A Big Push of Panda from the Ground: Land Subsidy and Structural Transformation in China

Shawn Chen, Yudan Cheng, Liutang Gong and Wenjia Tian
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Yudan Cheng: School of Statistics and Mathematics, Central University of Finance and Economics
Wenjia Tian: School of Statistics and Mathematics, Central University of Finance and Economics

No 23-09, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: This paper examines the role of land policies in China’s structural transformation, focusing on industrial land subsidies and their impacts on the industrial sector’s share of GDP. Drawing on the "big push" theory, we argue that these subsidies address the fixed costs of industrialization and trigger structural transformation. Additionally, we show that land subsidies may not necessarily boost industrialization due to their potential to misallocate resources and lower aggregate productivity. Using a calibrated model, our counterfactual analysis shows that China’s land subsidies contribute to a 40% difference in industrial GDP share between China and the rest of the world.

Keywords: Structural transformation; Industrialization; Industrial land subsidy; Big push (search for similar items in EconPapers)
JEL-codes: H2 L52 O14 R52 (search for similar items in EconPapers)
Pages: 52
Date: 2023
New Economics Papers: this item is included in nep-agr and nep-cna
Note: MD5 = d98d300f8230f08ada7effdaeb494d01
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Persistent link: https://EconPapers.repec.org/RePEc:uwa:wpaper:23-09

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