Land market misallocation, regional integration, and economic growth: Evidence from the Yangtze River Delta Region, China

Intensive land use and land marketization is an important engine for promoting regional integration, especially on the background of China's fragmented land market. It might be difficult to establish an integrated national land market in the short run. As a compromise, the establishment of regional land markets consisting of a few neighboring provinces could be an option. Particularly, the Yangtze River Delta Region (YRDR), could be an ideal place for such a policy trial. This study uses the data of Shanghai, Jiangsu, Zhejiang, and Anhui in YRDR from 1999 to 2017 to quantitatively calibrate possible economic benefits when the land misallocation is corrected with an integrated land market. We find that, if an integrated construction land market was established in YRDR, and Anhui could transfer some of its construction land quota to Shanghai, the transaction between Anhui and Shanghai in 2017 could bring an improved income of 289.8 billion yuan in YRDR, ceteris paribus, about 1.73% of the regional gross domestic product. The integration of regional land markets has brought about significant efficiency improvements. This study provides insights into sustainable economic growth in future China and the regional development strategy of other developing countries.