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In recent years, International Political Economy (IPE) scholars have increasingly turned their attention to cities. However, their primary focus has been on the role of a select few global ‘cities’ that regulate global flows of capital, goods, and services. Nonetheless, a significant gap in the IPE literature pertains to the limited exploration of how processes of neoliberal globalization are impacting and regulating the low-income ‘informal’ housing sector in cities located in the global South. To address this gap in the existing IPE literature, this paper critically analyzes the processes of formation and demolition of informal housing settlements against the backdrop of the neoliberal regime of accumulation. Informal housing settlements have been extensively examined by critical geographers and scholars in the field of urban studies. What distinguishes this paper is its unique contribution to the literature on IPE, that is, it utilizes the political economy of informal housing settlements as an entry point to critically analyze social ontology and the inherent contradictions of the postcolonial state. The paper argues that the relationship between informal housing settlements and the postcolonial state can be better understood through the lens of the ‘institutional hybridity.’ This concept refers to the fusion of contradictory socio-economic and institutional impulses within the postcolonial state, which aims to manage social reproduction and capitalist accumulation simultaneously. The inherent tension between social reproduction and accumulation manifests in the informal housing settlements in the form of a dialectic of ‘benevolence-violence.’ On one hand, the postcolonial state attempts to appear ‘benevolent’ towards marginalized groups by ‘allowing’ them to establish informal housing settlements through a multi-layered network of clientelism. On the other hand, the postcolonial state resorts to violent displacement of marginalized groups as soon as they pose obstacles to real estate-led capitalist accumulation. Thus, the paper contends that IPE scholars should carefully consider the political economy of informal housing settlements, as it provides captivating insights into the mechanisms through which the postcolonial state becomes subject to regulation and is pulled in different directions by the socio-economic forces of neoliberal globalization.

Political economy of the ‘informal’ housing question: institutional-hybridity of the postcolonial state