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Land Use Regulations and Urbanization in the Developing World: Evidence from over 600 Cities

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Name of the Asset | Land Use Regulations and Urbanization in the Developing World: Evidence from over 600 Cities
Type of Asset | Working Paper
Date | July 2013


The regulation of urban development, such as building height restrictions or minimum lot sizes and green belts, is theorized to affect different aspects of urbanization such as the price of housing and land. This paper examines the determinants of land use regulation and their relationship to various urban outcomes.

The study uses data from the Doing Business project of the World Bank (including the Enterprise Surveys) that measure several aspects of land use regulations in almost 700 cities in over 180 countries around the world. It matches the data on regulation to publically available geographic data, and census microdata from the Integrated Public Use Microdata Series.

The paper confirms the importance of land use regulations, even though they are more cumbersome in developing countries. Stricter regulations are associated with higher levels of corruption and bribery. Land regulations also negatively impact business expansion to some extent. There is no correlation with household formation, which likely reflects the constraining impact of regulations on housing markets. Findings do not imply the dramatic reduction of the use of land regulation, and policy implications must be considered carefully.

Authors | Paavo Monkkonen and Lucas Ronconi
Country and/or Region | Developing countries
Name of the Program | Urbanization and Development: Delving Deeper into the Nexus
Funder(s) |  Institutional Capacity Strengthening Fund (ICSF) of the Inter-American Development Bank (IDB) as part of the IDB Initiative on Strengthening Policy Links between Latin America and Asia, and thanks to the contribution of the Government of the People’s Republic of China

Download the Full Study here

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