Renowned macroeconomist Paul Romer (perhaps the economist most responsible for getting the literature on endogenous growth up and running) has resigned from Berkeley to help start up a new institute dedicated to changing how we think about sovereignty, so as to make it easier both for countries to borrow rule-sets from each other, and perhaps to allow other countries to actively administer parts of their own territory. Romer notes
…we [should] rethink sovereignty (respect borders, but maybe create new systems of administrative control); rethink citizenship (allowing perhaps for voice without residency as well as residency without voice); and rethink scale (instead of focusing on nations, focus on new cities.) If nations are willing to experiment along these lines, they can create new places, places that can give more people access to the kind of rules that they would like to live and work under, and places that can sustain the historical process of entry and innovation in national systems of rules.
This is not only not as strange as it sounds, but actually has some considerable empirical precedent, as Alex Cooley and Hendrik Spruyt discuss in their new book, Contracting States (Amazon). State sovereignty is much more frequently abrogated than we think, and many states effectively control bits and pieces of other states’ territories. Sovereignty is not the single unitary phenomenon that it is often taken for, but instead a “a bundle of rights and obligations that are dynamically exchanged and transferred between states.”
The first chapter of Contracting States over at Princeton University Press.