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Box X.2 (concluded)
Other authors discuss the function of urban regulation, specifically its secondary effects, in counterpoint to
the ECLAC assertion regarding institutional weakness. Proponents of this view fall into at least two camps. Authors
in one camp regard urban regulations as distortions that affect the natural equilibrium created by market forces. This
position is based on research conducted in developed countries and on the experience of these countries, in which
regulations are reflected not in informality but rather in the cost of land. According to Pendall, Puentes and Martin
(2006, p. 1), economists attribute a part of the high cost of housing to regulations that restrict supply and improve
the quality of housing and neighborhoods. There are empirical studies on the situation in the region that have
detected a relationship between urban regulation, the supply of buildable land and informality. Recent studies in
Brazil (Ávila, 2007; Biderman, 2008) show that informality levels are higher in more regulated cities, which
supports the hypothesis that regulating land use and imposing rules on building may reinforce other factors that
contribute to irregular and informal occupation of urban areas (Rolnik, 2011), but in general this is little data to
support this theory and other studies have been conducted in which this relationship was not observed. Based on
what has happened in Latin America, authors in the other camp do not question regulation per se, inasmuch as they
find, inter alia, that the land market in the region functions poorly, but rather the asymmetrical and unequal way in
which it is applied. Specifically, they maintain that the exclusionary nature of metropolitan regulations incentivize
peri-urban informality among the poor. According to Rolnik (2011), this situation leads to an exclusionary
regulatory framework, restricting access to land among the low-income population and conditioning this access
solely and exclusively for this “captive” market, or in the case of its absence or insufficient demand under the
conditions offered, on informality (Rolnik, 2011).
Taking a still broader approach, other authors recognize the main determinant of informality as the high
cost of urbanized land, which is in short supply not because land is scarce —in fact, it is abundant in the region—
but rather due to a combination of market failures, regulatory problems, policy omissions and structural inequalities,
which worsened during the era of rapid population growth in the cities. This would suggest that the main
determinant factors of informality and residential precariousness, especially on the urban periphery, are failure to
impose high tax penalties on undocumented urban income, negligence in the use of public land and partiality in the
application of urban regulations (Smolka, 2011, p. 111 in Aguilar and Escanilla, 2011).
Lastly, some authors make an important distinction in analysing the link between regulations and
informality, which has to do with the characteristics of regulations, which are neither unique or uniform (Rolnik,
2011; Pendall, Puentes and Martin, 2006). Accordingly, it is highly debatable whether a generic relationship can be
established without considering the content of regulations. Smolka states it clearly in these terms: “The hypothesis
should be not discarded that high prices (of urbanized land) can/should largely be attributed to the prevalence in Latin
American cities of regulations that are excessive or very strict in places where they should be more poor friendly (rich
areas) and lax where they should be stricter (poor areas). In other words: wealthy areas are inadequately regulated and
poor areas are not adequately regulated” (Smolka, 2011, p. 111 in Aguilar and Escanilla, 2011).
Source: Latin American and Caribbean Demographic Centre (CELADE) - Population Division of ECLAC.
Peri-urban growth in Latin America has a structural relationship with informality, whether due to
institutional weaknesses, which translate into a lack of preventive measures, or the precarious settlements
that exist outside the official rules of operation of the city (see box X.1). Urban informality is linked to
labour market informality, and both tend to be mutually reinforcing. It is also related to failures in urban
processes, which can be attributed to inadequate infrastructure, equipment and roads. The most visible
expression of residential informality in metropolises are precarious settlements, an issue addressed in
chapter IX, 6 and these settlements tend to be concentrated in metropolises. For example, recently released
data from Brazil’s 2010 census reveal that “… 88.6% of homes situated in subnormal agglomerations (the
6
Informality is not limited to land invasions because there is also an informal market: “The urban poor do not fall
into the category of ‘solvent demand.’ Accordingly, the various types of informality have been predominant in
land occupations in the region’s countries. Historically, the poor had to choose to live between two basic types of
urban informality: direct occupation and the illegal market” (Clichevsky, 2006, p. 8).