Managed urbanization and agricultural productivity: evidence from China’s New-type urbanization pilot program

Urbanization is reshaping agriculture in many low- and middle-income countries, but how this process influences innovation-led agricultural productivity growth remains an open question. This paper studies China’s New-type Urbanization Pilot Program (NTUP), launched in 2014, which combined rural land tenure reforms, hukou system adjustments, and targeted infrastructure investment to promote two-way factor flows between cities and villages. We exploit the program’s staggered rollout across counties and estimate its effects on agricultural total factor productivity (TFP) using a multi-period difference-in-differences design. Drawing on a balanced panel of 1,329 Chinese counties for 2000–2023, we show that the NTUP raises agricultural total factor productivity by about 17–19% in pilot counties, with gains unfolding gradually over time. These gains operate through multiple reinforcing channels, including better integration of factor markets, a shift in farm labor toward mechanized production, and faster technology diffusion. The productivity effects were largest in counties geographically remote from provincial capitals, where market-driven urbanization tends to bypass. Our findings indicate that the returns to urbanization for agriculture are largest when programs explicitly combine institutional reform with geographically inclusive public investment. This design principle offers practical lessons for other developing economies navigating the relationship between rapid urban growth and food security.