Chapter 3 first provides a brief discussion of the way economists and finance researchers treat novelty and narratives in models describing outcomes in asset markets. Emphasis is placed on the treatment of true uncertainty. The remainder of the chapter surveys the relevant research from disciplines outside of economics and finance investigating narratology, or the study of narrative dynamics. Findings from the fields of neuroscience, cognitive psychology, sociology, anthropology, and linguistics are presented that shed light on the Novelty-Narrative Hypothesis for understanding stock market instability. The findings referenced are from both experimental and natural settings. The chapter discusses the narrative mode framework exploring the unsystematic part of the mind used to imagine possible states of the world. The chapter advances the view that story-based thinking through narratives brings meaning to unique experiences that inform day-to-day decision making, especially when the surrounding environment is undergoing change. The importance of endogenous emotions for dealing with novelty and uncertainty is highlighted throughout the chapter.

Chapter 2 is about time-varying relationships driving stock price fluctuations and volatility and how novel events and narrative dynamics may be at play. It provides a survey of the relevant literature on structural change, popular forms, such as regime switching and parameter nonconstancy, and the potential sources of narrative dynamics related to instability. Emphasis is placed on whether transition probabilities are better understood as time-varying and how rare events fit in. Historic events that are good candidates for having catalyzed periods of change between stock prices and fundamentals over the last three decades will be identified. Narrative anecdotes from financial news will be provided in support of the view that much of the instability in the stock market is unforeseeable ex ante. Therefore, probabilistic, and other quantitative rules modeling change in stock market relationships are inappropriate when Knightian uncertainty events are unfolding in real time. Finally, the role of investor sentiment underpinning instability will be discussed through the lens of dictionary-based notions of individual rationality.

Chapter 12 offers some suggestions about how researchers in economics and finance may apply the KU indices and narrative proxies in their own work moving forward. The present value model for the aggregate stock market is used as a case study wherein the SP500 dividend series is adjusted for the narrative influence from the dividends/earnings unscheduled corporate event group presented in Chapter 7. Cointegration analysis finds that stock market prices and dividends only share a longer-run cointegrating relationship when dividends are adjusted for novelty–narrative effects. The chapter then offers an example applying the baseline KU corporate index interacted with sentiment, novelty, and relevance to a simple trading strategy that shows enhanced returns through a back-testing example where long positions are opened or closed based on moderately high narrative intensity periods.

Chapter 5 accomplishes several goals. First, a general description of the Dow Jones equities events dataset is provided. Summary statistics are reported for the total event stories identified in connection to corporate news focusing on those events classified as unscheduled. Second, disaggregated categories within the unscheduled corporate event dataset are described using a hierarchy of group classifications. An example of an unscheduled event record is provided to illustrate the output for each identified event. Of particular interest is classification of KU events by “category,” “novelty,” “relevance,” “sentiment,” and “inertia/volume.” These are the factors that will be interacted to generate narrative intensity and principal components factors against which stock market outcomes and structural change dynamics will be compared. Third, the baseline KU index is introduced based on unscheduled corporate events with accompanying time-series plots. Autoregressive tests inform which statistical properties best describe the events' data generating process. The chapter concludes with an examination of historical stock market events that align with major shifts in the index.

This chapter introduces the KU Diversity, or Variation, Index which considers to what degree there are different unscheduled corporate event groups occurring simultaneously during a particular subperiod of time in the stock market and how this composition changes over time. The top ten groups of unscheduled KU events will be ranked across each of the four five-year subperiods over the full data sample based on proportion of total corporate KU events. Changes in composition and ranking of the groupings will be discussed. Detailed descriptions of each novel event category within the highest ranked groups are provided. Case studies of three large-cap US firms are presented during the dramatically volatile days of March 2020 corresponding to the COVID-19 crisis to illustrate the importance of unscheduled corporate events, particularly in times of market turmoil and instability. Correlation coefficients across KU indices suggest that when novel corporate events increase in raw terms so does the clustering of KU events by group, implying that narrative dynamics may be unfolding.

