Analysis On The Implementation Effect Of New Industrial Land Policy In The Pearl River Delta From The Perspective Of Transaction Cost Theory

Upgrading and restructuring of manufacturing industries has been a new trend which promotes development of China’s urban economy and high-quality industries.New industries emerge with some features that are different from those of traditional manufacturing industries.However,traditional land use policies for manufacturing industries could not meet the needs and requirements of these new industries in terms of development space.In light with this,Chinese central and local governments issued some new policies regarding utilization of manufacturing industrial land.Yet the implementation of the new industrial land policy is not considered to be very successful so far.So,which factors affected the implementation of these particular land use policies for developing new industries? The research attempts to tackle this problem from the perspective of developers,based on transaction cost theory and combined with the analysis framework of real estate investment decision proposed by Seabrooke and Kent,The study select the land policies especially for new industries in cities located at the Pearl River Delta as the research object.On the basis of giving a full picture of factors affecting the investment decisions of developers involving in providing spaces for new industries,this research discusses the transaction costs arising from the implementation of the new industrial policy from three levels,i.e.the constitutional level,the governance level and the operation level,as well as analyzing the interaction of factors between the three levels mentioned above.The study tries to give an understanding of the mechanisms of how these policies would impact the decision-making of developer,and provide ideas for the improvement of land use policies for new industries.The study reviews first literatures relating to the application of transaction cost theory in researches relevant to the implementation of land use policies,utilization and upgrading of old manufacturing industrial land as well as development of spaces for new industries.It finds that transaction cost theory has gradually become a useful tool in the study of land use system,and thus has implications in studying of land use policies for developing new industries.Secondly,based on transaction cost theory and borrowing Seabrooke and Kent’s real estate investment decision-making analysis framework,this paper build its analytical framework for studying land use policies for new industries and its implementation process by classifying relevant factors affecting investment decisions in this field into three levels,i.e.the constitutional level,the governance level and the operation level.Moreover,the policies and implementation effects of land use policies for new industries in Pearl River Delta cities are sorted out and summarized.Shenzhen,Dongguan and Guangzhou are selected as representative cases for in-depth study.Furthermore,land use policies for new industries in the Pearls River Delta and their effect are analyzed,using the analytical framework established.Finally,how investment decisions are influenced by uncertainties arising from the institutional arrangements relevant to the land use policies are discussed.The research find that much uncertainties exist in the process implementing land policies for new industries,as evidenced by the vagueness,frequent changes and institutional constraints of rules of the game at the constitutional level.At the governance level,government agencies has much space to exercise discretionary power in setting land use conditions for new industries,and the management procedure and approval process of land use applications for the new industries is relatively complex.These complexity and uncertainty will bring higher transaction costs to developers of spaces for new industries.As to situations at the operational level,there is ambiguity in the functional type,use pattern and rental price setting of new industrial buildings,which also brings about much uncertainties to the developer and the market.Whether a developer has the professional ability to communicate and negotiate with the government plays a significant role in reducing the actual construction cost and transaction costs in the process.In practice,developers often attempt to reduce investment costs through negotiation and game to maximize profits.Their investment decisions are based on comparisons between the possible total investment costs as well as the expected revenues of different development routes.The study finds that transaction costs do not constitute the sole factor affecting the investment decision making of developers.It is argued that total cost is the decisive factor for decision makings in the development and construction of new industries spaces.The research also find that there are extremely active interactions between different levels of the land use system framework governing the development of new industries spaces,which would shed light on a new perspective and optimization path for adjusting land use policies for developing new industries.