Effect of urban innovation on land finance dependence: evidence from 233 Chinese cities
Abstract
Unlike most studies on urban innovation, which focus on the effects of land-use policies, this study investigates the effect of urban innovation (UI) on land finance dependence (LFD). In China, innovation-related policies are intended to create a shared business environment where new entrepreneurs can contribute to achieving sustainable economic growth. This study analyzes the spatiotemporal dynamics of LFD and UI from 2005 to 2019 using the spatial autocorrelation model and dynamic spatial Durbin model. It finds a positive spatial association between LFD and UI throughout the studied regions during the study period. It also reveals a significant inhibitory effect of UI on LFD and a negative impact on the LFD of neighbouring cities. Moreover, the inhibitory effects will increase over time. Lastly, this study shows varied impacts of UI on LFD in different regions, especially in eastern China. Important policy recommendations for high-quality development in China are provided.
Keyword : urban innovation, land finance dependence, spatial Durbin model, land-use policies, different regions, high-quality development
How to Cite
Fu, W., Zhao, X., Lin, S.-H., Li, Y., & Wang, Z. (2023). Effect of urban innovation on land finance dependence: evidence from 233 Chinese cities. International Journal of Strategic Property Management, 27(3), 188–201. https://doi.org/10.3846/ijspm.2023.19922
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Lu, J., Li, B., & Li, H. (2019). The influence of land finance and public service supply on peri-urbanization: evidence from the counties in China. Habitat International, 92, 102039. https://doi.org/10.1016/j.habitatint.2019.102039
Mansfield, E. (1985). How rapidly does new industrial technology leak out? The Journal of Industrial Economics, 34(2), 217. https://doi.org/10.2307/2098683
Marshall, A. (1920). Principles of economics. Macmillan.
Martin, R., & Sunley, P. (2008). Slow convergence? The new endogenous growth theory and regional development. Economic Geography, 74(3), 201–227. https://doi.org/10.1111/j.1944-8287.1998.tb00113.x
Mo, J. (2018). Land financing and economic growth: evidence from Chinese counties. China Economic Review, 50, 218–239. https://doi.org/10.1016/j.chieco.2018.04.011
Mou, Y., & Qian, Z. (2018). Will the market level of primary land market be upgraded by land financial dependence? Based on the test of a provincial-level panel data in China from 2005 to 2015. China Land Science, 32(10), 8-13+35 (in Chinese).
Niu, W., Nie, T., Chen, X., Wang, T., Shi, J., Xu, Z., & Zhang, H. (2022). Understanding the corrective effect of the urban growth boundary policy on land finance dependence of local governments in China. International Journal of Environmental Research and Public Health, 19(8), 4785. https://doi.org/10.3390/ijerph19084785
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Petrariu, I. R., Bumbac, R., & Ciobanu, R. (2013). Innovation: a path to competitiveness and economic growth. The case of CEE countries. Theoretical and Applied Economics, 20(5), 15–26.
Rogers, E. M. (1962). Diffusion of innovations. Free Press.
Rostow, W. W. (1959). The stages of economic growth. Economic History Review, 12(1), 1–16. https://doi.org/10.1111/j.1468-0289.1959.tb01829.x
Shang, H., Jiang, L., Pan, X., & Pan, X. (2022). Green technology innovation spillover effect and urban eco-efficiency convergence: evidence from Chinese cities. Energy Economics, 114, 106307. https://doi.org/10.1016/j.eneco.2022.106307
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65. https://doi.org/10.2307/1884513
State Council of China. (2016). The outline of national innovation-driven development strategy. http://www.gov.cn/zhengce/2016-05/19/content_5074812.htm
Stone, S. B. (2014). A more accurate measure of local public goods: overlapping government combinations as units of analysis. Urban Studies Research, 2014, 1–8. https://doi.org/10.1155/2014/963503
Su, C.-W., Yuan, X., Umar, M., & Lobonţ, O.-R. (2022). Does technological innovation bring destruction or creation to the labor market? Technology in Society, 68, 101905. https://doi.org/10.1016/j.techsoc.2022.101905
Tan, R., Zhang, T., Liu, D., & Xu, H. (2021). How will innovation-driven development policy affect sustainable urban land use: evidence from 230 Chinese cities. Sustainable Cities and Society, 72, 103021. https://doi.org/10.1016/j.scs.2021.103021
Tang, P., Zhou, L., & Shi, X. (2014). Factors impacting local government dependent on land finance according to provincial-level panel data from 1998 to 2010 in China. Resources Science, 36(7), 1374–1381 (in Chinese).