Introduction

There is a vast and growing literature focusing on the economies of scale and scope (Marshall 1920) that industrial units get by agglomerating themselves into ‘industrial clusters’ (Canёils and Romijn 2003). Moving away from the micro-economic perspective of technological capacity at the firm level, these studies explore regional networks as contributing to technological capability and competitive advantage to industrial units (Pyke and Sengenberger 1992; Schmitz and Nadvi 1999). While thinking of small industrial clusters (SICs), it is often useful to consider them as networks of actors, grouped together in a geographical space, often competing with each other but also sharing technological know-how, facilities, skilled pool of labour and other resources (Varman and Chakrabarti 2011). For example, the clustering of knitwear units and their ancillary industries in Ludhiana played a critical role in its innovative transformation. However, the opening up of new market opportunities also explains the resilience of regional firms to the crises of 1990 and their recovery (Tewari 1999; Tewari and Pillai 2005). But mere survival does not mean that the cluster's technological capacity is close to competing at the international level, as the study of textile clusters in Panipat shows (Gulrajani 2006). The source of this dynamism lay in the strength of the organisational aspects of its production system, which did not guarantee its long-term survival. This study aims to focus on what policy support measures are required for industrial clusters in the informal sector to remain viable, innovate and acquire competitive advantage in international markets.

While in the literature, the advantage of industrial clusters and the policy support they require are often pitched in terms of the technological capacity and competitiveness of firms or the cluster in general, in the current context, industrial clusters have an important role of generating employment. There is a fair amount of evidence to show that the employment elasticity (rate of growth of employment with respect to the rate of growth of output) in India's manufacturing industry has declined in recent years. Keen observers of the economy have noted that ‘unlike China's or South Korea's growth through manufactured exports that absorbed low-skilled-labour in vast numbers, India's growth episode was led by a high-skilled service sector that failed to adequately absorb unskilled labour from agriculture’ (Kotwal and Sen 2019).

Cities of the Global South have witnessed the emergence of a newly affluent, highly mobile upper class, dramatic changes in consumption patterns, rapidly changing information and communication channels, and the exclusion of some from these processes. Disparities are hardly new to cities in developing countries, anchored as they are in highly unequal structures shaped by the privileged access of elite castes and communities, in traditional societies, to learning and increasingly to professional skills and other resources. Social and economic exclusions were structured into this urban framework where manual, unskilled work was performed by lower castes and underprivileged communities. In the current era, however, urban inequalities have a different face. As cities become sites of spectacular wealth and consumption, the widening chasm between those who can access the benefits of global marketisation and those who remain on the margins, or are in structurally disadvantageous positions within it, becomes starker. Many cities of the developing world are caught within these sharply emerging contradictions of wealth and deprivation.

These contradictions are blatantly visible in Bangalore. Bangalore's rapid economic rise, riding on the IT revolution and a facilitating policy environment for private capital, both domestic and foreign, has been discussed in Chapter 3. While this growth trajectory has brought some opportunities to a few sections of the urban lower classes in Bangalore, there is as yet no substantive analysis of the precise nature of these opportunities, and, more importantly, whether these translate to increased access to economic and social resources for the urban poor and their progeny. The questions examined in this chapter are: What happens to the urban poor in a context of rapid economic growth of the city? What are the channels through which the urban underclass get drawn into the city's growing economy? What are the modalities of inclusion and exclusion?

The decline of large state-owned manufacturing industries and of the SSI sector frames Bangalore's political economy of the last few decades. With the folding up of factory jobs, unskilled workers are employed predominantly in he construction industry and in the lower rungs of the service sector. In what ways do these macro features reflect in the lives and livelihoods of slum dwellers?

This chapter is about inner-city slums, where most people were found to work in casual wage employment, self-employment in petty trade, or as salaried workers in services.

The troubled relationship between economic growth and redistribution/welfare is a long-standing concern in the social sciences. Globalisation, associated increasingly with the duality of rising wealth and continuing deprivations, has brought an added sharpness to this concern. Two principal genres of a critical discourse can be located. Marxist critiques of globalisation and market-led economic growth – anchored in the dependency perspective, and infused with class analysis – are theoretically rich but marked by a deep, brooding pessimism and lacking in robust alternatives. On the other side, strands of liberal, mainstream social science are rooted in a pragmatic world view: that alongside a capitalist and market-based economic model, an appropriate degree of state responsibility should be restored and maintained. Marked by a nostalgia for the post-war social-democracy-inspired welfare state, and an anxiety to restore some dimensions of it, this genre of scholarship remains at the same time strongly committed to retaining the gains of the new economic model of globalisation and privatisation.

Partly a reincarnation of post-war Keynesian statist welfarism, this genre of writings can also be looked at as a narrative attempting to re-theorise the developmental state. Emerging at a time when the market had gained legitimacy of hegemonic proportions, reiterations of the state's centrality, which have emerged from global institutions and from leading scholars, are critical interventions that shape a new political normativity of justice and public responsibility. Do they do more? Does a substantively new theory of the state emerge from contemporary writings on the capitalist developmental state?

