Economic incentives!disincentives of planning regimes (economic impact)

It was found that Ghana’s planning regime generates economic disincentives in the study area. Chapter 9 noted that, although some planning regime requirements - approved sub-division planning scheme, electricity, and formalised title - generated marginal positive economic impact, Ghana’s planning regime generates a huge economic disincentive in the study area. Based on empirical evidence, Chapter 9 demonstrates that the extent of the economic disincentive is approximately 31.8% of the value of a standard three-bedroom planned residential development in the study area, which is more than the benefit it generates. In monetary terms, this amounts to GH024,925.33 or US$16,616.89 in addition to the time lag it creates.

This finding undoubtedly runs contrary to the theoretical prescriptions of the human action-based economic framework, which underpins this book. The human action-based economic theoretic framework demonstrates that compliance with planning regulations and the manifestation of an efficient and effective planning regime is driven by incentives. However, contrary to this proposition, a major finding from the empirical evidence has established that Ghana’s planning regime generates a huge disincentive to property owners/developers in the study area. This is because the cost of compliance with the requirements of the planning regime is far beyond its benefit apart from the fact that it may not be possible for most of the people in the country to afford it given their precarious socio-economic conditions.

The foregoing gives evidence that Ghana’s planning regime with respect to the study area is not worthwhile from the standpoint of economics. Given this evidence and the volumes of literature discussion on the weakness of SSA planning regimes, the ongoing planning reforms are in the right direction (Chapter 6). However, the critical question that confronts these planning reforms occurring in SSA is in what direction should they be pursued?

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