Rana Hasan on Harnessing the Economic Potential of Indian Cities

Hi Rana, welcome to the show. It's such a pleasure to have you here. >> Hi Shi, it's lovely to be here. Thank you. >> Yeah. Yeah. And I have been I feel like I've been reading your work for such a long time and there are so many areas that you've actually covered in a very detailed way. But I want to start with the most recent work first because I think that's one of India's sort of biggest challenges right now. Uh and this is the work on cities mainly. How should we think about you know urban growth lomeration effects whether that relates to job growth innovation and also you know all the infrastructure and congestion issues that uh that India faces and and you've written a series of papers on this but I want to start with your recent ADB report uh where you argue that the economically meaningful uh area or city is often a natural city and it's not exactly the municipal or the census idea of the city. So I guess a good place to start is how do economists think about cities in a way that is different from how planners or geographers or even the government thinks about cities? Should we just think about labor markets or should we think about something much broader than that? That that's a great uh starting point Shi and uh really it was one of the um issues that we took up when we started this work on cities and and I should just mention here Shui that in fact the way I got into the city's work was really through my interest in jobs um and as you know people started recognizing uh you know there was this uh sort of a cliche that you know jobs are created by firms the private sector and and then you know some people started saying uh you know It's actually cities that create jobs. So Martin Rama who led that uh world development report on jobs he ended that report I think if if if my memory serves me correctly by saying look we really need to understand cities because that's where these uh dynamic or non-dnamic firms are located whether they're doing manufacturing in the per urban area or services in the center and and really that's also the the point at which you realize that okay um the city's got to be much broader than just the municipal boundaries um and And often these are very narrow. Uh you know if you just think of any of our cities whether it's Delhi or Gorga or Mumbai um there's stuff that's happening within the context of the administrative boundary or the municipal boundaries but there's a lot that's taking place outside. Um workers are living outside coming in. Uh there's some workers who are living in coming out. Uh there school kids um you know flows all all across these different uh uh governance units. And and the big problem is that when these units are being governed as if they were just isolated islands, uh we know that we are not optimizing on let's say the placement of infrastructure um you know the sewage facilities uh uh um uh solid waste treatment plants um and just you know industrial parks, IT parks, business parks. So you really have to think about a a much wider area whether it's commuting zones uh etc like you know everything that falls within let's say a 1hour commute time uh that's my city that's the labor market so yes that's that's how we uh came about it >> so you know normally when we think about places outside of India and you know especially including in the report natural cities often encompass more than one municipal corporation Right. Uh sometimes it could be like a greater uh Mumbai area municipal corporation and some of the smaller areas. Sometimes it could include some forest land, you know, some ground punches even if you if you go far enough. And usually one would imagine that it's a problem of coordination. Now in India, we don't devolve very much authority fiscal or political to our cities. So it seems like the local level government actually doesn't have that much to do and we are too centralized. So does that mean this makes it easier in the Indian case because the state government holds all the cards or does it make it worse in Indian states because there is really not even a cluster of functioning municipal authorities let alone one functioning municipal authority? >> Yeah. Uh great question. Um the the the fact of the matter is I think it's proving to be quite difficult to get this uh coordination going. So um you know you you've got we've got so many different states and we see that there is a bit of a a struggle in in in being able to get all these different uh units um working together. Um but you know we do see some uh efforts now to really tackle this problem and improve the coordination uh across uh uh uh government units. Um you know a couple of years ago when we had started uh when when the government of India had requested uh ADB uh to work together with the World Bank uh on some of these issues about uh and and you know the umbrella was uh uh a city as a growth hub. How how do you encourage our cities as growth hubs? Um we we did get a chance to you know um talk to state officials uh from different states. Um Tanadu um is is a great example where the Chennai uh uh metropolitan development authority uh was really thinking in terms of um a a region that was uh a couple of thousand square kilometers. In fact, they were already thinking about the future and and thinking in terms of an expanded or or greater CDMMA area of about I think four or 5,000 square kilometers. But uh Shi I I think that challenge of coordination remains and and I'd like to just make one point uh uh for now which is it's not just coordination. It's not just you know I'm I'm doing a function. I I have a function, you have a function. Uh how do we coordinate? uh some of our planning uh uh uh you know the the the planning norms are different. Um urban areas you you suddenly have your building bylaws and all these things kicking in. Rural areas you don't and even though a lot of the rural areas especially the ones around the cities we know they're not doing that much agriculture. In fact it is services it is manufacturing and yet you know their norms for the building layouts for road width etc are different. And and that that that's the problem that you're not going to solve just by coordination. you're actually going to need to change your planning norms. >> So is this a more fundamental issue of just classification? India is much more urban than Indian planners or the Indian governments at various level even begin to realize or recognize. So what is the appropriate starting point? Is it first classification then the appropriate municipal agencies then a unified planning system or is it like is it the other way around? What's a good way to think about this? I think in terms of the way forward, so I'll just interpret your question in terms of okay, how do we go forward? I think getting policy makers and everyone to think about the economics of that city and and and really starting to call it say city region may be the way forward because once you're able to emphasize that point that look uh you know the reason we're trying to get you to coordinate the reason we're trying to get you to sort out you know the functions who does what uh etc it's important because you're really one economic unit um so I would say that's the way to go. I'm not sure if I've answered your question. I I suspect I've uh >> No, it's it's really hard to answer. So, you know, if I can peel the economic unit a little bit more, the way economists think about cities, uh one way is that they are labor markets, right? Uh that's the uh the classic Alam Berto way of imagining what a city looks like. So, you don't think of it geographically alone. you just think of it in terms of the labor market and wherever the labor market takes us those are the boundaries of the city and that's what you need to reclassify. Uh another way of thinking about it is a lomeration uh right and this is the the I guess this is really where economists have the most to contribute because we have about two millennia worth of evidence on endogenous growth and elomeration and here it's much beyond just a labor market. It includes shared infrastructure. Uh but most importantly it's about a a space physical space where people can learn and exchange ideas and innovate right uh and finally that's the imagination that economists bring to the city. So when you say city as an economic unit, what should be the defining factor when it comes to India at its current stage of development? Because we do have pockets in many places which are doing this kind of you know a very first world knowledge elomeration where the universities are connected to the services industry or to research labs but mostly we're talking about services job markets and in very few areas we're talking about some manufacturing in the per urban areas. So what is a good way to to start thinking about this in India and maybe if it's different in different Indian cities that would be helpful too. >> Yeah Shi, so first of all you know it's measurement. Um I I I think measurement is extremely important. You you talked about how uh you know um is India more urbanized than our uh let's