Population growth and land development: Investigating the bi-directional interactions

Abstract

This study explores the two-way interactions to gain an in-depth understanding of the impact of population growth on development expansion and vice versa. The empirical investigation adopts a spatial econometric approach which allows for spatial interactions and the decomposition of total marginal effects into own-area and spatial spillover effects. Furthermore, the estimation method overcomes the endogeneity biases due to reverse causality and the incorporation of spatial components. Some key results are (1) Significant spatial interactions exist in land development and population growth; (2) Population growth has promoted land development in local and adjacent areas, with a cumulative impact on neighboring areas greater than local impact. (3) The expansion of land development has led to a growth of the local population. On the other hand, it has led to a decline in the population of the nearby areas (i.e., own and spillover effects are in the opposite directions). Besides, our results indicate that land development in urban areas has attracted suburban and rural residents to relocate to cities and towns. Improving employment opportunities and transportation systems in major urban areas may be negatively associated with the economic development of surrounding rural and suburban areas.