Research On The Impact Mechanism Of Land Development Level On Local Fiscal Distress

Since the tax-sharing system reform,local governments in China have faced fiscal imbalances,primarily due to the policy arrangement of "centralizing financial authority and devolving administrative powers." With the continuous development of the economy,the scale of local fiscal revenue has gradually expanded,but the fiscal situation in major agricultural provinces remains severe,characterized by insufficient financial self-sufficiency and excessive dependence on central transfer payments.Agriculture,an industry with positive externalities,plays a crucial role in ensuring national food and ecological security.As a result,the state has implemented a series of land use regulation policies and fiscal support policies for agriculture to safeguard agricultural production and development.This study first reviews classic theories and literature related to land development and local fiscal distress,then analyzes the externalities of agriculture from a food production perspective and traces the evolution of China’s land use control policies and fiscal support policies for agriculture.Subsequently,by constructing a land development model,it measures the land development levels in various regions of China and evaluates the fiscal conditions of local governments from three perspectives:local financial self-sufficiency,financial pressure,and transfer payment dependency.Using relevant data,the study then conducts a comprehensive analysis of land development levels and the current fiscal distress in different regions.Based on this,a fixed-effect model with cluster robust standard error is employed to empirically test the impact of land development levels on local fiscal distress and explore regional differences in the influence of land development levels on local fiscal distress from the perspectives of eastern,central,and western regions,as well as major and non-major grain-producing areas.Finally,the study conducts robustness tests on the model using various methods to verify its rationality and the reliability of empirical results.The main conclusions drawn in this study include:Firstly,there is a negative correlation between the level of land development and local financial distress,that is,the higher the level of land development,the lower the degree of financial difficulties faced by local governments.Conversely,the lower the level of land development,the more severe the financial difficulties faced by local governments.Secondly,the farmland red line policy is positively related to local financial distress,indicating that farmland protection is not conducive to improving local financial difficulties.On the one hand,the strict farmland protection system restricts the conversion of farmland to construction land,which to some extent hinders the development of secondary and tertiary industries,which are the main sources of local tax revenue.Therefore,farmland protection restricts the increase of local fiscal revenue.On the other hand,farmland protection increases the expenditure authority of local governments,requiring them to allocate a portion of their financial resources to support agricultural and rural development,thereby increasing local government financial expenditure.It is precisely because of these two factors that the gap between local fiscal revenue and expenditure continues to widen,and local financial distress becomes increasingly severe.Thirdly,due to differences in factor endowments and development levels among regions,there are significant differences in the impact of land development levels on local financial distress.From the sample division of eastern,central,and western regions,the impact of land development levels in the central and western regions on local financial distress is significantly higher than in the eastern regions.From the sample division of major grain producing areas and non-major grain producing areas,the impact of land development levels in major grain producing areas on local financial distress is significantly higher than that in non-major grain producing areas.Based on the above conclusions,this study proposes the following policy recommendations:First,deepen the reform of the financial and tax system and establish a fiscal system that matches the central and local fiscal powers and responsibilities.Second,optimize land use structure and improve the efficiency of land resource utilization.Third,promote the optimization and upgrading of the industrial structure,the integrated development of primary,secondary,and tertiary industries,and cultivate local fiscal revenue autonomy.Fourth,improve the interest compensation mechanism for farmland protection and perfect the transfer payment system.