Tobler, W. R. (1970). A computer movie simulating urban growth in the Detroit region. Economic Geography, 46(1), 234–240. https://doi.org/10.2307/143141
Wang, D., Ren, C., & Zhou, T. (2021). Understanding the impact of land finance on industrial structure change in China: insights from a spatial econometric analysis. Land Use Policy, 103, 105323. https://doi.org/10.1016/j.landusepol.2021.105323
Wang, J., & Zhang, X. (2022). Land-based urbanization in China: mismatched land development in the post-financial crisis era. Habitat International, 125, 102598. https://doi.org/10.1016/j.habitatint.2022.102598
Wang, R., & Hou, J. (2021). Land finance, land attracting investment and housing price fluctuations in China. International Review of Economics & Finance, 72, 690–699. https://doi.org/10.1016/j.iref.2020.12.021
Wei, Y., & Lu, Q. (2021). Land financial dependence, urban public service supply and population urbanization. Economic Review Journal, 7, 118–128. https://doi.org/10.16528/j.cnki.22-1054/f.202107118
Wei, Y., Li, H., & Yue, W. (2017). Urban land expansion and regional inequality in transitional China. Landscape and Urban Planning, 163, 17–31. https://doi.org/10.1016/j.landurbplan.2017.02.019 (in Chinese).
Wu, Q., Li, Y., & Yan, S. (2015). The incentives of China’s urban land finance. Land Use Policy, 42, 432–442. https://doi.org/10.1016/j.landusepol.2014.08.015
Xie, R., Fu, W., Yao, S., & Zhang, Q. (2021). Effects of financial agglomeration on green total factor productivity in Chinese cities: insights from an empirical spatial Durbin model. Energy Economics, 101, 105449. https://doi.org/10.1016/j.eneco.2021.105449
Ye, L., & Wu, A. M. (2014). Urbanization, land development, and land financing: evidence from Chinese cities. Journal of Urban Affairs, 36(sup1), 354–368. https://doi.org/10.1111/juaf.12105
Zeng, C. (2019). Spatial spillover effect on land conveyance fee—a multi-scheme investigation in Wuhan agglomeration. Land Use Policy, 89, 104196. https://doi.org/10.1016/j.landusepol.2019.104196
Zhong, S., Li, X., & Ma, J. (2022). Impacts of land finance on green land use efficiency in the Yangtze River Economic Belt: a spatial econometrics analysis. Environmental Science and Pollution Research, 29, 56004–56022. https://doi.org/10.1007/s11356-022-19450-1
Zhong, T., Zhang, X., Huang, X., & Liu, F. (2019). Blessing or curse? Impact of land finance on rural public infrastructure development. Land Use Policy, 85, 130–141. https://doi.org/10.1016/j.landusepol.2019.03.036
Zhu, B., Zhang, M., Zhou, Y., Wang, P., Sheng, J., He, K., Wei, Y.-M., & Xie, R. (2019). Exploring the effect of industrial structure adjustment on interprovincial green development efficiency in China: a novel integrated approach. Energy Policy, 134, 110946. https://doi.org/10.1016/j.enpol.2019.110946
Anselin, L. (1988). Spatial econometrics: methods and models (Vol. 4). Springer. https://doi.org/10.1007/978-94-015-7799-1
Anselin, L. (1995). Local indicators of spatial association—LISA. Geographical Analysis, 27(2), 93–115. https://doi.org/10.1111/j.1538-4632.1995.tb00338.x
Cao, Y., Wan, N., Zhang, H., Zhang, X., & Zhou, Q. (2020). Linking environmental regulation and economic growth through technological innovation and resource consumption: analysis of spatial interaction patterns of urban agglomerations. Ecological Indicators, 112, 106062. https://doi.org/10.1016/j.ecolind.2019.106062
Cheng, J., Zhao, J., Zhu, D., Jiang, X., Zhang, H., & Zhang, Y. (2022). Land marketization and urban innovation capability: evidence from China. Habitat International, 122, 102540. https://doi.org/10.1016/j.habitatint.2022.102540
Clark, C. (1940). The conditions of economic progress. Macmillan.
Du, J., Thill, J.-C., & Peiser, R. B. (2016). Land pricing and its impact on land use efficiency in post-land-reform China: a case study of Beijing. Cities, 50, 68–74. https://doi.org/10.1016/j.cities.2015.08.014
Elhorst, J. P. (2010). Applied spatial econometrics: raising the bar. Spatial Economic Analysis, 5(1), 9–28. https://doi.org/10.1080/17421770903541772
Fan, X., Qiu, S., & Sun, Y. (2020). Land finance dependence and urban land marketization in China: the perspective of strategic choice of local governments on land transfer. Land Use Policy, 99, 105023. https://doi.org/10.1016/j.landusepol.2020.105023
Florida, R., Adler, P., & Mellander, C. (2017). The city as innovation machine. Regional Studies, 51(1), 86–96. https://doi.org/10.1080/00343404.2016.1255324
Funk, J. M., Field, C. B., Kerr, S., & Daigneault, A. (2014). Modeling the impact of carbon farming on land use in a New Zealand landscape. Environmental Science & Policy, 37, 1–10. https://doi.org/10.1016/j.envsci.2013.08.008
Getis, A., & Ord, J. K. (2010). The analysis of spatial association by use of distance statistics. Geographical Analysis, 24(3), 189–206. https://doi.org/10.1111/j.1538-4632.1992.tb00261.x
Guo, Y. (2008). Land issues under central-local fiscal competition: an analysis based on conomics literature. Comparative Economic & Social Systems, 2, 59–64.
