Charter cities (sometimes called model cities) are semi-autonomous political units within an existing state with significant administrative and regulatory authority.
A comprehensive report by Rethink Priorities identified three main types of benefits charter cities can potentially deliver:
The authors of the report do not believe that allocating resources to charter cities projects is cost-effective—relative to GiveWell's priority programs—based on their direct benefits. The authors speculate that these direct benefits may be exceeded by the indirect benefits, but note that (1) such indirect benefits are very hard to estimate and (2) regardless of their magnitude, they can likely be produced more cost-effectively by special reform zones (SEZs) than by charter cities. While noting the potential value of additional research on the indirect benefits of charter cities, the authors conclude that "charter cities require more evidence in their favor before we could recommend them as a promising intervention to pursue."
In a series of replies, Mark Lutter, from the Charter Cities Institute, disputed the report's conclusions as overly pessimistic, arguing that charter cities constitute the only attempt to replicate the unprecedented economic growth of China, which lifted 850 million people out of poverty; that SEZs differ from charter cities in a number of important respects and are for that reason unlikely to deliver comparable economic benefits; and that, given their low budget, the apparent failures in Madagascar and Honduras provide evidence that charter cities are more, not less, tractable than they initially appeared....