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A New Era pp 155-173 | Cite as

How Does Land Finance Affect Economic Growth in China?

Mathematical Model Analysis and Empirical Analysis on Provincial Panel Data
  • Shumin Yue
  • Yi Lu
Chapter

Abstract

Land finance, as the local governments’ policy to collect revenue in China, is considered to be related with the economic growth. In recent years, whether land finance is contributing to economic growth and how land finance affects economic growth have been attracting more and more attention of the researchers. In this chapter, the economy is divided into two sectors—traditional Malthus section and modern Solow sector under the framework of the New-Classical Theory of Economic Growth. The effect of land finance on economic growth in China is derived via mathematical method based on economic growth model. The result shows that land finance will transfer the labor from the Malthus sector to the Solow sector, which will induce the economic growth. This chapter uses the panel data analysis of 30 provinces during 2004–2013 to test the above result. It finds that reducing the rural land and raising the land lease price have promoted the economic growth. The labor transfer from the Malthus sector to the Solow sector caused by land finance do more contribution to economic growth than reducing the rural land and raising the land lease price.

Keywords

Land finance Economic growth Malthus sector Solow sector 

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Shumin Yue
    • 1
  • Yi Lu
    • 1
  1. 1.School of FinanceRenmin University of ChinaBeijingChina

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