say census data uh would tell us? Uh and and I think there have been some really good efforts. Um there are people who've been using nighttime lights. That's something that we used basically just looking at, you know, it's you you start with the center of a large statutory town. Um that's that's what the census calls it, a city, and then you just work outwards and see, okay, you know, um how where do these contiguous lights stop? Uh then there's work being done by people um uh using builtup spaces. Uh so there's some recent work at the going to be coming out I think soon with a report on just um uh urban India when you use builtup um uh images. Um so so uh that that measurement part is very important. In one of the studies we did I I think we made a um we did an interesting thing. We merged economic census data uh with the population census data >> and um you know at the town village level and uh uh we we just looked at the case of Indor over time >> and and this is a city so you know when you look at it from the nighttime lights you see indor is expanding. What's fascinating is that when you look at it from the point of view of the economic census um you actually see this very interesting transformation about how indoor um is uh basically large manufacturing plants are moving out they're moving out into the per urban areas you you see that in the data now this is not panel data we're not tracking uh actual individual plants but it's census data and and I think you you you can you can you can uh uh it's it's quite suggest suggestive uh that you're starting off with more manufacturing inside then it's more manufacturing outside and I think stuff like that is great because it's you know the policy maker can see it immediately you know you can put up two slides um and and and make that point and and everybody gets it that wow yes and in fact you know just uh a little bit more on the indoor example >> it's really interesting uh you know there are these different measures of uh specialization um right what does a city specialize in what does geographic units specialize in. And if you look at the administrative uh uh uh um indoor uh the municipal boundaries of indoor um it's it's some services uh that that that makes indoor different from other parts of uh other urban uh areas in India in that sense in the sense that that those particular services are much more concentrated in Indor than other Indian cities. when you consider the broader uh you know the natural city of Indoor it's certain manufacturing sectors uh chemicals and autos um so that stuff is important because for a second reason uh the first reason is it's showing how uh um these cities are integrated um their economies are integrated it's also important to make the point that manufacturing matters so in fact in this other study that we had done where in fact we just used the urban elomeration definition of the Indian census we found that actually um about a good 20 to 25% of jobs in the city broadly defined is coming from manufacturing. Uh so it's not the case uh so so naturally you know when you when you define the city as a broader entity including the perurban areas manufacturing is important. So there these measurement good measurement can really spark these two three key ideas fix these two three ideas sensitize policy makers to these two three ideas. So that's where I would start just the measurement. So you know once we start looking at the measurement and I've been in many rooms and conferences where you've put up some of these images right uh as have many of your colleagues what we see often in India is not the traditional idea of a city that you might see say in Europe or the United States. So one most Indian cities don't have that classic central business district kind of configuration. In fact what we have is something similar to what you talked about in Indor. We have a donut configuration that is the center of the city starts getting a little bit hollowed out and most of this economic activity especially new economic activity is happening in the outskirts either because of land value or because of land zoning land use issues and so on right or maybe just structural transformation where the per urban areas are now becoming you know less agrarian and more manufacturing oriented. So if that becomes the key point, is the argument that this data can help us plan better or is the argument that we just need to rethink how we do land use across the city because there is no reason for this donut shape to exist. In fact, donut-shaped cities are often not the most efficient. So what is a good way to think about that question? So Shi I I would say um uh you've touched upon really two issues. The the first is the one that we've been talking about which is defining the city appropriately. Uh so recognizing that the city is much more than the municipal boundaries. It's this entire larger area. But the second issue is really about land. uh the way you're using land uh your urban planning your master planning land zoning uh building uh regulations uh you know height restrictions setbacks I I think it's this second whole you know set of issues that come under the urban planning land use planning zoning uh that that becomes critical um in in your own work shi you've done this recent paper with your co-authors on land conversion uh that's a fascinating issue and I think it's it's intimately related if if we could have you know good um efficient land conversion processes uh and if you could marry these with good um you know modern I would say efficient uh land use building bylaws building regulations I think you would tend to see that donut shade disappearing over time certainly in brownfield areas I mean it would take much much much longer but relatively green field areas you would see that that classic um you know the bell-shaped uh uh cross-section of the city where the taller buildings the business districts are in the center um other kinds of activities are on the outside >> so you know on that I find one of your papers uh that you wrote on Bangalore fascinating because it's exactly marrying these two big questions right one is how do we think about the city as a unit and therefore plan a metro or a metropolitan transportation for that ity and then marry that with the appropriate either regulation or the deregulation. And these two things are typically very hard to study together because you don't know which one needs to come first and which one is the binding constraint. But you do something quite remarkable in in this particular paper because what you look at is uh that you know where the metro goes. So you actually trace where the metro is going and both before and after and you look at the welfare gains of the metro right u and you find that I mean metro obviously generates these uh significant non-trivial positive uh you know welfare gains and spillover benefits but if you marry where the metro is located with some relaxation of other regulation you know most importantly the FSI or the floor area uh ratio restrictions then suddenly those welfare gains or the spillover benefits are just much much larger. Right? So is this a question of we don't know what is the binding constraint first? Uh is it a question of you can't know what the binding constraint is? You should just relax it anyway. Is it a sequencing problem? What is your interpretation of how we should take broader lessons from that Bangalore paper? >> Yeah. Um Shi. So yes uh that that that that that's that's been a paper that was very exciting for me to do and I had great co-authors. Um you know it was motivated actually by Delhi the the city um I've lived in the longest and um uh I think it was AJ Sha had a blog once where he talked about um uh and and maybe it was somebody else but he talked about Delhi Metro about how you know terrific uh engineering success. Uh but you look at Hoskas Metro which was actually close to the place I was living in and Hoskas Metro was opening up to IIT which is a residential campus and a park on the other side. Um and and and this is not this this is this is great engineering stuff and you know the way uh they minimized cost overruns built everything on time and and engineering wise it's it's a great success but because the city is so flat it can never um decongest the way you would want it to. >> Yeah. >> And ultimately you know when you start thinking about that there's the engineering part the transport part uh and then there's the urban planning part and that's where the coordination issue comes in. What's fascinating Shi is that uh you know uh I I when I started this urban work I got the chance to go to Tokyo ADB institute had a conference on urbanization and there was somebody who was making this presentation um maybe from the ministry but uh they they kept on referring to the ministry of urban um something and transport uh it was urban transport and tourism and I asked them why why is urban because I was used to you know coming from India we have uh uh the urban development ministry transport is separate and um this person said well because what's a city without transport um so so of course the ministry