Sharing sovereignty

Paul Romer has argued that the solution to African and Asian prosperity is to set up ‘Charter Cities’ where foreign companies set up business, imparting skills, employment and expertise. Developing countries would give up sovereignty in return for more wealth.

Aditya Chakrabortty writes in the Guardian that Romer’s idea:

smacks of colonialism

Aditya is right. This kind of argument fails to appreciate what it might be like to have someone else run your country. Romer underestimates the importance of agency; that successful policy needs popular support. People who do not have any influence over policy won’t support them, however technically ‘correct’.

It reminds me of when I was working in the Solomon Islands. Francis Fukuyama had just written an article suggesting that the government consider sharing sovereignty with Australia because, in the wake of a civil war, the Solomon Islands government couldn’t run its own affairs.

Fukuyama’s proposal was naive, because many Solomon Islanders already resented the already large Australian-led presence (donor spending was bigger than the government’s). Ceding yet more powers to Canberra would have risked further social unrest. Fukuyama had clearly forgotten how unpopular British rule was, despite it having ended only three decades earlier.

And Fukuyama had got the country’s political economy almost in reverse. The problem was not that the central government in Honiara was incompetent and to be remodelled on the Australian system, it was that people in the islands other than Guadalcanal didn’t feel that the regime represented them. People saw a lumbering giant wallowing in aid money, little of which reached them. Politicians helped themselves to the pot and served the interests of their extended families. Most Solomon Islanders quite rationally went about their own business, working on a subsistence level to support their own families. Any notion of contributing to national economic life was secondary.

Distancing the state yet more by ceding powers to Australia would further undermine the legitimacy of the state. However ‘correct’ or academically rigorous the proposal was, it wouldn’t do anything to integrate Solomon Islanders into national decision-making. Indeed it would do the opposite, marginalising the central government and eroding many people’s faith in the Solomon Islands as a nation.

What was needed (and still is), is a credible get-out strategy whereby donors build government autonomy rather than take it away. Apart from the enormous task of building productive capacity so that government can generate its own tax revenues, this would involve much more genuine ‘capacity building’ and training, as well as allowing the government to make mistakes, and to take responsibility for them.

Romer might use economic theory to argue that Charter Cities will create employment and promote learning-by-doing, technology transfer and so on, but if people are not in control of these Charter Cities, they will be disenfranchised and won’t participate as fully as they might. Democracy is not just a luxury; it is essential to make sure that economic policy works well.

Charter cities, like most forms of shared sovereignty, won’t work.