Lakshmi Iyer is an economist in the Business, Government and the International Economy (BGIE) Unit at Harvard Business School. Her primary research fields are political economy and development economics, with a special emphasis on property rights. Her research has examined historical and current property rights institutions in developing countries such as India, Vietnam, China and the Philippines. She has also studied many dimensions of the quality of government in developing countries, including the legacy of colonial rule, the division of authority between politicians and bureaucrats, and the link between poverty and conflict.

Lakshmi Iyer teaches Business, Government and the International Economy in the first year MBA curriculum, and holds a Ph.D. in Economics from the Massachusetts Institute of Technology. 

What motivated you to major in Economics?

 My Bachelor’s degree was in Statistics from the Indian statistical Institute in Kolkata. I chose ISI for two unusual reasons: first, I really wanted to study Mathematics, but not Physics—and this was one of the very few places in India which allowed you to do that. Second, all undergraduates were paid a monthly stipend, and I just loved the idea of someone paying me to study something I wanted to! In fact, that is the biggest charm of an academic career too! After I finished my Bachelor’s degree, I wanted to apply all the statistical tools I had learned to real-life problems, and I had had a fantastic Economics teacher in high school—it made sense to combine the two interests. I therefore specialized in economics for my Master’s degree and then came to MIT for my Ph.D.
      
How did you get interested in property rights?

 I was interested in the impact of historical circumstances on future paths of development and my advisor Abhijit Banerjee pointed me to the historical variation in property rights across India. We wrote a paper comparing the future development paths of zamindari areas (where land ownership was much more concentrated) and raiyatwari areas, where property rights were distributed more widely. What we found was that zamindari areas were much slower to take up the Green Revolution agricultural technologies in the 1960s, and in fact started falling behind on agricultural yields, even though they had been more productive in the colonial period. Part of the reason was the much higher policy priority given to land reforms and land redistribution in these areas, whereas raiyatwari areas prioritized more development expenditures (and consequently had greater access to schools and medical centers as well).

      After this initial paper, I realized that there were many more interesting issues related to property rights to be investigated in more current periods as well. I have subsequently written about land reforms implemented in Vietnam and China, and have just completed a case about informal property rights in slum areas.
      
What would you register as the major positive and major negative of India's colonial legacy?

      Three big positives: political unity without major internal wars for almost 150 years; the provision of railways; and the English language, which has helped greatly in the development of the software industry, for instance.

      Two major negatives: a lack of attention to basic education, and a persistent policy bias towards urban areas. It is noteworthy that rural income growth has consistently lagged behind urban income growth for the last three decades. 

      Of course, it is possible that India would have build railways even if we were not a colony, and it is also possible that basic education would have suffered even without colonial rule. But some of my research shows that areas which were ruled by native princes and were under indirect British colonial rule, in fact, have better access to health and education even today. 

By being a faculty member at arguably the most prestigious business school in the country you are probably shaping the way the future of the world economy will work. What kind of a world do you hope to shape? 

I think it is too much of a stretch to say that we shape the world economy. What we can conceivably shape is how our future business leaders think about the world economy, and how they react to it. There are two main trends I would like them to keep in mind, which are going to influence the nature of global markets in the future: the future of the world economy is going to be in the developing world, specifically Asia, which is the fastest growing region in the world today. And second, the world is becoming increasingly urban: almost half the world population lives in urban areas today, and this number is expected to increase to almost 70% in the next four decades.

Could you tell us a little about the most interesting case study you did on the redevelopment of the Dharavi Slums? Are public-private partnerships the future for removing many of the woes facing India today?