of urban affairs has to be the ministry of transport and for me that was like fascinating um and that's that's the coordination problem so I think everyone gets it this is the challenge you know people understand this uh that the transport people or the you know people who are designing the metro they understand that you know yes we wish that we could have our stations opening up to very tall buildings um uh etc but it's it's really a question of um uh the the the coordination now coming back to the question you raised um should we just relax FSI everywhere uh I would just be a bit hesitant about that because at the end of the day it it it is an important planning tool and you do want to be able to control um uh densities there. There's so many different factors that come in. And in fact, you know, uh in even in our paper, we found during these uh um simulation exercises that the real bang that you get in terms of efficiency of the city, the economics of the city is when your tall buildings uh open up near the the the key nodes of the transport network. So it could be bus stations, it could be uh metro stations, etc. That's really important. Um, and you know, I'm not an urban planner, uh, but I'm going to just go ahead and, you know, um, make make a, you know, uh, a bit of a leap over here. Uh, Bangkok, um, you know, Bangkok, uh, is a city, I believe, where if, if you go to Bangkok, you'll see you you'll see some of the central business district type of stuff, but you'll also see suddenly, um, you know, you're driving along and then you see a extremely tall building uh, somewhere. That's not actually I think good planning because it leads to congestion. You know if you suddenly have a 70s story tower you you have to have people coming in coming out and and then you know you haven't thought through the transport uh uh issue uh you're not going to get actually uh the the the biggest bang for the buck. So I do feel these things have to be coordinated. >> So fair enough. And I understand that what you mean by you shouldn't have something willy-nilly. you know suddenly if you just open up everything there might be one building that comes up at one sort of unique pocket where they manage to assemble land but you don't have the road widths there or you know other kinds of things but when it comes to metros and again I'm not an engineering person at all but I'm just you know uh just using common sense it seems like it should be fairly straightforward to marry the metro construction with the widening of sewage and roadways and those kinds of things. So, so those things all kind of run together and typically run under similar government units and things like that. Is that something that is even attempted in India? Is that something we think about at all or do we just put the metro where you know either as a rent seeeking exercise where the powers that be or the politicians already own some land and those values will go up or as a we're going to you know put in a metro station every 1 kilometer or some basic arithmetic like that. >> So Shi I think um people have just gotten much more sensitized to this. So let's say maybe 20 years ago you know if we were talking um we we would um you know be a bit dismayed and say gosh nobody is thinking about this issue but you really see a lot of effort now I mean India has come out with a to policy uh at at the center um it's it's percolating to the states uh some states are doing it so it is happening it's a slow process because I think just you know the the the challenge dealing with brownfield areas uh and unfortunately we're not dealing with too many green field areas. Uh right, having said that, I do think that over the next three decades or so, you're just going to be see be seeing a lot more urbanization. So there still is um lot of green field areas. Uh so I'm a bit optimistic on this shi u even just in in the limited amount of time that I've spent on this issue. I think 2015 or 2016 is when we start first uh you know uh uh me and a couple of my colleagues started thinking about working on this area. If I compare uh the situation back then to the situation now um there there is just a lot of recognition in um in in in [music] government about this issue. But remember you're dealing with land and I and I think the land factor markets they are the most difficult to deal with. And here uh you know this whole concept of nimi and and you know people um who've who've had u you know nice big uh um land parcels in the middle of the city um they they they will they will fight um to not uh uh you know go for that that that bell-shaped u uh structure of a city. >> Yeah. So you know in India the numbers are really off compared to pretty much anywhere else except maybe China. In India even like a tier three city is so much larger than most other parts of the world. So India can get scale effects and a lomeration effects much more easily. like a tier three city in India can easily make a metro sort of uh you know both feasible in terms of cost benefit and also you know it can it can start breaking even in terms of revenue very very very quickly. So should India prioritize its secondary cities and sort of third tier cities or should it still focus on the largest elomerations and there are still elomeration effects that are you know there for the picking in in the greater Bangalore area or the greater Mumbai area and so on. >> Right. So Shy on this one um I I'm going to say we need both. uh the the the question is okay who does what I think in the big cities you can really get the private sector to come in because you know those elomeration economies they're a reality uh we know that they're there they're functioning um you know whether it's matching of of um suppliers buyers matching of workers to to firms uh people understand this and it is actually all happening or the shared resources you know uh uh in a given um you know you you you you can just share the infrastructure much better. So I think the emphasis has to be in the bigger cities find ways to encourage uh more and more PPPs. Um figure out whether the bottlenecks to these PPPs uh unlock them. Uh in in the smaller cities the second and third tier cities uh they are their their problem is infrastructure. I mean the basic infrastructure is not there and I think it would be could be a bit of a stretch to assume that you know the private sector is going to come in in a big way. That's where you need the public fund. So you you you need both. Uh but how you attack the problem would have to be different. >> So Rana, I want to come back to a third aspect that you find when you're looking at the you know cross across Asian cities uh in across papers and and your reports. Uh the third element is universities and how there are different levels different kinds of human capital uh that actually need to be the input into innovation right uh in India is there a tension between the spatial conditions that can generate a large number of good jobs uh which typically tend to be in manufacturing and services versus those that can generate frontier innovation where they are plugged in with you know universities and labs and certain kinds of private sector activities. >> Yeah. Um Shi, great question. In in fact, yeah, this touches on a couple of issues including just how universities uh are run are incentivized to work with the private sector. Uh but let me just uh back up a bit and and just mention you know this work that we had done. Um uh we were able to take um um the World Bank enterprise surveys and uh uh you know the World Bank office that was responsible for that very kindly provided us uh the geo codes with a 2 km fudge factor uh and then we were able to map it uh to our cities and and what we do find is that um firms which are located in uh cities with highquality universities especially engineering universities um are um uh uh our are cities whose firms are just doing more process innovation, product innovation and doing more R&D. Now the causality uh as you know you know economists love to get down into causality but I think uh because this was like the first time anyone had shown on a large scale for Asia that at least this correlation was there. I think we we we u we were let off but um a bit more easily. Um but the the bottom line is I think we we are talking about uh two different types of things. You you can have the university there. I mean look at IIT Delhi right? IIT Delhi is there and there's just lots of uh people uh services there there's manufacturing there's manufacturing of electronics uh out there in NOA right uh there's in Gorgo all all all all the services you probably have global capability centers and I'm sure I'm sure there's some spillovers but uh my bet would be that if you looked at uh you know what the potential is I I I am sure that the potential for the synergies would be much more but Then this like I said you know it's not really an urban planning at at some stage it ceases to be an urban planning issue. It's really about the how the university system works uh how professors are encouraged do they find it you know worth their while and in fact I I I have to just