"Race to the Bottom" Competition by Negotiated Land Leasing: an institutional analysis and empirical evidence from Chinese cities

Ran Tao, Fei Yuan, Mingxing Liu and Heng-Fu Zou ()
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Ran Tao: Center for Chinese Agricultural Policy, Chinese Academy of Sciences
Fei Yuan: Center for Chinese Agricultural Policy, Chinese Academy of Sciences
Mingxing Liu: China Institute for Education Finance Research, Peking University

No 294, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: By analyzing the evolution of local governments' roles in different periods of China's growth in transition, this paper explores local fiscal incentives to use subsidized land and infrastructure as a key instrument in regional competition for manufacturing investment after the mid-1990s. We relate local land development behavior to China's current land use institutions and inter-governmental arrangements. On the basis of a panel data covering prefectural-level city from 1999 to 2003, we empirically identify and compare the fiscal impacts of different forms of land leasing (by negotiation versus by auction/tender). Policy implications are drawn from this analysis to further reform China's urban land system and fiscal institutions.

Keywords: race to bottom competition; land leasing by negotiation; tax sharing system; local fiscal incentives; China's growth in transition (search for similar items in EconPapers)
JEL-codes: H71 O14 Q15 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:294

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