Driving Mechanism Of The Institutional Evolution On The Transfer Of Collective Non-agricultral Construction Land

Since the start of the transition period in China, the capital characteristic of land in urban and peri-urban areas has been emerged. The current land acquisition policy excludes the farmers to obtain the incremental value of farmland conversion for urban development, which actually harm severely the benefits of farmers and the rural collectives. The huge difference between the expectation and the reality causes the farmers and collectives try to avoid the land acquisition and find its own way to self-urbanization, which aims to gain more benefits. At the same time, due to rapid social and economy growth, the demand for urban construction land increase indeed. With constrain of the scarce of urban construction land, the newly converted farmland for construction has become the main source for the local governments to push their economy growth. Under above conditions, the conveyance directly from rural to urban without the only legal method that the land has to go through land acquisition first has emerged in many regions in China. So this study aims to analyze the driving forces and mechanism of current institution change on the related policies on rural construction land conveyance. It will employ New Institutional Economics to probe into the external rents, the transaction cost, and the mechanism based on the game analysis of the related interests groups'strategies and behaviors. The paper will also select two typical cases on the institutional change to verify the theory and assumptions developed by the paper. Some institutional design and recommendations for policy will also be provided. There are 8 chapters in total. The first, second chapters are the introduction and theoretical parts, which describes the background, the aim, the content of the study. It also includes a literature review for current arts status on NIE, on external rents, transaction costs and game between interest groups, which are focusing on their roles on the institutional change. According to NIE, institutional change is due to external rent occurs. But whether the change could succeed depends on the related transaction costs and benefit, and also depends on the game results among the stakeholders. So to probe into these three factors are helpful for identification of the process.The third, fourth, and fifth chapters employ NIE to analyze the driving forces, modes, and process of the conveyance of rural collective-owned construction land. The results show that due to the change of economic and social environment, the land conversion can bring huge or potential huge incremental value. When the value becomes big enough then it drives the institutional change. But the cost of institutional change and the corresponding between different stakeholders will constrain the change and results in a balanced or unbalanced equilibrium. When the central government provides formal institutes, and the other actors in the game obey the arrangement, then the equilibrium will be balanced and leads to higher benefit.The sixth chapter is the cases study. The cases are selected in Nanhai district, Foushan city, Guangdong province, and in Jiangning district, Nanjing city, and Jiangsu province, which are representing two typical cases currently in China, the land stock system and rent directly by the collectives to urban. The former is a legal experimenting mode, while the latter is a illegal mode which are forbidden by the central government. The cases study verified the theoretical analysis. The results show that no matter the initiated institutional change is legal or illegal, a external rent existing is the prerequisite, and the path for change is according to the related transaction cost and the game behavior of the stakeholders. Some recommendations are also can given as following. First the bottom-up direction for institutional change is important currently in China for its rural collective-owned land conveyance. So the central government should provide certain policy spaces for local government's innovation can leads to a two-win situation. The seventh chapter describes the design for institutional change. It points out that the innovation should firstly base on a formalized institutional environment, e.g. legal act and protect the legal benefit of all stakeholders. This can be fulfilled through internalized the external rents, reducing the transaction cost and balancing the interests of all the stakeholders. The law, the property right institution, and the market mechanism are needed to be reformed.The eighth chapter is the conclusion and policy recommendation. It first traces back to the whole paper and then gives the main findings and contributions of this paper. The recommendations are 1) a formal rule for local innovation is quite important,2) pay attention to the interests of all involved stakeholders during the conveyance of rural collective-owned land,3) at last, but not the least, a bottom-up mechanism for innovation is important.