Gauging the impact of land-use regulation in developing countries

Cities in all countries of the world engage in the regulation of land-use. There is evidence that many cities restrict building heights. In doing so, they constrain office and housing supply, thus raising office and housing costs, and reducing productivity and welfare. While such regulations may have major consequences for urban poverty, there is little data on how they compare across countries, especially for the developing world.

If housing and office costs are high due to land-use regulations that limit supply, the physical and economic growth of cities will be constrained. As housing prices increase, priced-out residents must seek housing further away from cities. While slum upgrading programs improve the lives of poorer urban residents, cities cannot meet the fast-increasing demand for urban space from residents and firms without more tall buildings. Building-height restrictions encourage car-centric, land-intensive urban sprawl rather than compact vertical development.

This study uses a methodology that has produced an index of land-use regulations for most countries in the world. More precisely, for each country, we have used an existing data set of tall buildings above 80 meters and data on income, agricultural land rent and other drivers of urban development to predict the average “tallness” of their buildings and compared it with their observed tallness to estimate country-level “height gaps”. The next stage of this project seeks to improve analysis by using a database and generating more results for developing countries, in particular those in Africa and South Asia.