Land and Urban Economic Growth in China

Chengri Ding and Erik Lichtenburg

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Land to accommodate urban development in China is provided through requisitions by government officials, suggesting that land availability may be a constraint on urban economic growth.  An econometric model of urban GDP growth suggests that land has constrained economic growth in coastal areas but not elsewhere.  Elasticities calculated from the estimated coefficients indicate that land availability has a larger proportional impact on economic growth than domestic and foreign investment, labor supply, and government spending.  The estimated parameters provide evidence about arbitrage opportunities created by discrepancies between urban land value and compensation for requisitioned rural land, suggesting rural unrest associated with conversion of farmland to urban uses may have some economic roots.