The Impact of Law on Business Location
- Laws are rules created by the government of a country with the aim of regulating the actions of its citizens and businesses
- Regulation is the process of enforcing the laws that have been created and ensuring that businesses abide by them
- Regulation is the process of enforcing the laws that have been created and ensuring that businesses abide by them
- Governments and local authorities can incentivise businesses to locate in particular areas
- In areas of high unemployment or industrial decline grants or reduced tax rates may be offered to businesses that create jobs or improve communities
- In areas of high unemployment or industrial decline grants or reduced tax rates may be offered to businesses that create jobs or improve communities
- In some cases, businesses are deterred from locating in particular areas
- E.g. In areas of outstanding natural beauty, strict bylaws or city ordinances may regulate the type of business activity that is permitted
- E.g. A country with strict environmental laws might not be an attractive location for a manufacturing company that produces a lot of waste
- The presence or absence of laws can affect a businesses choice of location in two ways
1. Less economically developed countries
- Less economically developed countries often have fewer laws and less enforcement of their existing laws, which is likely to be attractive to some businesses
- Businesses enjoy lower costs as they have to meet fewer legal requirements, such as safe handling of waste material
- Labour can be paid very low rates as no minimum wages exists
- Employees and customers have less opportunity to pursue legal action
2. More economically developed countries
- Developed economies with extensive laws can be attractive to businesses who desire to locate in region with
- Good infrastructure
- Highly-skilled workers
- High standards of living
Laws and their Impact on Location
Type of Law |
Areas of Impact |
Examples |
Employment law |
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Environmental law |
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Consumer law |
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