Institutional Restriction,land Finance And Interaction Mechanism Of Local Governments

Commercialization of land is an important driving force for China's economic development, providing financial source for local governments and political promotion for governmental management teams. The activities of illegal land have obstructed the normal and orderly development of the economy. The study of the principle of the land supply of the local government and the formation mechanism of illegal land activities is a way to understand the institution of land with Chinese characteristics, which has a strong guidance.This paper focuses on three issues: (1) Are there existing the path dependence about the land supply and illegal land acts of the local government?Whether the situation of the land supply and illegal land acts of a studied province can be affected by the corresponding behavior from the other provinces.(2) Construct a relationship model between the proportion of revenue paid to central government and the land supply of the local government. (3) Construct a theoretical model about the central government supervision to the land illegal activities of the local governments.This paper reviews the theory of institutional changes and the agglomeration economy in the first and second chapter, and studies the formation of the institutional background of the land finance. Fiscal decentralization makes the local government become the relatively independent interest entities, and also impulses the local government pursue the development of the local economy. Market segmentation between the local governments and the financial dispute between the central government and the local governments becomes the institutional background to the land finance.The third chapter analyzes the formation of land finance. First of all, build the principal-agent model about the land revenue for local government. The conclusion of the model is the income of land grand fee for local government, the double agent, affected by the proportion of revenue paid to central government. Secondly, the land finance has been built up through the development of rural enterprise, FDI and real estate, and Land resources act as a source of local government financial capital. The Fuzzy of ownership of the collectively-owners Farmland becomes the legal source of land finance. Chapter IV proposes the results from the econometric models of the land supply of the local government. Testing the proposition that the path dependence existing in the local government and the interaction among the local government on the land grand activities based on the dynamic panel dada from 1999-2008.Chapterâ…¤discusses the illegal land acts of local government. The asymmetric target between the central government and local governments is the reason of the illegal land acts of local government. A theoretical model about the central government supervision the local governments of land illegal activities are built to describe this dynamic game progress and the cost functions each other. Testing the proposition that the path dependence of the illegal land acts existing in the local governments and the interaction among the local governments based on the dynamic panel dada from 1999-2008.