make a a point here which is again you know there's recognition within the government about this. So the Ministry of Education actually has a project uh uh uh has a program to try and foster better university industry linkages in in about uh 40 different institutions, tier 2 institutions. You know the IITs uh are are doing well uh but about 40 tier 2 centrally funded universities. Um so that that effort is there but I think that is a different issue from the pure urban planning kind of stuff. So the way I interpret your response is that there may be other Asian cities where there is this trade-off or tension between good jobs versus frontier innovation. But in India, we're nowhere close to that threshold yet. Like there is still a lot of gains to be made both on frontier innovation through better linkages and also on getting better jobs through better planning. Uh [clears throat] very nicely put Shri I I absolutely I I think you know and it's similar to this whole story about manufacturing or services India is at such a scale you need both you can do both you can excel at both uh similarly I would say uh we we absolutely uh should be doing the frontier um we should be doing um the the assembly the the entire supply chain India is just too big to to not be doing everything well >> yeah and also Oh, I feel I mean on the manufacturing services point there are different parts of India that are still poor enough to do manufacturing and there are parts of India that are rich enough just to do the frontier innovation right like we're not a tiny economy spatially or economically or in terms of human capital so there is still a lot of room in Bihar and UP and all these places where we could be doing the the low-end manufacturing that that China has vacated or other places have vacated >> absolutely absolutely and Odisha. >> Yeah, Odisha has done really well. >> Um, you know, why why I bring up Odisha is that I I've read a a couple of newspaper articles and then just, you know, casually asked people in the uh apparel textile sector. The the article uh it was in Mint somewhere. It was just talking about how in in Tamil Nadu you have all these garment factories and um and and and the factory owners, the managers are paying a premium to workers from Odisha. um etc. and and and so the question becomes wait why isn't Oisha setting up garments right this is not semiconductors >> uh this is this is garments so yes you're absolutely right >> so when it comes you know to the city trying to finance itself the way I think about a lot of your work is of course there is coordination there's a question of the appropriate regulation and a lot of thinking needs to go into this but a second part of it is how to finance some of this right and what What I get from the work like multiple papers and reports together is there is enough value uh and enough spillover benefits that if we invest in the infrastructure whether it's metroransit or other kinds of you know planning and coordination development there would be enough welfare gains to finance that is that an approp is India still at that stage where that's the appropriate lens or do we need to start thinking about financing much more critically because Indian state finances are such a mess. >> I I think it's a second truth. Um I you know in in some sense the financing is there. Uh so there was this really neat uh um study done by uh CPR uh on on a I hesitate to say tier 2 but let's let's call it a tier 2 city in Karnataka. Um and uh Tumuru uh and I might be pronouncing it uh incorrectly. uh they just did this very interesting exercise to say the different agencies of the state. So whether it's city level, state level and perhaps even central level, how much funding is actually coming into the city? So you know whether it's for roads or telecom or what what what have you. It it's a pretty exhaustive exercise because as you can imagine you know just just figuring out you know going through the account books and all of the different agencies it's actually quite a bit. The problem is it's all scattered across different agencies and um local agencies which frankly don't have all that much right it it's property taxes tend to be one thing that's there for the cities octroy used to be there but after GSD octroy is gone then you just have the state and and central level financing um now if you could coordinate this if this could be coordinated you know uh uh with an umbrella with somebody at the apex really somebody who's at the end of the you know the buck stops here. Um uh that that I I think that's where the challenge is. >> So the finance will come eventually. >> I think so. I think so. Yes. >> And the land values are I mean we still don't tax land and property taxes. I mean there are so many things within a city other than consumption taxes that we could tap into. So many cases of user fees, right? None of that gets really used right now in a place like Tumur. I imagine. >> Yes. uh tum I I I don't know the exact numbers there there is a recent study that's being done by some of my ADB colleagues just collecting data on city finances and and and they show that you know this again this is the interesting thing about India it's so large that there is variation so you do have some cities in some in in some states uh um which which are doing okay on the property tax stuff I mean that's the way you want to get to and then there's a whole bunch of uh cities which are just not And that's where again the sensitizing or the sitting down with policy makers and trying to work out a holistic solution to the issues that we're talking about of which finance which you've just touched about now is super critical. So you know you said uh at the head of the conversation that you got into this because of your work on jobs right and and you were a labor economist for such a large portion of your career and in particular manufacturing jobs uh because that needs to be a part of the structural transformation where India has lagged the most or been the weakest and what I get when I read the more recent papers which are on manufacturing or industrial policy which is different from industrial targeting but industrial policy uh the way I think about or interpret your papers is you think of urban policy as a sort of form of or a companion to industrial policy is that a good way to think about that starting point >> that that's that's a nice way to think about it uh Shi absolutely you know I I it what what you just said reminds me um Jill's Durant at at UPEN Wharton you know he's his his were some of the papers that me and my colleagues read and we we loved them. We said, "Wow." And then, you know, we got in touch with Jes and and Jill has been a a great uh you know adviser to us and I remember him saying once you know urban issues involve the mother of all general equilibrium problems. >> Yes. >> And and he said this is this is where the action is at. This is what we need to crack. So I completely agree Shorty. Um absolutely. So you know on this again uh what is so let me back up the way I think about how India has tried to boost its manufacturing at various points is cities have not been in the picture at all funnily enough right so we think about the odd regulation or the odd subsidy like we want to boost manufacturing of the you know leather chupels or apparel or something like that so there will be a PLI scheme announced or a subsidy announced so that's one kind of policym a second kind is oh Everything is locked because of land. So let's issue special economic zones. Now the weird thing is nobody wants to move to these special economic zones because land was a constraint but was not the binding constraint, right? You needed other supply chains to integrate. You needed labor to move to those places. And oddly enough, no one figured out that people are not going to move with their families to a special economic zone that doesn't allow schools or doesn't allow housing and only allows industry. Right? So we had that kind of a problem and no one really thought about how do we integrate industrial policy or uh what kinds of industry should enter should not enter should exist should not exist when we think about urban urban areas. So is that the the beginning of the problem or is it something different that industrial activity has just grown despite any government efforts and we need to think about industry in urban areas just completely differently from what people have been doing so far? >> Yeah, Shy, I think it's the former um you know there was this deliberate push to you know in in in in pursuit of the objective of um uh regionally balanced development. you a you wanted to push manufacturing out to different states but um there was there were also stipulations uh about uh you know where can you set up a factory how far should it be and um yes of course you know when it comes to polluting stuff so instead of you know regulating in terms of the type of activity you're doing if it's hazardous chemicals etc of course that's what you should be you have to be very careful about where you locate them. Uh but this blanket kind of thing that was part of our industrial licensing