Promotion incentives, economic growth targets and industrial land supply: evidence from China

ABSTRACT

This study examines the impact of officials’ promotion incentives on the industrial land supply and explores the mediating role of economic growth targets, which are greatly influenced by local leaders. Using the panel data of 257 prefecture-level cities across China from 2007 to 2019, we identify the influence of officials’ promotion incentives on industrial land supply using a two-way fixed-effects model and then examine the mediating role played by the setting of economic growth targets using a mediating-effects model. The estimated results indicate that the promotion incentives of local leaders and the supply of industrial land by local governments follow a significant inverted U-shaped relationship, and that the economic growth targets play a partial mediating role. Heterogeneity analysis shows that the impact of promotion incentives for local leaders on industrial land supply is significantly heterogeneous due to differences in the age of local leaders and the economic development across different regions. The findings are important for improving China’s assessment system of officials, formulating economic growth targets, and optimizing the allocation of urban industrial land.

KEYWORDS:

• Promotion incentives
• industrial land supply
• economic growth targets
• target responsibility system
• China

JEL CLASSIFICATION:

• E71
• P48
• R52

Disclosure statement

No potential conflict of interest was reported by the author(s).

Supplementary material

Supplemental data for this article can be accessed online at https://doi.org/10.1080/00036846.2024.2351227

Notes

¹ China Land Market Website accurately records the details of every land supply in the country since January 1, 2007, including subdivided land use type, transaction date, plot location, purpose, and use intensity.

² The calculation method for the number of years corresponding to the highest point of the inverted U-shaped curve is: -(the coefficient value of the primary term of tenure)/(2*the coefficient of the quadratic term of tenure). Same as this method below.

³ Among Chinese officials, there is a saying regarding the ‘age ceiling’; at the age of 57, prefecture-level officials (municipal party secretaries) may be promoted to deputy ministerial cadres, and at 58, the chances of promotion greatly decrease.

⁴ Not only in the year when the party congress was held, but also in the previous year, officials may have had corresponding expectations (H. Wu, Yang, and Yang 2021).

⁵ The variable (LAND) refers to the area of industrial land supplied through bidding, auction, listing and agreement. while the variable (lnLAND_1) adds the area of industrial land supplied by administrative allocation.

Additional information

Funding

The work was supported by the Ministry of Science and Technologies of P.R. China [2016YFE0103100]; the Philosophy and Social Science Leading Talent Project of National Social Science Foundation of China [22VRC163]; the 111 Project [B17024]; the Central Universities Basic Scientific Research Business Fund of Nanjing Agricultural University supports research in the humanities and social sciences [SKYZ2023004].