The Scale Of The Impact On Urban Land Supply Of Public Goods

Since the reform and opening-up, Chinese style decentralization, which is a combination of fiscal decentralization and political centralization, is one of the important reasons for the rapid economic development in our country. Local governments can share more benefits of economic growth through fiscal decentralization, political centralization gives more political power for the central government to make quantitative evaluations among local governments. This pattern on the one hand, has brought the enormous success of economic growth, but on the other hand, this pattern also has many negative impacts, imbalance in the structure of local government public goods provision is one of them. Compared with the enthusiasm of the infrastructure investment, our local governments’ provision for public goods such as education, health and social security is insufficient, at the same time, there are regional imbalance problem. From land finance to cut Chinese style decentralization, this paper focus on the relationship between the land finance and the urbanpublic goods provision, although land finance makes the local governments to relax the constraint of fiscal revenue, the benefit of economic public goods increases and opportunity cost of non-economic goods decreases, therefore, at the equilibrium time, the local governments will increase supply to economic public goods, non-economic goods may not benefit from higher fiscal revenue. Using the panel data of286cities from year1999to2010, the empirical research finds that controlling more land resources makes the local governments significantly increase the urban economic public goods investment and significantly decrease the the urban non-economic public goods investment. And comparative analysis between the eastern area and the western area shows that, more land granting makes the gap much bigger.