To Build Outward or Upward: the Spatial Pattern of Urban Land Development in China

Abstract

This paper studies the determinants of the spatial pattern of urban land development. It was motivated by an observation that the fastest-growing Chinese cities have undergone outward expansion of urban land development with relatively low use intensity. The study links this pattern with the career concerns of local leaders who act as city developers. It first develops a theoretical model to demonstrate how a city leader whose career advancement depends on city economic growth chooses the spatial pattern of urban land development. 2 major testable predications are derived: First, city leaders with high career incentives are more likely to expand the city outward to boost land sale revenues for financing public infrastructure and enhancing economic growth. Second, the average use intensity of newly developed land is lower for city leaders with stronger career incentives due to the trade-off between a city’s upward and outward expansion. The theory is tested using a large dataset of residential land transactions matched with city leaders from 2000 to 2012. It finds robust evidence consistent with the predictions of the model. This paper is a part of a Global Research Program on Spatial Development of Cities, funded by the Multi Donor Trust Fund on Sustainable Urbanization of the World Bank and supported by the UK Department for International Development