Gyourko, J., Shen, Y., Wu, J., & Zhang, R. (2022). Land finance in China: analysis and review. China Economic Review, 76, 101868. https://doi.org/10.1016/j.chieco.2022.101868
Han, S., Wang, M., Liu, Q., Wang, R., Ou, G., & Zhang, L. (2022). The Influence of land disposition derived from land finance on urban innovation in China: mechanism discussion and empirical evidence. International Journal of Environmental Research and Public Health, 19(6), 3212. https://doi.org/10.3390/ijerph19063212
Head, K., & Ries, J. (1996). Inter-city competition for foreign investment: static and dynamic effects of China’s incentive areas. Journal of Urban Economics, 40(1), 38–60. https://doi.org/10.1006/juec.1996.0022
Ke, H., Dai, S., & Yu, H. (2021). Spatial effect of innovation efficiency on ecological footprint: city-level empirical evidence from China. Environmental Technology & Innovation, 22, 101536. https://doi.org/10.1016/j.eti.2021.101536
Kou, Z., & Liu, X. (2020). On patenting behavior of Chinese firms: stylized facts and effects of innovation policy. Economic Research Journal, 55(03), 83–99 (in Chinese).
Liu, N., & Fan, F. (2020). Threshold effect of international technology spillovers on China’s regional economic growth. Technology Analysis & Strategic Management, 32(8), 923–935. https://doi.org/10.1080/09537325.2020.1729977
Liu, Y., & Dong, F. (2021). How technological innovation impacts urban green economy efficiency in emerging economies: a case study of 278 Chinese cities. Resources, Conservation and Recycling, 169, 105534. https://doi.org/10.1016/j.resconrec.2021.105534
Liu, Y., Fan, P., Yue, W., & Song, Y. (2018). Impacts of land finance on urban sprawl in China: the case of Chongqing. Land Use Policy, 72, 420–432. https://doi.org/10.1016/j.landusepol.2018.01.004
Liu, Y., Gao, H., Cai, J., Lu, Y., & Fan, Z. (2022). Urbanization path, housing price and land finance: international experience and China’s facts. Land Use Policy, 113, 105866. https://doi.org/10.1016/j.landusepol.2021.105866
Liu, Y., Luan, L., Wu, W., Zhang, Z., & Hsu, Y. (2021). Can digital financial inclusion promote China’s economic growth? International Review of Financial Analysis, 78, 101889. https://doi.org/10.1016/j.irfa.2021.101889
Lu, J., Li, B., & Li, H. (2019). The influence of land finance and public service supply on peri-urbanization: evidence from the counties in China. Habitat International, 92, 102039. https://doi.org/10.1016/j.habitatint.2019.102039
Mansfield, E. (1985). How rapidly does new industrial technology leak out? The Journal of Industrial Economics, 34(2), 217. https://doi.org/10.2307/2098683
Marshall, A. (1920). Principles of economics. Macmillan.
Martin, R., & Sunley, P. (2008). Slow convergence? The new endogenous growth theory and regional development. Economic Geography, 74(3), 201–227. https://doi.org/10.1111/j.1944-8287.1998.tb00113.x
Mo, J. (2018). Land financing and economic growth: evidence from Chinese counties. China Economic Review, 50, 218–239. https://doi.org/10.1016/j.chieco.2018.04.011
Mou, Y., & Qian, Z. (2018). Will the market level of primary land market be upgraded by land financial dependence? Based on the test of a provincial-level panel data in China from 2005 to 2015. China Land Science, 32(10), 8-13+35 (in Chinese).
Niu, W., Nie, T., Chen, X., Wang, T., Shi, J., Xu, Z., & Zhang, H. (2022). Understanding the corrective effect of the urban growth boundary policy on land finance dependence of local governments in China. International Journal of Environmental Research and Public Health, 19(8), 4785. https://doi.org/10.3390/ijerph19084785
Peng, W., Yin, Y., Kuang, C., Wen, Z., & Kuang, J. (2021). Spatial spillover effect of green innovation on economic development quality in China: evidence from a panel data of 270 prefecture-level and above cities. Sustainable Cities and Society, 69, 102863. https://doi.org/10.1016/j.scs.2021.102863
Petrariu, I. R., Bumbac, R., & Ciobanu, R. (2013). Innovation: a path to competitiveness and economic growth. The case of CEE countries. Theoretical and Applied Economics, 20(5), 15–26.
