Spatial Allocation of Land,Differentiation of Local Government Debt and Coordinated Regional Development
Efficient spatial allocation of national land resources is crucial for the successful implementation of a regional coordinated development strategy.Since the initiation of China's reform and opening-up policy,the eastern coastal regions have taken the lead in entering a high-speed development trajectory.However,economic disparities between the eastern regions and other areas have increased.To address this issue,the 16th Central Committee of the Communist Party of China proposed the"Regional Coordinated Development Strategy"after the Third Plenary Session,which marked the beginning of various resources,with land as a representative,shifting toward the central and western regions.During this process,the disparity in both total output and per capita income between the eastern and central-western regions decreased significantly,but it also led to regional differentiation in local government debt.This study constructs a dynamic general equilibrium model that includes elements such as land market,labor market,local governments,and local government debt.It depicts the endogenous optimal behavior of local governments in different regions and explores the spatial distribution characteristics of local government debt and regional development disparities.First,through qualitative analysis,this study reproduces the observed phenomenon of income per capita,housing prices,and regional total output differentiation since the inception of the reform and opening-up policy.It further explores the behavior patterns of local governments after the expansion of development disparities.It is found that local governments in the less developed central and western regions rely more on land finance compared with local governments in the developed eastern regions,resulting in higher debt pressure.They also depend more on infrastructure investment to drive local economic development.Furthermore,assuming restricted labor mobility across regions,the study simulates the allocation of land to less developed areas.The results reveal that despite the reduction in the gap between regional total output and per capita income,there is further differentiation in local government leverage ratios and housing prices under this land allocation scheme.Additionally,the study finds that the overall output efficiency is lower with this land allocation method.To enhance the spatial allocation efficiency of land,it should be directed toward developed regions.However,this exacerbates income disparity among individuals.As such,a single-factor land allocation approach cannot address the multifaceted policy challenges,comprising local government debt differentiation,income differentiation,housing price differentiation,and low output efficiency,simultaneously.This leads to a discussion on labor factors.The study highlights that free labor mobility can alleviate the issue of income differentiation among individuals,enhance resource allocation efficiency,and boost overall economic output.However,labor mobility also amplifies differentiation in local government debt and housing prices between areas with population outflows and inflows.Therefore,the study proposes a factor allocation scheme that effectively mitigates regional disparities and enhances overall efficiency,namely,the simultaneous flow of both land and labor to developed regions.The simulation results demonstrate that this factor allocation scheme effectively achieves policy objectives,including reducing local government debt differentiation,income differentiation,and housing price differentiation,as well as restraining total output disparities.While some differentiation phenomena persist compared with the baseline model of"labor immobility,"its capacity to alleviate various differentiation phenomena surpasses other policies.To achieve its objective,this study simulates reaction diagrams for the wage ratio and local government leverage ratio between Cities 2 and 1 under scenarios of"labor immobility+land allocation to less developed areas"and"labor mobility+land allocation to developed areas".This analysis aims to scrutinize the robustness of the conclusions.The article finds that if the elasticity of substitution between products in the two regions is moderate,the expansion of production capacity in the eastern region would have a limited impact on the competitive advantage of the central-western region.It also has a positive effect on the latter due to product complementarity,leading to a reduction in per capita income disparity.However,if the elasticity of substitution between products is strong,the slight expansion of production capacity in the developed region significantly affects the competitive advantage of the less developed region,resulting in a deeper negative impact.The simulation results reveal that this negative impact leads to further divergence in the leverage ratios of the governments of the two regions,rendering the policy less effective in mitigating local government debt differentiation.Overall,the core mechanism presented in this study is insensitive to parameters and exhibits robustness.Foreign investment attraction is a critical avenue for local governments to harness external resources and propel local economic development.The manner and extent of its implementation may vary by region.The article delves into characterizing local government investment attraction behavior in the model,primarily from the perspective of industrial land,and explores local government investment attraction behavior while considering tax disparities between the two regions.The results indicate that,without considering tax differences,the policy of both land and labor flowing to developed regions tends to overestimate its control effects on regional output,wages,"real"wages,housing prices,land marginal productivity,and total consumption.However,it underestimates its regulatory effects on local government leverage ratios and total output.Importantly,it does not diminish the effectiveness of this policy combination relative to other policy combinations.
Local Government DebtLand Spatial AllocationLabor MobilityRegional Differentiation
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