Answer to Question #205733 in Macroeconomics for rhulani

Question

Critically discuss the impact of land use regulations on the formalization and sustainability of small businesses

Answer 1

Solution:

The main aim of land use regulations implemented by the government is to make sure that businesses operate according to the laid down rules and regulations under their jurisdiction. These regulations include conservative measures, land use planning, environmental protection, and zoning places, all meant to protect the interest of big businesses.

These land regulations policies have largely impacted small businesses in a number of ways. For one, it has resulted in numerous restrictions in their operations particularly during development stages and transfer of land. It has become extremely difficult for small businesses to operate under these difficult conditions. Small businesses cannot easily expand due to the increased costs involved in meeting all the set land-use regulations. It is also hard for new small businesses to be developed due to barriers of entry created by the big businesses, hence discouraging growth and development.

Land-use regulation policies have also inflicted other requirements on the landowners of small businesses, such as offering part of their land for public use when expanding, failure to which they will be denied expansion. This has, therefore, led to the loss of some parts of the land for small businesses that they would have used for development and expansion.

Small businesses are failing and subsequently closing down due to the socio-economic constraints brought about by land-use regulations. Small businesses especially start-ups do not necessarily have the financial or administrative resources to fully comply will all the land use regulations.