regime uh definitely contributed to it. Um so it it it was an issue right from getgo and I think the recognition of elomeration economies was just not there. >> I mean because it's the opposite. It's it's actually absolutely this this is the opposite. Um and and so you if you left it to the private sector um they would just gone elomerating. Um in fact I recall that when we started uh doing our work for Niti Aayog um uh and and and that led to that 2024 publication on harnessing the economic potential of Indian cities. Uh the first uh workshop that we had, we had municipal commissioners, we had folks from industries departments and we also called some private developers of industrial parks and you know there were a few of them um and and they all absolutely agreed to the point they said look if you force me to develop an industrial park more than 50 km away from a vibrant urban area. I can do it. It's not going to succeed because he said, "Forget about, you know, attracting the the the the the manager of the factory, the highest level guy. I can't even get good workers because good workers, like you said, Shi, they care about the education of their children. They care about the hospitals, etc. So, it's a sort of a non-starter. The other thing I must point out is scale. you know when you talk about our SEZs or industrial parks um in in some work we've done you know we have this nice histogram >> where we just have plotted um you know the sizes of these uh I think two or three thousand uh industrial parks um this is from one of the databases that DPI has very small >> it's just too small you you you just can't have any scale there >> yeah so it doesn't make sense there even for a single hospital or a single school to set up. >> Absolutely. >> Given how small it is and until that happens, no one moves with their family. So the thing never takes off basically. >> Right. Right. >> Yeah. But you know this is a weird So the the the trouble is we have a bigger problem at hand. Right. It's not just about convincing four or five agencies to coordinate or to solve a particular regulatory problem. It feels like the problem is so much bigger where fundamentally Indian policy makers don't trust the market to get any of this right. Like you know once upon a time we didn't trust markets to make enough bajad scooters in the economy and we told them how many to make and how to make them and now we don't trust the market to get a lomeration right. we don't trust them to figure out the city boundaries or broad labor markets and this balanced regional growth where every state will get an IIT in the middle of nowhere and every state will get a big you know aluminium plant in the middle of nowhere or something that still seems to be what drives everything uh when we think about this kind of spatial or geographically contingent policy. Yeah, Shi, I think uh number one, things are improving. Uh but number two, I want to get to why this happens. I don't think it's so much distrust of markets, but it is a formidable problem to solve, which is that in as per you know uh uh uh the the the just just on on how our government is structured, governance is structured. You've got center, you've got state, local governments don't have power. You know, I I there was this 1980 book and it was written for I think the title was called city limits. It's it's a book by an American uh uh uh uh researcher uh just about cities and he made this point uh in the introduction uh and it's it's beautiful and it's so simple. His his point there is that look you know um capital is very mobile. We all know capital is mobile. Um workers of course are mobile. People migrate. You see a lot of migration in China, in India, uh in the US, but still um you are sort of uh you know located in a a town or a city and and you have ties to it. What better uh for governance to let those people govern their city? They're the ones who have a stake in it, right? And so that's that's actually what makes a lot of these places tick. Uh it's what makes China tick. And we, you know, when we were doing this uh uh the the the first study, the the ADB study that you started off with, uh it it struck me and that's why I started calling it the basic agenda and then the non-standard agenda. And I've never come up with a better terminology, but what I mean is the basic agenda is your standard uh your your you know better land use, uh better building bylaws, uh you know, start all all these restrictions on building heights and setbacks. That's the basic agenda. Water supply, sanitation. I think uh nobody's going to dispute it. But I think that may not be all. There is this issue about >> who actually is thinking about economic development at the local level. And if your answer is nobody, we have a problem. That's where you know you you have people who are not incentivized at the local levels, they're not empowered. So this is the worst combination. Um and I think that's when when we started just looking at how um uh Chinese cities were doing it, we realized it was the opposite of South Asia. And and and this problem that I'm talking about is not just an Indian issue. It's it's pan South Asia. China was the opposite where the city mayor and the vice mayors, my goodness, they were completely incentivized to make sure that their cities worked as engines of growth and they were empowered. >> Yeah. Um it's it's interesting you know we we uh u we at some stage were told okay look you know China's very different what's the point we started looking at the US and and New York City >> New York City there's a deputy mayor who's in charge of economics there are two three there's theme uh unit but there's also a unit which is trying to bring in new industries uh life science AI etc so we uh that that's lacking and that's what I call the non-standard um part. There's the basic, you know, the basic uh problem and then the non-standard stuff. Uh we we need to tackle them. >> And a lot of my interest in is seeing in how we can push on that second one >> cuz I I really believe until local officials are incentivized and empowered um we are going to go on running into the problem. Now the difficulty there is states they don't want to necessarily devolve right uh >> yeah because they're the cash cow the cities are the cash cow and they can grab money from there and spend it everywhere else which is less productive >> and so one way out is why doesn't the chief minister adopt the the the the capital city right um don't okay so because you've got to get at this problem step by step so that's that's one issue um one one potential solution. The other one which um uh I I uh is is is basically start something like a called a city economic council or a economic development board of the city. Um just a a a it it should not just be a one-off meeting, but you do have to have some unit um where it's located functionally or organizationally. you know we can we can work that out with different states but you need this entity which is keeping track of uh you know which are my theme clusters um which are my anchor investors um what are their bottlenecks you know 10 years from today I want them to be doing really well uh what's stopping them >> you need somebody at that level to be thinking about these problems >> and this is your recommendation in the ADB report outside of India too like this is just something all cities need right So this is not an India specific malady and a problem. It's a city specific malady. >> It's a city specific. Yes. Yeah. >> Yeah. So you know here I I find that for the incentivization you know the latter problem that you detailed there's a more fundamental problem that the powers that we think of people as you know pieces on a chessboard that can be moved around and that don't need to be incentivized. I think that's the fundamental crunch there. Right. Right? I mean India has such large numbers. People flock to cities anyway just to earn their livelihood. So somehow there doesn't seem to be the thinking that we need to incentivize people to come to our city, live there for a long time, actually adopt it as their own or make a life there and and part of that process is what is going to get us the the bigger spillover benefits. Just think we think of people as actually we don't want them moving to cities, right? Which which translates into some kind of nimism. So it's a very strange mindset when it comes to how we think about people who want to urbanize. >> Yes. No, absolutely. I think these um uh these these um hurdles that we throw in in in in in front of people uh and and by the way Shi uh I I think that was a very deeply embedded part of the philosophy um 50 60 years ago. In fact, um, uh, you know, there's a very nice study of just Indian thinking on urbanization over time. Um, and, uh, this is the point that they make that Indian thinking on urbanization was about how to slow it down. >> Yeah. >> You know, that was the overriding concern. >> Uh, which is really got it wrong. >> Crazy, right? >> Yeah. These are your engines of growth. This is where you want people to be coming. This is this is development. Tell us one country that that has developed