Promotion incentives, economic growth targets and industrial land supply: evidence from China

Abstract

ABSTRACT This study examines the impact of officials’ promotion incentives on the industrial land supply and explores the mediating role of economic growth targets, which are greatly influenced by local leaders. Using the panel data of 257 prefecture-level cities across China from 2007 to 2019, we identify the influence of officials’ promotion incentives on industrial land supply using a two-way fixed-effects model and then examine the mediating role played by the setting of economic growth targets using a mediating-effects model. The estimated results indicate that the promotion incentives of local leaders and the supply of industrial land by local governments follow a significant inverted U-shaped relationship, and that the economic growth targets play a partial mediating role. Heterogeneity analysis shows that the impact of promotion incentives for local leaders on industrial land supply is significantly heterogeneous due to differences in the age of local leaders and the economic development across different regions. The findings are important for improving China’s assessment system of officials, formulating economic growth targets, and optimizing the allocation of urban industrial land.