walked away. The Honduran record is also the clearest evidence on how these zones end: by a vote of the host country's legislature and a ruling of its courts. ## See Also - [[Network State Experiments Roster]] - [[Crack-Up Capitalism]] — whose Honduras chapter is titled "Silicon Valley Colonialism" - [[Patchwork]] - [[Itana]] — a charter-city project in Nigeria