Does misallocation of land resources reduce urban green total factor productivity? An analysis of city-level panel data in China

Although the “developing by land” model substantially stimulates industrialization and urbanization, the land-resource-allocation model with “high-cost and low-efficiency” that makes up most of the industry can potentially enlarge resource consumption and intensify environmental pollution. This paper examines the mechanisms of the impacts of land resource misallocation on urban green total factor productivity (GTFP), using a dataset of China’s 277 cities at the prefecture (and higher) level from 2006 to 2013. Fundamental and spatial econometric models are estimated to empirically investigate the effects of land resource misallocation on GTFP and explore the spillover effects as well as regional differences. The results reveal that the misallocation of land resources directly reduces the GTFP of the city and hinders the development of GTFP in neighboring cities. The mismatch of land allocation is a major reason for restricting the improvement of the overall productivity that accounts for energy consumption and environmental degradation, with mechanisms involving the undermined technological innovation and industrial structure upgrading. Regional heterogeneity analysis suggests that the unfavorable effects of land resource misallocation on GTFP are indirect and associated with spillover effects for sample cities in eastern and central regions. The mechanisms involving innovation capacity and manufacturing agglomeration also exhibit substantial regional disparities among eastern, western, and central regions. By optimizing the allocation of land resources, enterprises with strong innovation capabilities and belonging to modern service industries can obtain more land use, enhancing their motivation for technological innovation and optimizing industrial structure and achieving high-quality economic growth and sustainable development.