without these big elomer centers of elomeration but um there you go. [laughter] >> So you know have Indian cities gotten anything right like what are some of the things we have gotten right? Well, I think we have a lot of uh cities. So that's that's you know tier one, tier two cities and and that's something very nice. I mean if I just compare that to the case of Thailand uh I mean the highest level of uh uh primacy as they call it you know just one center the Bangkok metropolitan area >> and and if you think about it >> India's done pretty well and the fascinating thing about India is uh state the state variation. So you see Tamil Nadu in fact this is something somebody suggested I look at but never got the opportunity um but but I think there the starting point is absolutely correct that Tamil Nadu has a lot of tier 2 towns and they're pretty vibrant economically >> um some other states may not uh why you know what explains this so the beauty about India is that um you know you can be be unhappy that you know things are moving but you'll always find some good counter examples of places where things are going right, going in the right direction. And I think really as researchers, Shorty, for us, you know, understanding those those experiences and just getting it across to policy makers from different places is is is super important. >> Yeah. So you know when it comes to developing deeper job markets in cities what I got from the Bangalore paper was that we need to think about the physical infrastructure and the regulatory infrastructure and somehow marry the two and make sure they go hand in hand. Now when you think of it specifically from the point of view of job markets especially manufacturing jobs does that need to have a third prong which is now we also need to think about labor regulation or trade regulation and things like that >> it goes completely hand in hand you know you could solve the the the the basic problem of cities as I mentioned right the uh uh the water supply sewage infrastructure power but that's that's not going to be enough you know especially if you're thinking about wanting to compete at the global stage and I see no reason why India should not be right there at the top. uh then you have to you have to realize that there's uh all these regulatory hurdles and and I would think you know even beyond that um it's it's like you know if if I think about China and Korea let's say versus Thailand or Indonesia and and to some extent even Malaysia uh the latter three did a good job in terms of providing all the basics uh all these basic things we're talking about I think are are provided well the power supply is good etc etc. The roads are there. They do have an you know sufficient elomeration areas for industry to come up. Look at this whole uh penang's you know electronics sector etc. All all that is there and yet that cutting edge innovation it's it's not happening but you saw it happen in Korea. >> Yeah. >> Uh you see it in a big way in China over the last 15 20 years. Right. So there is I think something there also I don't think uh it's it's something automatic that'll just happen on its own and and you know now what I'm talking about is is is very closely related to uh you know Nshad Forbes has written a book he writes his op-eds I see him you know making you know at at conferences where he's asking why aren't our top firms doing more R&D right so there's there's something I think um in there in terms of just incent incentives uh that that need to be there uh and are not there currently and I think part of it has to do with trade policy um right if you you're a big player you have a pretty much closed market why why why should you waste money right so all all those issues of regulation trade policy they all come in short >> yeah so coming to labor regulation first which is also where you've done a lot of your work one theme I see in Indian cities is that they thrive because of the informal sector. Right? So, Indian cities have managed to somehow tap in that informal pool of labor or rather made that pool of labor informal whichever way we phrase it because of bad regulation. If we start doing major labor uh regulation reform and try to forcefully formalize these firms, are we actually going to create a problem for urbanization? Do you see any tension in those two things at all? Shi if the labor regulations that applied to Indian manufacturing um were applied across the board and actually even within manufacturing right um I I think it would be highly problematic >> um so we have to be really careful on the design of labor regulation because it's true you know economists don't like these uh um these these artificial thresholds right where something applies to the you guys something doesn't apply to you guys know it's level playing field etc. But in a sense a safety valve really has been that these very draconian laws applied to only a certain subsector >> size of the firm. Yeah. >> Yes. Yes. Uh yeah you come under the factories act and then or or you have 10 or 20 workers. Now the good news there shi is that while yes there is a bit of a push to universalize the labor codes there's also a push to >> take these thresholds and just raise them right so that that I think is a very big safety uh uh valve over here the second thing is the recognition of fixedterm contracts >> you know I think that's that's very important now of course when you have the option if you still have the option of having no contract versus um >> even a fixed room contract many businesses will say I'm I'm going to go with no contract right so uh that that that is a bit of tension I think you do want workers to have protection and and that's where you know one of my papers which is a prian uh ja the IG1 I think you you you even mentioned it the other day in our email exchange uh I was looking over over that again because it's been such a long time uh and I said wow shi's picked up on this one so I went back and and I remembered what was neat about it was the it was just comparing two pieces of regulation. The regulation on severance pay and the regulation on uh uh dismissal and and in a in a world where you know workers are risk averse, life is uncertain, you do want some protection for workers, right? And that severance pay, you know, in the in in our study, what we found and uh the the theory part showed it and then the empiric suggested it that severance pay is not all that bad. >> Yeah. >> Um the problem is when you introduce this massive rigidity of not being able to lay off workers or >> which was part of the old code which is if I want to change what a worker does, >> change their task. Yeah. >> I it it it can be a complete bottleneck. That's the kind of stuff you don't want. Yeah, actually I you know my colleague Kadamisha and I had a paper last year where we said we should increase the thresholds uh to a thousand >> and the argument I mean we came up with that number I just picked it out of a hat kind of thing but my reasoning was that a lot of our labor regulation assumes the old Charles Dickens world where capital is incredibly powerful and asymmetrically you know more powerful than labor and So labor needs all these protections including what kind of paint there will be on the wall to whether there are one you know two doors or three windows or how many clocks and urinals there are. So we've made labor protection extremely honorous in a way and we've done it in the most economically bizarre way because normally when you impose a cost on the firm you it should be a cost that actually the labor gets paid but a lot of the costs we impose through our labor regulation are cost that the firm bears but the laborer never enjoys right which is pretty much all of your factories act but what you're saying instead is something slightly different which is hey we do need some protections the firms are even willing to bear the cost to attract better labor for longer terms. Uh and severance is one of those exact costs that regulation can impose that the firm will bear that the worker directly receives as opposed to all this other nonsense which is just dead weight losses. Right? So is that a good way of thinking about how you think about labor regulation in this context? >> Shut in general yes. uh with the caveat that you can take any well-intended um you know >> uh uh intervention and just take it to the extreme and on severance pay um Sri Lanka has an issue uh very high severance pay uh and perhaps Indonesia at one point of time so you know it's again uh uh remember the problem with severance pay is uh especially when a firm is going out of business it's it's exact ly when the firm is going out of business that you know they probably don't have money for severance pay uh and and and that's where you're being asked uh uh uh uh to pay. Now if you suddenly double or triple that severance pay what that's going to do is it's going to dissuade investors from coming in in the first place especially in garments. Garments is a is is a is is a classic example of a foot loose industry. uh you know, you come in, you set up shop um and and it turns out that uh hey, you know, that