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Fiscal Decentralization, Yardstick Competition in Determining Chinese Local Governments’ Land Conveyance Behavior

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Abstract

This chapter investigates the institutional and political motivation behind Chinese local governments’ land conveyance behavior. The principal-agent model is adopted to illustrate the mechanisms of how yardstick competition and fiscal decentralization encourage land sale. We find that although yardstick competition promotes short-term economic growth, the presence of land finance impairs the “selection effect” of yardstick competition. Using a panel data of 31 Chinese provinces from 2003 to 2011 in a spatial autoregressive model, we show that yardstick competition exerts a large positive impact on the intensity of land sale and leasing, while the influence of fiscal decentralization has a moderate impact and the influence of foreign direct investment (FDI) appears to be insignificant.

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Author information

Authors and Affiliations

  1. International Business School Suzhou, Xi’an Jiaotong-Liverpool University, Suzhou, China

    Wenyin Yang & Yang Chen

Authors
  1. Wenyin Yang
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  2. Yang Chen
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Corresponding author

Correspondence to Yang Chen .

Editor information

Editors and Affiliations

  1. Xi’an Jiaotong-Liverpool University, Suzhou, Jiangsu, China

    Juann H. Hung

  2. Xi’an Jiaotong-Liverpool University, Suzhou, Jiangsu, China

    Yang Chen

Appendix

Appendix

Fig. 1.1
figure 1

Moran’s I for spatial autocorrelation in land conveyance fee (2003–2011)

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Table 1.1 Benchmark models with GMM , 2SLS and OLS estimations
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Table 1.2 GMM estimations with IVs
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Table 1.3 GMM estimations using different IVs
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Table 1.4 Introducing first-order time lag of the dependent variable and the first-order time lag of spatial lag
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Table 1.5 Models using different measures of competition
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Table 1.6 Robustness check using railway distance-based spatial weight matrix
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Yang, W., Chen, Y. (2018). Fiscal Decentralization, Yardstick Competition in Determining Chinese Local Governments’ Land Conveyance Behavior. In: Hung, J., Chen, Y. (eds) The State of China’s State Capitalism. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-13-0983-0_1

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  • DOI: https://doi.org/10.1007/978-981-13-0983-0_1

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  • Publisher Name: Palgrave Macmillan, Singapore

  • Print ISBN: 978-981-13-0982-3

  • Online ISBN: 978-981-13-0983-0

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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