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Is There a Kuznets Curve Effect for China’s Land-Driven Development Mode?

Author

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  • Weifan Zhang

    (School of Management Science and Engineering, Central University of Finance and Economics, Beijing 100081, China
    Department of City and Regional Planning, The University of North Carolina at Chapel Hill, Chapel Hill, NC 27599, USA)

  • Yan Song

    (Department of City and Regional Planning, The University of North Carolina at Chapel Hill, Chapel Hill, NC 27599, USA)

Abstract

This paper empirically investigates whether the contribution of land-driven development to economic growth has declined along with the Kuznets curve hypothesis by using a nonlinear dynamic model. Over the past 40 years, Chinese local governments have raised commercial–residential land prices, mortgaged reserve land to gain valuable funds to facilitate urban construction and then improve urbanization, and driven down industrial land prices to attract foreign direct investment (FDI) and promote industrialization. By controlling the land market, this typical land-driven development mode has played a significant role in the process of local industrialization and urbanization. However, with the change in cities’ internal and external conditions, many problems hidden in this mechanism have begun to emerge. The results from the dynamic panel data method reveal that, at the national level, the effect of land supply on local economies initially indicates an increase and then a drop, which is an inverted U-shaped curve, or the Kuznets curve effect. The impact of land-driven development has declined in China’s economic transformation period, but at the regional level, in the eastern and mid-western regions, there is a different reason.

Suggested Citation

  • Weifan Zhang & Yan Song, 2019. "Is There a Kuznets Curve Effect for China’s Land-Driven Development Mode?," Sustainability, MDPI, vol. 11(16), pages 1-20, August.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:16:p:4446-:d:258431
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