Vietnamese firm is doing it better and they've got the Walmart uh uh deal. I don't I'm going to close this and then uh you know, you've got to pay huge severance pay so you never enter. So, um each of these things we have to be careful. Uh I I think when you uh when when when policy makers think about these laws, they really have to work with the private sector also the firms because those guys are going to react to whatever you do, right? It's it's better to take them on board, take the workers on board um and and and that's how you you come up with these things. Um Shi, but it it it brings me to another point. I mean, how do you deal with the severance pay? Look at how it's done in the US also. Of course, firms have their different, you know, >> their own policies. >> Met meta's laying off workers and and and I believe they're being quite generous uh in these recent layoffs. You know, that that's that's up to the firm, but there's also unemployment insurance. Um now, we are I think um not rich enough right now to have uh these kinds of systems, but you can start developing mechanisms which get you there. Um Chile had this uh solidarity fund etc. you know where workers pull money, the firm pulls money and and we we we have to start getting there and I think Shi we can do it especially because the administrative costs of this have really come down thanks to Aadhaar all these digital platforms the the databases talking to other you've got EFPO you've got this is portal that the labor ministry is is is developing so uh generally the two big costs admin costs financial costs the financial costs there are there but we can think in terms of pooling of these different risks and then the admin costs we've got to be able to use all these new technologies that are coming in. >> Yeah. So you know one other weird thing that we see when it comes to manufacturing in urban areas versus you know per urban or rural or even special economic zone areas is systematically across all sectors it seems that for a labor abundant economy you know firms are typically uh sort of substituting away from labor towards capital and in India it has been extremely premature except that that substitution is far lesser in urban urban areas than they are in many of the other areas. Is this because a lot of capital heavy industry doesn't come to urban areas in the first place or is it because that substitution takes place because it's hard to find labor and in urban areas that's a constraint that has been in some sense uh softened or lessened. I I I think it's a bit of both but certainly the the first one you know the nature of the industry uh large capital intensive industry a you're not even going to get the land and in fact even if somehow you have you know for legacy reasons land you really should be thinking of >> selling that land and and and moving out. Um so so a bit of both. Um and and because production processes are so different across sectors in in in urban areas where you have all these different workers, you'll naturally want to use them. Um you know think of the startup shorty I mean a completely different example like uh you know you ask people why do you want to be in youngsters? Why do you want to go to Bangalore? Uh because that's where not only the engineers are there but you might even find a lawyer who understands these issues right it's it's the financing. So it's this entire group of this this entire production process you've got all the key uh inputs uh from the human capital side there. >> Yeah. So elomeration works right everything from finding a lawyer to finding an apartment to making sure that if your startup goes under you can find another job and and so on and so forth. So >> what is a good way to think about labor elasticities in India and and you've really looked at this problem both you know uh with trade liberalization which is typically the context in which labor elasticities are studied but also how do we think about that going forward given that the world is now moved away from you know liberalization moving closer to mercantalism and protectionism. Yeah, I think there um we somehow need to find a way to to un unroll that process Riy because I think you know globalization uh it's been terrific for the developing world for sure. I mean you you you've just seen the way East Asia within one generation was able to make this jump and if if it was a closed world um highly pretextious world I don't think that could have happened. So just from the point of view of the developing world uh you you need that scale and you know people say oh India has a scale no when it comes to the globe it it doesn't. So I do hope that um this this move to a more mercantileist world um you know slows down and and starts reversing itself. Um but beyond that could you just repeat your question? I guess my let me back up a little bit so we we can unpack this in three four steps. So the first is you talked about these East Asian economies and how they managed to get that structural transformation in place with the headwinds of globalization in a generation or maybe two. So first question is how what did India not get right that many of these other East Asian economies did get right when it comes to employing a very vast pool of labor getting them out of agriculture into industries and then the knowledge economy. >> Yeah, that that's got to be a trade. Um we just did not see trade as an outlet um for for demand uh scale. In fact, now I I I I realize you know that when you ask me about the labor elasticity stuff, the reason I went to trade is because um you know when labor demand becomes more elastic, it's true that any shock means more wage wage volatility, more output volatility, more employment volatility. But uh if you can get that labor demand curve to be shifting >> uh right outwards and and how does that happen? that happens when output is expanding, when demand is expanding, and that's where trade comes in. >> Um, and and and so I I just think, you know, without a large market to serve, uh, you you you you you've got to certainly, you know, you can't necessarily um, you know, uh, uh, influence what other people do or or dictate what other people do in terms of their policies. You can certainly influence your own policies. And I think that's where uh the attempts to use trade policy as a industrial policy I I I think it's very dangerous. India went down that route. It did not work out well. Uh I think for many countries it has not worked out well. Um so you've got to keep uh trade openness going and and I do believe that um uh you do that and this flattening of the labor demand curve this this >> elasticities there are other ways like I said you know at the same time that you're seeing this labor demand curve become flatter you have the wherewithal to develop systems of social protection that protect workers but don't impinge on individual firm decisions in the way our polic policies uh had them. >> So, you know, but so that's a fear of not being part or not being as open to global trade because you're worried about your workers. But in India, we didn't have those many workers in these tradable industries in the first place. So, I guess what did we get wrong overall? Was it just we didn't think about which industries are the ones we need to focus on? because we did manage to export a lot of software and other such things. Uh manufacturing in apparel and other things did pick up in the middle and India did increase its share uh in manufacturing but eventually it just kind of plateaued and it's hard to think about all that fault just being one of not good trade policy. There must have been other huge blunders that were made along the way, right? >> Labor labor should labor um uh labor I think the de facto labor regulatory system now is a lot um it's it's it's it's more permissive now than it was in the past. Uh I remember in in you know in the course of our uh various studies uh talking to one of India's largest um uh employers uh largest apparel manufacturers and I I I mentioned something that I'd seen from interviews with smaller apparel uh producers. I I would ask them what's the indust does the industrial dispute act interfere uh with your functionings and some of these guys did not know this legislation they would say wait what what are you we don't know this legis legislation right but then you start talking and it was very clear as one one person said look >> I don't want to put too many workers under one roof >> period okay I don't know what legislation I don't even know this legislation you're talking about but it's it's it's too tricky. It's too difficult dealing with a labor unrest. Um, and that could be because of the local politician, you know, will take their side. It could be because of the industrial disputes act. It's just it's like multiple things. The bottom line is >> they don't want to become large. Now, >> coming to the the the large player, one of the largest, uh, he narrated a very interesting story. He he he said that, you know, on his own he's managed to figure he he's figured out how to, you know, keep everyone happy, keep, you know, the workers productive and