Land Supply Constraints,Optimization of Industrial Land Allocation and Enterprise Efficiency:Evidence from Farmland Protection Policies
China has a large population but a small farmland area,which is its basic national condition.According to sur-vey data released by the Ministry of Natural Resources,the per capita farmland area in China is 1.4 mu(about 0.0933 hectares),which is 40％of the world average.Although China's land resources are very scarce,during the past forty years of rapid development,local governments in China still heavily relied on massive land inputs to promote industrialization and urbanization.However,a large amount of land investment has led to a misallocation of land resources and low eco-nomic efficiency.In recent years,the Chinese governments have begun to tighten land supply,resulting in a 40.85％de-crease in construction land area per unit of GDP nationwide,and a 60％increase in average investment intensity in indus-trial land.What is the impact of land supply tightening on land resource allocation?What is the impact of land resource al-location on the total factor productivity of firms?The more important the role of land has been in China's past economic development,the greater the impact of tighter land resources on China's future economic development will be.This paper takes the farmland retention index control policy as a quasi-natural experiment.In 2010,in order to main-tain 1.8 billion mu of farmland,the central government decomposed 1.8 billion mu of farmland into cities and established a vertical management system.The central government regards the quantity of farmland as one of the basic indicators for evaluating local government officials.As 70％of the new land for construction in cities is converted from farmland,the policy of protecting farmland has imposed severe restrictions on the supply of urban land for construction.We,by using farmland protection intensity differences,measure the extent to which land supply is constrained in different cities.The core logic of this paper is that the tightened land supply will first change the land allocation behavior of local governments.Governments often allocate scarce land to more efficient firms to improve the allocation efficiency of land resources.Optimized allocation of factors is the core path to improve the total factor productivity of firms.As Hsieh &Klenow(2009)found,when China raises the factor allocation efficiency to the level of the United States,its total factor productivity will increase by 30％to 50％.To demonstrate the above logic,based on the Chinese enterprise tax survey da-tabase and national land statistics collected and by using the physical properties of soil,we predict the amount and loca-tion of farmland to address the endogeneity between the amount of farmland and economic development,and identify the causal impact of land supply constraints on firms'total factor productivity.We find that after the implementation of the farmland retention index control policy,two significant changes emerge:first,more industrial land is allocated to high-efficiency firms;second,land costs increase,and high cost becomes a threshold to select efficient firms to enter the cities.Both changes can lead to an overall improvement in enterprise efficiency.Heterogeneity analyses show that after tighten-ing land supply,firms'efficiency improvement is greater in central urban areas,non-high-technology industries and areas with high land demand.The contributions of this paper are as follows.First,this paper is an early study of how local governments change the behavior of land resource allocation when land supply is tightened,and how the change of land allocation behavior af-fects the efficiency of firms.Second,this paper builds a logical framework of"land supply tightening-land allocation be-havior transformation-enterprise efficiency improvement,"which provides new evidence for the optimal allocation of re-sources to promote enterprise efficiency.Third,this paper utilizes soil physical conditions to predict the amount and loca-tion of farmland,which is a good solution to the endogeneity problem between land supply and economic development,and provides a better identification strategy for research in this field.In addition,this paper incorporates land elements into the measurement of total factor productivity,and considering land element inputs is a more accurate measure of firms'production efficiency in China's development.
Protection of FarmlandIndustrial Land AllocationEnterprise Efficiency High-quality Development
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