Thursday, May 21, 2009


From Michael Perelman:
Paul Romer [one of the world's foremost growth economists] proposes that developing countries could invite instant Hong Kongs---new cities in new locations run by experienced governments such as Canada or Finland. They would enrich the country where they are built as special economic zones while also rewarding the distant government that makes the investment of building the new city state and installing a set of fair and productive rules.
This reminds me a lot of franchising in business, where a small entrepreneur gets often badly needed aid in the form of a well established and successful system and ingredients, training, and a vast and sophisticated support network, but the motivated and energetic entrepreneur provides the bulk of the work on the ground. The entrepreneur is also restricted to following many of the rules of the franchiser that are for the purpose of ensuring quality control, efficiency, and success.

This has been an extremely beneficial relationship for a great number of entrepreneurs. It's a powerfully synergystic and successful concept, or model.

Given the great logic and success of franchising, Romer's idea certainly appears to have potential, but you need to be very smart and careful in structuring the details so as not to cause strong opposition due to sovereignty and nationalism issues.

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