Rogers, E. M. (1962). Diffusion of innovations. Free Press.
Rostow, W. W. (1959). The stages of economic growth. Economic History Review, 12(1), 1–16. https://doi.org/10.1111/j.1468-0289.1959.tb01829.x
Shang, H., Jiang, L., Pan, X., & Pan, X. (2022). Green technology innovation spillover effect and urban eco-efficiency convergence: evidence from Chinese cities. Energy Economics, 114, 106307. https://doi.org/10.1016/j.eneco.2022.106307
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65. https://doi.org/10.2307/1884513
State Council of China. (2016). The outline of national innovation-driven development strategy. http://www.gov.cn/zhengce/2016-05/19/content_5074812.htm
Stone, S. B. (2014). A more accurate measure of local public goods: overlapping government combinations as units of analysis. Urban Studies Research, 2014, 1–8. https://doi.org/10.1155/2014/963503
Su, C.-W., Yuan, X., Umar, M., & Lobonţ, O.-R. (2022). Does technological innovation bring destruction or creation to the labor market? Technology in Society, 68, 101905. https://doi.org/10.1016/j.techsoc.2022.101905
Tan, R., Zhang, T., Liu, D., & Xu, H. (2021). How will innovation-driven development policy affect sustainable urban land use: evidence from 230 Chinese cities. Sustainable Cities and Society, 72, 103021. https://doi.org/10.1016/j.scs.2021.103021
Tang, P., Zhou, L., & Shi, X. (2014). Factors impacting local government dependent on land finance according to provincial-level panel data from 1998 to 2010 in China. Resources Science, 36(7), 1374–1381 (in Chinese).
Tobler, W. R. (1970). A computer movie simulating urban growth in the Detroit region. Economic Geography, 46(1), 234–240. https://doi.org/10.2307/143141
Wang, D., Ren, C., & Zhou, T. (2021). Understanding the impact of land finance on industrial structure change in China: insights from a spatial econometric analysis. Land Use Policy, 103, 105323. https://doi.org/10.1016/j.landusepol.2021.105323
Wang, J., & Zhang, X. (2022). Land-based urbanization in China: mismatched land development in the post-financial crisis era. Habitat International, 125, 102598. https://doi.org/10.1016/j.habitatint.2022.102598
Wang, R., & Hou, J. (2021). Land finance, land attracting investment and housing price fluctuations in China. International Review of Economics & Finance, 72, 690–699. https://doi.org/10.1016/j.iref.2020.12.021
Wei, Y., & Lu, Q. (2021). Land financial dependence, urban public service supply and population urbanization. Economic Review Journal, 7, 118–128. https://doi.org/10.16528/j.cnki.22-1054/f.202107118
Wei, Y., Li, H., & Yue, W. (2017). Urban land expansion and regional inequality in transitional China. Landscape and Urban Planning, 163, 17–31. https://doi.org/10.1016/j.landurbplan.2017.02.019 (in Chinese).
Wu, Q., Li, Y., & Yan, S. (2015). The incentives of China’s urban land finance. Land Use Policy, 42, 432–442. https://doi.org/10.1016/j.landusepol.2014.08.015
Xie, R., Fu, W., Yao, S., & Zhang, Q. (2021). Effects of financial agglomeration on green total factor productivity in Chinese cities: insights from an empirical spatial Durbin model. Energy Economics, 101, 105449. https://doi.org/10.1016/j.eneco.2021.105449
Ye, L., & Wu, A. M. (2014). Urbanization, land development, and land financing: evidence from Chinese cities. Journal of Urban Affairs, 36(sup1), 354–368. https://doi.org/10.1111/juaf.12105
Zeng, C. (2019). Spatial spillover effect on land conveyance fee—a multi-scheme investigation in Wuhan agglomeration. Land Use Policy, 89, 104196. https://doi.org/10.1016/j.landusepol.2019.104196
Zhong, S., Li, X., & Ma, J. (2022). Impacts of land finance on green land use efficiency in the Yangtze River Economic Belt: a spatial econometrics analysis. Environmental Science and Pollution Research, 29, 56004–56022. https://doi.org/10.1007/s11356-022-19450-1
Zhong, T., Zhang, X., Huang, X., & Liu, F. (2019). Blessing or curse? Impact of land finance on rural public infrastructure development. Land Use Policy, 85, 130–141. https://doi.org/10.1016/j.landusepol.2019.03.036
Zhu, B., Zhang, M., Zhou, Y., Wang, P., Sheng, J., He, K., Wei, Y.-M., & Xie, R. (2019). Exploring the effect of industrial structure adjustment on interprovincial green development efficiency in China: a novel integrated approach. Energy Policy, 134, 110946. https://doi.org/10.1016/j.enpol.2019.110946