New Entrepreneurship and SMEs within Urban Cores: Barriers to Entry?

PI: Arindam Dutta (Department of Architecture, MIT)

Abstract

The proposed research below is based upon breaking the dogma that highest and best land value is also the most productive. The overarching reliance of elites and governments in developing countries on “Western urban land economics” that privilege highest-bidders on a rent-gradient from urban center to urban periphery has paradoxically created economically uneven urban landscapes in Asia and the developing world. SOE-driven megaproject developments in urban cores and Special Economic Zones (SEZs) in ex-urban locations stem from investment criteria that privilege large investments, whose inflexibility towards incremental changes of use and adaptability may pose inherent barriers for the key sectors where long-term economic resilience in the developing world may be located: new (small) entrepreneurial entrants and SMEs. One measure of productivity ignored by “land economics-type” monetary measurement is the incubation function and positive externalities that cities as such have historically provided, positives that have been one of the core arguments for cities themselves as “engines of economies.” In order to better understand these potential barriers, it is important to model correlations between “place-based” externalities (labor surpluses, co-location, interfirm linkages) created in areas where there is a high concentration of SMEs and the measurable benefits conferred by location and better infrastructure. I would argue that conventional real estate paradigms tend to narrow the range of viable enterprise and SMEs, whose collective “noise” is crucial to economic resilience for the majority of economic actors. Studying these correlations would necessarily involves the study of “informal” or “extra- legal” transactions, both in respect to real estate as well as the other forms of economic activity housed within it; in countries such as India or China, for instance, greater formal transparency and legal enforcement is not necessarily a stimulus for the biggest and smallest economic actors (or, for that matter, the state). My project therefore aims to look at the potential for sub-state collaboration amongst a large diversity of economic actors, and the feasibility that such might pose for urban improvements that benefit SMEs and new economic entrants. The prospect is to think about new, para-legal, forms of economic composition within real estate arrangements as well as infrastructural upgradations that are responsive to smaller, incremental “bottom-up” demands that are supportive of place-based externalities, and are therefore inherently better posed to aid higher productivity. In order to do this, I propose to study old, presumptively “problematic,” inner-city business districts in three Indian cities in comparison to the new megaproject business districts that have been deemed their “solution,” as presenting the occasion to examine backward-forward linkages in entrepreneurial and real estate behavior over the last twenty years or so. Using a mix of digital mapping, anthropological, and litigation records of business and property disputes, I hope to arrive at real propositions for para-legal collaborations towards better infrastructural amenities, as well as design/development propositions that answer best to the incremental demands posed by high concentration of SMEs and new, small, economic entrants.