Fiscal Pressure, Inter-Industrial Allocation of Land and Agglomerations Effects

Abstract Land is a production factor that supports industrial development and also an important resource for increasing local government revenue. The scientific allocation of land has a positive effect on applying a new development philosophy. Based on the data of China’s micro land transaction, this paper constructs the industrial dispersion indicator of land transfer to discuss about how short-term fiscal pressure affects allocation of land resources among industries and then analyzes its impacts on agglomeration effects. The results show that the greater the short-term fiscal pressure, the higher the dispersion of land transfer among industries, which holds true after going through a series of robustness tests. Further analyses show that the dispersion of land transfer among industries deteriorates the policy orientation of giving priority to key industries. Finally, the practice of dispersion of land transfer among industries weakens agglomeration economies. The research results of this paper show that local governments’ strategy of land transfer among induestries for coping with short-term fiscal pressure has the characteristics of “increasing fiscal revenues and weakening the role of industrial guidance.” This means that in the new stage of development, local governments urgently need to enhance their understanding of the multiple functions of land and avoid impairing industrial development for addressing the short-term fiscal pressure.