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Decentralization, Land Finance and Urban Infrastructure
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TitleDecentralization, Land Finance and Urban Infrastructure  
AuthorTang Yugang and Chen Qiang  
OrganizationSchool of Economics, Shandong University; 
Key WordsInfrastructure; Explicit Land Finance; Implicit Land Finance; Capitalization 
AbstractChina has witnessed unprecedented growth in its infrastructure sector since mid 1990s, which has played an important role in China’s economic growth and social development.This paper attempts to provide an integrated theoretical and empirical framework to explore the rationale of rapid improvements in China's infrastructures. This study shows that the establishment of fiscal decentralization system and the market-oriented reform of the factor of land are key prerequisites of the take-off of China’s infrastructures. Inter-jurisdictional competition and land finance innovations ,both of which originate from China’s decentralized economic governance model, change the demand and supply capacity of infrastructures historically, especially in the urban sector.The relationship between land finance and the supply of urban infrastructure is explored.Empirical evidence is given based on the inter-provincial panel data from year 1999 to 2007,using the capital stock and physical stock of infrastructures as the explained factor respectively. This study can not only help to understand the growth of urban infrastructure in China, but also provide a useful perspective to understand the Chinese-style decentralization when land is controlled by local governments. 
Serial NumberWP352 
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