NYU economist Paul Romer is what Chrystia calls an “ideas entrepreneur.” He revolutionized the study of economic growth with his research on the power of ideas. He shook up the field of higher education with his company that offered online homework problems that were graded by computer. Now Romer has set out to alleviate world poverty. For his new project, Romer set up a nonprofit organization dedicated to convincing governments across the developing world that they should cede a portion of their territory to an external authority in order to create a “charter city” in which new rules would make it attractive for skilled immigrants, unskilled migrants and businesses to come and settle.

This radical idea is slowly catching on. Honduras is poised to be the first country in the world to host a charter city after its Congress approved a constitutional amendment enabling such a plan in January.

He talked with Chrystia at the Aspen Ideas Festival about the Charter Cities project. Here’s a transcript of some of the highlights of their conversation.

CHRYSTIA FREELAND: What kind of legislation — what does it take to build these new cities, these reform zones?

PAUL ROMER: Let me give you a “for instance.”  This new zone [in Honduras] will have its own judiciary.  The hope is that a partner country will agree to let its Supreme Court act as the court of final appeal for the judiciary within this zone.  If the treaty can be negotiated soon enough, the enabling legislation will specify that country X is–