Foreign direct investment, fiscal decentralization and land conflicts in China

Abstract

Land disputes have been an important risk to social stability in China since the turn of the century. This paper uses provincial data on illegal land uses during the period 1999-2010 as a proxy for the intensity of land conflicts to investigate the effects of foreign direct investment (FDI) and fiscal decentralization on jurisdictional land conflicts. The results show that the FDI growth rate has a positive and significant impact on the growth rate of illegal land use when there is a high degree of fiscal decentralization. We thus provide evidence supporting the hypothesis that regional competition for FDI, as shaped by fiscal decentralization, tends to raise conflicts over land in China.