Start-Up Cities Along the Border

Open border advocates have long sought to promote open border policies in immigrant recipient countries but success has been mixed at best. Occasionally immigration policies are relaxed and sometimes they are restricted. Despite the countless energy and effort expanded, it is unclear whether the world is moving towards open borders. It may be time to consider directing efforts  towards the governments of migrant sending countries. Specifically, it may be time to lobby for the creation of start-up cities along the borders of the first world in places such as Mexico, Turkey, and Morocco.

Start-up cities are regions which remain under the jurisdiction of their host country but which are allowed a large degree of autonomy in domestic affairs and have their own independent legal and economic institutions. Start-up cities may even be allowed to operate under a different legal system than their host nation. Leading the development of start-up cities is the central American country of Honduras, which is currently setting up the framework for the creation of several start-up cities. The details of the Honduran start-up cities are still to be decided but once completed they will give Honduran citizens the opportunity to decide under which set of institutions they wish to live under.

Start-up cities are related to but distinct from charter cities, which have been discussed on the site before. Paul Romer, a Stanford Economist, first showcased his idea of charter cities on a TED talk in 2009. Romer’s charter cities though relied on help from the first world to get started up and in some variations the charter cities were administered by foreign governments. One of his examples was Canadian administration of a charter city in Cuba. Start-up cities (I take the term from Chapman University Law Professor Tom Bell), on the other hand, are initiated by and remain fully under the control of the host country. I suspect many migrants from and residents of the third world prefer the latter option. It is difficult to explain to a first world audience, but colonialism is still very much in the collective memory of the third world and anything with the trappings of colonialism will be met with heavy resistance. It is for this reason why I believe that, if they are to succeed, start-up cities will have to rely on existing overseas populations to help provide the expertise needed. This is not to say that expertise cannot be drawn from elsewhere, but it would be of great political aide nonetheless if it were perceived that start-up cities were under the control of natives.

Mexico, and other traditional emigrant countries, could pass legislation to create start-up cities that allowed its citizens to live in institutions similar to its northern neighbor, the United States, whilst still remaining in Mexican soil. Indeed countries like Mexico have a comparative advantage when it comes to creating start-up cities; they already have a large population of overseas citizens who are used to living under such institutions and therefore better able to re-create them elsewhere.

The creation of start-up cities should be favorable to all stake holders, including traditional opponents of open borders.

Migrants do not leave their homelands without reluctance. Migrants do not pack up and move their lives thousand of miles away out of whim or as a rite of passage. Migrants leave their countries of birth out of economic necessity or in order to escape  dangers to their safety. If a viable option allowed for them to continue residing in their homeland but under better institutions, many would prefer this option than migration to a foreign land.

Even migrants who have already migrated would be tempted by the lure of start-up cities in their countries of origin. Many migrants live as second or third class citizens with reduced civil liberties and limits on the economic activities they can undertake. Start up cities would enable migrants an opportunity to exert rights as fully fledged citizens and enter their elected profession with minimized legal obstacles.

Host countries should be favorable of start up-cities as it would create a wealthy region to draw tax revenues from. Start-up cities should be created in regions with low levels of populations or require that populated regions opt into them through referendum. This will ensure that minimal land disputes arise from the creation of start-up cities.

Traditional opponents of immigration should favor start-up cities as it allows them a method to rid themselves of migrants. Opponents of migration who recognize the economic value of immigration but who oppose migration out of cultural concern should favor start-up cities as a method that lets them to do business with migrants without having to live among them. Start-up cities could be created along the the border of the first world, but would be located on the third world side of the border and should therefore qualm fears by traditional opponents of migration that migration will lead to territorial losses.

Mexico is a prime candidate for the creation of start-up cities. Maquiladoras, special economic zones where Mexican labor works using capital from the United States, already litter the US-Mexican border. Maquiladoras already allow Mexicans to partially enjoy US economic institutions. Start-up cities would be a natural evolution and allow Mexicans not only to work under US institutions full time, but to live under them. Mexico also has the benefit of having a large overseas population whose expertise living under better institutions could be used to create start-up cities. Using expertise from fellow Mexicans should reduce the potential of a start-up city being mistakenly identified as an attempt to colonize the country. Mexicans would enjoy the benefits of US institutions but without reliance on US authorities to provide them. Mexico is also a prime candidate because its overseas population retains voting rights in Mexican politics and can therefore exert political pressure for the establishment of start-up cities.

Mexico is not the sole country in a favorable position for start-up cities. Turkey, with its large established overseas population in Germany and its favorable location next to the European Union is also a prime candidate as well. As is Morocco. Morocco actually presents a unique case in that it has two Spanish enclave cities, Cueta and Melilla, on its end of the sea. Both cities have high rates of illegal immigrants crossing over to enjoy Spanish institutions. The Moroccan government would do well to create start-up cities to provide better institutions for its people.

Start-up cities needn’t be located along the border of the first world. I propose this only because I believe those regions closest to the first world have a comparative advantage in regards to having overseas citizens with the knowledge necessary to recreate the desired institutions and due to geographic proximity that should favor trade.

Start-up cities are not without their flaws. Countries such as Mexico may be willing to allow start-up cities to adopt economic institutions different from the rest of country, but they may grow concerned about allowing such cities to have different political systems. Residents of start up cities may enjoy greater freedom than their counterparts elsewhere in the country, but they will still have to make certain concessions in order to appease current political elites. The current situation in Hong Kong (an example we’ve discussed before) provides us a case example of this. Hong Kong was an British settlement in China and was only transferred to Chinese authorities in 1997. British institutions allowed Hong Kong to flourish rapidly and in recognition of this the mainland government has allowed Hong Kong to retain a high degree of autonomy in its economic institutions. It has also tried to mimick the institutions that allowed Hong Kong to grow elsewhere in China through the creation of special economic zones. However it has also attempted to exert greater power over Hong Kong’s political  institutions. This suggests that the citizens of start-up cities will have to actively fight off attempts to curb their autonomy.

Start-up cities may also fail to provide the necessary institutions to all would-be migrants. Mexican nationals would benefit from the creation of start-up cities along the US border, but the Mexican government may be reluctant to allow Honduran or Guatemalans to reside in Mexico. It would be preferable if start-up cities were granted the freedom to set their own migration policies, but its unclear if this is politically possible. Hopefully the advent of start-up cities in some countries would exert pressure on other countries to follow suit.

Despite these flaws I believe that start-up cities are worth further attention by open border advocates. Efforts to convince the first world of the benefits of open borders should be continued, but it may be time to see if we can gain greater returns on our efforts by directing resources towards third world governments.

Michelangelo Landgrave

Michelangelo Landgrave is an economics graduate student at California State University, Long Beach.

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