The Impact Of Land Finance On Total Factor Productivity

The report of the 19 th National Congress pointed out that raising total factor productivity and cultivating new momentum for economic development are the top priorities of economic development in the new period.Since the reform and opening up,China's economy has experienced rapid growth,and it has also faced a series of “low-end predicaments” such as redundant construction and low resource allocation efficiency.Under China's circumstances,the land government fiscal behavior of local governments is a key factor that affect the allocation of resources.The mode of development centered on land transfer plays a complex role in the process of regional economic growth.The innovation of this paper lies in a comprehensive analysis of the impact of land fiscal behavior on total factor productivity from theoretical and empirical perspectives,and focuses on using two sets of datas in different dimensions concluding urban and industrial enterprises matching data,and using instrumental variables method to solve endogenous problems,then revealing the loss of efficiency due to land fiscal expansion.The conclusions of this paper provide important reference for the reform of local government finance and taxation system and the development mode.In theory,local government land finance behavior has positive and negative effects on total factor productivity.On the one hand,the way of land transfer eases the budget constraints under the decentralization system of local governments,promotes the enthusiasm of local investment promotion and investment construction,satisfies the demand of land use of industrial enterprises,and effectively promotes the improvement of TFP;on the other hand,The excessive expansion of land finance caused the effect of resource misallocation.The excessive investment in the real estate industry and the distortion in the structure of public expenditures are not conducive to the improvement of the efficiency of the urban service industry,resulting in loss of efficiency.In view of this,this article puts forward two hypotheses:(1)In the initial period of industrialization,the way of land transfer promotes industrial agglomeration and the promotion of corporate TFP,but over-expansion of land finance will lead to resource mismatch,resulting in the impaction of land finance on industrial enterprises may be inverted “U” type.(2)Over-expansion of land finance has not only pushed up urban housing prices,created crowding effects and resource misallocation effects,but also caused a rigid lock-in of the industrial structure,which has inhibited the efficiency of the service sector,and has been detrimental to the overall factor productivity of the city and resulting in loss of efficiency.Empirically,the paper mainly uses 230 city datas of prefecture level and above,and matching data of industrial enterprises,and uses instrumental variable method to test the impact of land finance on TFP.First of all,whether the OLS method or the use of land slope as the instrument variable,the expansion of local government land finance has significantly inhibited the increase of urban TFP.While the expansion of land finance has brought about significant scale economy effect,it has also significantly inhibited the city's technological progress and technological efficiency improvements.Secondly,there is a significant inverted “U” relationship between the expansion of land finance and TFP of industrial enterprises.When the per capita land sales revenue(logarithms)exceeds 1.37,the impact of land finance on TFP of industrial enterprises will turn negative.Finally,the mechanism test shows that over-reliance on the development model of “creating wealth with the land” leads to excessive investment in real estate and other related industries and rising housing prices,resulting in the resource misallocation and distorting the structure of public expenditure,thus suppressing the city's total factor productivity.Therefore,this paper proposes the following policy recommendations:(1)to strengthen the market-oriented reform of the land system;(2)to improve the performance appraisal mechanism;(3)to improve the management of land revenue and expenditure;(4)to speed up the development of taxation process for local entities;(5)Deepen financial system reform.