 This case study is about a public-private partnership proposed by the government in order to develop the slum area of Dharavi in Mumbai, which has the dubious distinction of being the largest slum in Asia. (It was also the slum where the movie Slumdog Millionaire was filmed.) I should mention that HBS case studies are meant solely for the purpose of generating dynamic class discussions, rather than offering policy advice to the government. Nearly 700,000 people live in less than 2.5 square km of space in Dharavi, most of them are illegal settlers on government-owned land. The plan proposed by the government would involve the private sector getting the right to develop whole areas of Dharavi; they would provide free housing (300 sq ft) to each resident family. The idea is that, since the developers would be building multi-story buildings, they would have residential and commercial space to sell even after providing this free housing, thereby making this a profitable venture for the developer. 

  Many international consortia have expressed interest in bidding for this project, but the project has been getting delayed for more than a year now, due to various constraints. Part of the problem is that there are multiple stakeholders in this public private partnership. NGOs representing the people of Dharavi wanted several changes to the initial project, including increasing the area of the free housing and providing additional space to allow residents to continue their home-based businesses. Developers asked for additional time following the large drop in real estate prices and the global financial crisis. After many changes and modifications to the original proposal, bids were due to be submitted on July 30 this year, but the process was again postponed. Meanwhile, Maharashtra state elections are scheduled to be held in October. So the exact implementation of this project remains under considerable doubt. However, it has introduced the idea that slum redevelopment can be a profitable private sector enterprise under the right circumstances.

  This project also highlights the risks associated with public private partnerships in general, the biggest one being the large number of stakeholders (the private sector, the government, the voters, various interest groups etc). Often the goals of these stakeholders can be in opposition to each other, and it takes considerable skill to align all their incentives.

      
What is your prediction for the developmental timeline for India?

 The good and bad thing about India is that it takes time to change—but when the changes happen, they are equally hard to reverse. In this sense, the economic reform process and the impetus given to private enterprise are here to stay for a long time. I do not think we are going to go back to the License Raj any time soon. There are still many bottlenecks to be overcome, particularly with regard to investments in physical infrastructure and human development. But both the government and the private sector are aware of these deficiencies and I think we will be able to make the necessary improvements to continue our good economic growth performance.
      
What kinds of students would most benefit from an MBA at Harvard?

  The Harvard Business School’s mission statement is to “educate leaders who will make a difference in the world.” The key word here is “leaders.” If you are interested in specializing in very specific areas, other business schools might be a better fit. If you are interested in broadening your area of expertise, or moving to a different functional role than you had before, or learning all-round management skills, or how to set up or expand your own enterprises, then HBS is the best place. It is best to come after a few years spent working, because then you will have a better idea how the MBA will help you, and which types of management skills you need to spend more time on.

You are married to an economist who also is a most sought-after Carnatic Violinist. Does music play a big role in your life?

  Obviously it does! Before I met Vinay, I had never attended a Carnatic music concert—and now I have lost count of how many I have been to. The difficulty is in finding enough time (and energy) to do all that we want to do professionally and musically and personally, particularly for Vinay who is never able to practice as much as he wants to. My biggest musical challenge is that I am never able to listen to a concert fully any more, even when Vinay is playing, because our three-year-old daughter makes sure that she and I are always an outstanding audience i.e. standing outside the hall!

How do you manage the work-life balance?

 Ah...the biggest challenge of every working parent! The way I think about it is: some days the balance is tilted towards work (during which I am a less-than-ideal parent), some days towards parenting (when no work gets done) and some days towards other personal relationships (the area which gets the shortest shrift once kids arrive). I have to keep reminding myself that I cannot be the very best researcher, teacher, mother, wife, friend and daughter—definitely not all on the same day at least!

 It is also very important to carve out some time purely for your own personal enjoyment. My current adventure is piano—I started lessons a couple of months ago, and I am really enjoying it! Though then again…the issue of not enough time to practice comes up!
      
 What advice do you have for women who may be considering going into business school?

 Be prepared to find yourself in a minority in many business schools (including Harvard). This means that you may need to work extra hard to make your presence felt or to make yourself fit in. Above all, remain confident and assertive, and keep your career goals in mind.

Thank you for your time

Thank you

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