Competing for innovation: Political tournaments and high-tech industries-related land transfer

Abstract

In China's relative performance evaluation system, local government leaders compete to advance their jurisdictions' economies, with this competition extending beyond mere macroeconomic growth to encompass investments, public services, and environmental regulations. High-tech land, crucial for innovative endeavors, has garnered significant attention from local leaders. Two fundamental questions arise: whether and to what extent does the transfer of high-tech land become distorted due to the intense political competition among local leaders? To explore these questions, we empirically investigate these questions using a spatial econometric model, analyzing panel data from Chinese prefectures between 2009 and 2015. Our findings indicate that, under the innovative performance evaluation, local leaders are motivated to transfer more high-tech land. This allocation varies based on the leaders' age and length of time in office and is influenced either by the need to maintain economic growth or by fiscal pressures. Furthermore, we identify a spillover effect where leaders of neighboring prefectures tend to imitate one another, driven by their common goal of economic expansion. However, this competitive environment does not result in genuine innovative advantages for adjacent regions; instead, it impedes their development. Our results signal a caution against political competition straying from intended policy objectives.