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A limitation of land marketization: urban land resource allocation and regional industrial dynamics in China

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  • Ren, Zhuoran
  • Guo, Jiahong

Abstract

Land marketization refers to the allocation of land resources through market mechanisms. Most existing literature suggests that land marketization positively contributes to economic and social development. Drawing from evolutionary economic geography, this paper empirically examines the impact of land marketization on regional industrial dynamics in China and reveals its limitations. The findings indicate that, in the short term, land marketization negatively impacts the creation of new regional industries and reinforces the path-dependent trajectory of regional industrial evolution. This phenomenon operates through three mechanisms: the cost-pull effect, the investment crowding-out effect, and the innovation environment-inhibiting effect. Further analysis reveals lag and regional heterogeneity in the impact of land marketization. The negative impact of land marketization on regional industry creation turns into a positive one in the long run, with more pronounced negative effects in regions facing greater fiscal pressure. This paper argues that while developing countries should pursue land marketization reforms, a gradual approach is essential, with the government playing a balanced role in resource allocation to mitigate early-stage negative effects.

Suggested Citation

  • Ren, Zhuoran & Guo, Jiahong, 2025. "A limitation of land marketization: urban land resource allocation and regional industrial dynamics in China," Structural Change and Economic Dynamics, Elsevier, vol. 75(C), pages 288-300.
    • Handle: RePEc:eee:streco:v:75:y:2025:i:c:p:288-300
    DOI: 10.1016/j.strueco.2025.07.008
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