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Land marketization and industrial restructuring in China

Author

Listed:
  • Yang, Jidong
  • Liu, Cheng
  • Liu, Kai

Abstract

This study examines how land marketization without privatization in China influences industrial structure by utilizing China’s urban land transactions data from 2003 to 2015 and the data covering 29 industries in China’s industrial and manufacturing sector. The baseline panel-data analysis shows that a one standard deviation increase in the degree of land marketization will lead to a significant increase in the rationalization level of industrial structure, indicated by a decrease in the Theil index by 0.01, which is around 66.7% of the average annual change. The transmission mechanism is that land marketization boosts firm entry rate and market competition, leads to a lower proportion of state-owned enterprises, and also reduces the dispersion degree of firms’ TFP and improves the efficiency of resource allocation at the firm level. The systematic generalized method of moments and the instrumental variable approach are employed to deal with the possible endogeneity problem, and the main results are found to be robust. This study enriches our understanding of the reform of land marketization in developing countries: while maintaining land ownership unchanged, we can still make land use rights allocated through market means like auctions, which can result in a better industrial structure and a higher level of economic efficiency.

Suggested Citation

  • Yang, Jidong & Liu, Cheng & Liu, Kai, 2023. "Land marketization and industrial restructuring in China," Land Use Policy, Elsevier, vol. 131(C).
    • Handle: RePEc:eee:lauspo:v:131:y:2023:i:c:s026483772300203x
    DOI: 10.1016/j.landusepol.2023.106737
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    References listed on IDEAS

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    More about this item

    Keywords

    Marketization; Land transactions; Industrial structure; Misallocation;
    All these keywords.

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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