As a generalised critique of the inequitable nature of globalisation/market-led development began to emerge in both academic and public discourses, the expansion of social rights became part of the defined political agenda of democratic governments as well as of scholars striving to provide a humane face to a market-driven model of development. Critical of the inequitable impact of global capitalism, these writings have nevertheless stayed away from a determinist interpretation of the capitalist state as inevitably exclusivist and moved towards a more eclectic theorisation, which leaves open the possibility of inclusive social policies. Within this broad conceptual framework, scholars have reiterated the need for state attention to employment-generating economic policies as well as state-sponsored social insurance targeting poorer sections of the population.

By the middle of the 2010s, India's economic boom had tapered off after the global financial crisis. India did not suffer as much as the advanced economies did because of its large domestic market and relatively modest exposure to international capital flows. However, India's growing import dependence and rising share of short-term capital inflows in managing the balance of payment deficit became increasingly evident.

The widely accepted view of industrial stagnation gave rise to the clarion call for ‘Make in India’ – as coined by the then newly elected government. Such a policy goal resonated well with the public in response to growing import dependence on China for even simple consumer goods, such as kites or Ganesha idols. Modest output performance also meant a lack of manufacturing employment growth.

Around the time, I reviewed academic research status on India's industrialisation trends and patterns for the Indian Council of Social Science Research (ICSSR), analysing the reasons for India's modest industrial performance. During a discussion with Srinivasan Iyer of the Ford Foundation and P. S. Vijayshankar of Samaj Pragati Sahayog, Bagli, Dewas, an idea emerged for a research programme on the theme of manufacturing growth, employment and livelihood issues. There are many accounts of industrial performance at the aggregate level. However, our understanding of what has happened at the ground level in recent times seems acutely lacking. Likewise, though there is considerable scholarship on labour and employment, the current academic focus on manufacturing production and its implication for jobs and skills appears sparse.

The above idea, it appeared to me, offered an opportunity to bring together scholars to undertake detailed studies into how the labour-intensive industries, locations and clusters were performing. And what would it take to realising the national goals of ‘Make in India’?

Our effort was, in other words, an attempt to do in India's development discourse what the late Alice Amsden graphically described, ‘Bring Production Back In’. Why has India not performed well even in simple consumer goods? After deliberations with many concerned scholars over a year, the programme took root in 2016 at the Indira Gandhi Institute of Development Research (IGIDR), Mumbai.

This chapter looks at state initiatives to address the issue of poor housing in urban areas. Three major central legislative enactments, the Jawaharlal Nehru National Urban Renewal Mission/Basic Services to Urban Poor (JNNURM/ BSUP), Rajiv Awas Yojana (RAY) and the Pradhan Mantri Awas Yojana (PMAY), are outlined. This provides the backdrop to a discussion of the implementation of BSUP and RAY in Bangalore city. It should be noted that both JNNURM/BSUP and RAY have been discussed widely in both policy and academic forums. Much of this discussion has been in the nature of surveys to examine resource allocations, targets and achievements by counting projects and beneficiaries. Some studies have looked at the role of urban local bodies (ULBs), designed to have played a catalytic role in raising finance and in execution of housing projects. The emphasis in this chapter is on understanding the broader politics that surround the process of implementation of housing projects, and, importantly, the impact of projects and processes on the lives of slum dwellers.

The chapter draws on field-based research on housing projects in Bangalore city, looking at three spaces: slum development based on in situ housing; relocation of slums; and slums where housing projects could not be undertaken due to local resistance. The study reveals some important microfeatures of poor housing projects.

First, the state, through housing projects, provides to slum dwellers renewable leases for new apartments, which is meant to ensure protection from soaring rents and eviction. These, however, do not provide a sale deed or property rights. The projects, in this sense, have bypassed long-standing demands of the urban poor for right to land (Benjamin 2008, 2011; RoyChowdhury 2008, 2012). The projects have also ignored slum dwellers’ long-expressed demand for ‘land-to-sky’ rights on land (that is, right to own a piece of land and to build vertically on it) and their resistance to the idea of small apartments in multi-storey buildings which do not address their need to use housing for livelihood as well as for large and expanding families.

Second, the housing projects typically provide small accommodations, without the necessary and promised related infrastructure, thus bringing little change to the generally low quality of life in slums. State-sponsored housing projects were therefore, to a great extent, distanced from the actual needs and demands of slum dwellers for land rights, water, sanitation, stable supply of power, schools, anganwadis and health centres.