and and he's got his um connections in the global market. So, he's got his buyers, etc. That's a very stable situation for him. But he narrated a story where you know some Hong Kong based uh um textile aggregators contacted him and said look uh we are thinking of setting up in India but you need to tell us um if we want to just close the factory for whatever reason what are all the processes you know tell me the time and the costs >> and and that's where you know when when they sat down uh the the Hong Kong based group said forget it >> yeah it's dead on arrival once you look at how to close a factory under industrial disputes act >> and and and and that's where um it's it's you know the the the other countries Bangladesh I believe uh just doesn't have that uh uh situation and it's interesting shi why uh you know I've asked some people why is that and they say look um it's not that Bangladesh has a great um business regulatory environment it's just that it's like a bipartisan agreement you know the politicians on both sides >> are vested in this industry exporting and succeeding and so they will do what needs to be done >> to make sure that things are smooth for this industry. >> Yeah, it's the Tamil Nadu of South Asia is what I call Bangladesh, right? I mean Tamil Nadu's regulatory regime is actually not that different from Uttar Pradesh or Bihar or any other place. It's just there is some thinking between the political class and the bureaucratic class that we got to crack this and it's more important to grow the size of the pie than shut everything down and and so they seem to have cracked some political compromise and it sounds like you're saying Bangladesh is in a very similar boat >> for apparel >> for apparel. Yes. When you ask about other sectors, it it doesn't work because think about Bangladesh. This is the one country that I know of which has done really well in apparel finds it really difficult to get into footwear. >> Yeah. >> Right. And and that's the usual >> ladder. >> Yeah. >> Um very very very difficult time. So you know this reminds me of your uh uh your paper in um journal of comparative economics which was exactly about the apparel uh exporter right and one of the interesting things in that paper that you talked about was uh India is simply not integrated into global practices so actually even that capital labor substitution becomes very difficult or complicated for them because if it doesn't comply ly with the standards of Zara or Mango or whoever is going to buy these things then capital labor substitution is not really helping them out of the the regulatory mess that they're dealing with in India one am I remembering the paper and its findings correctly and is that more generally the problem that we just because we're so scared of global markets and we are ambivalent towards them we just don't think of a good way to integrating with them >> I I think so Shi I think it generalizes. I mean there we were really looking at apparel but I think it it it totally generalizes. Um one of the things about being in the global uh supply chain of any product is you need to be quick. You need to be able to you know switch uh product types uh you know make adjustments on the shop floor do things differently and for some reason it just turns out many of these things turn out to be just very difficult to do in India. take take expansion right there's this uh neat paper um uh uh by by sud uh I think it was a job market paper about just uh uh the strategy Indian firms have to use if they're thinking about expanding and how long it takes them to actually acquire that land when you're talking about such long adjustment periods >> it's over and truth uncertainty you know that's another thing that's that that I've gathered I I remember an expert on um uh supply chain logistics uh a professor uh uh basically US who gets invited to you know um to to to consult with companies um you know he was telling me look I don't know that much about India but uh I do know a lot about Vietnam, Mexico etc. Uh the the one thing I have an impression about on India is the uncertainty. So his point was that if you tell me that I'm 5% more costly than than my competitors on all these these other factors the the supply chain can actually take into that into account. They just say okay you know we'll we'll balance it out India has some other strengths and we'll balance it. But if you tell me that sometimes it's 5%. >> Uh the cost or the time let's say time it it'll take me 5% longer. On other occasions you say you know but something may go wrong and then I have to deal with some department and could be 35%. That's when it's like okay you know what we can't deal with this uncertainty. >> Yeah >> that's that's critical. >> Yeah. And in India we have some bizarre things going on right like the Supreme Court can just shut down the entire leather and tanning industry and move it to the outskirts of Agra. like we do some very strange very disruptive things and then we wonder why our you know footwear industry doesn't take off quite quite that easily. So we do have these uh you know regime uncertainty problems overall. But >> right >> one major learning for me you know now when I read all your work sort of together you know over a short period of time as opposed to over the years as I've been doing is uh that it just no longer helps to think in partial equilibrium terms of you know one labor regulation here or one factories act here or there. This is a huge general equilibrium problem. We need to think of clusters of regulation and remove them or we need to think of clusters of manufacturing either spatially or in terms of labor labor markets. Is that a good way of of winding down when I when I finish uh everything is like have you gone from being like an applied micro and regulatory economist into becoming a general equilibrium person. So Shi uh in in one sense yes but I also feel that that could be a very difficult agenda right? Yeah. >> Um I mean just you know the time it takes to >> look at the labor codes I I think you know going from those um you know >> 44 union labor laws to four and then uh working out all those um uh uh areas of overlap contradiction. it's just taken so long and then uh you know defining the rules. So all all this is uh uh needed it takes very long and this is where now I come back to my city economic council area. It's it's basically the idea that you need different players >> in a particular location to come together and agree that this is the vision for our location. >> Yeah. >> How do we work to solve it? So it's it's it's again it's sort of that Tamil Nadu thing that you were saying that the regulations are the same but somehow there's an agreement among some of the key players that look we've got to keep this line of business going. Uh it's good for not just the the you know the managers or the owners but it's good for the workers. I I think we have to think in parallel about introducing uh some tweaks to our governance frameworks which which kind of mimics uh that that that process. >> Yeah. And will allow this sort of like you know the mayor of Shanghai kind of you know that that you have one central node who has all the responsibility. They can even I mean you can even think of it as centralized corruption reduced uncertainty like there are many things that come from that and and that seems to have been the East Asian model overall and it's done well for China and East Asia and there's no reason it shouldn't work in India. >> Absolutely Shi because at the end of the day um if if you were to ask each of these different players that would you like to see an India or your state vibrant growing generating jobs who would say no? Yeah, >> there might be some people who would say no, but I'm sure that would be in a tiny tiny tiny minority. >> No, largely I think you're right that we've finally agreed on the goals, if not the means to reach them. I think finally we've agreed that big cities are a good thing. People leaving agriculture is a good thing. People actually lots of people going to universities, getting degrees. We didn't even have consensus on this once upon a time, right? We used to romanticize villages and we thought, "Oh, those people should stay there." you know, it's the cities are really for the elites. So, I I I do agree with you that we've come a long way, but but there's still a long ways to go. I'm really looking forward to reading more of your work uh you know, uh on on cities, on elomeration, on better planning and coordination. And thank you so much for doing this. >> Thank you, Shi. It's been really fun. So, thank you for thinking of uh me for doing this and then uh working this out. >> Well, I've been asking you for ages, so I'm glad you're here. I've only about covered about half your papers. So I think you'll have to come back and talk about the other half another time. [laughter] >> Or uh you know future research agendas. >> Yes. That that that's also uh Yeah. So maybe not the past papers but all the papers that that you're going to start writing in the future. But again, thank you so much for doing this. This has been amazing. Thank you.