The Influence of Land Disposition Derived from Land Finance on Urban Innovation in China: Mechanism Discussion and Empirical Evidence

As China’s economy advances into a new stage of high-quality development driven by scientific and technological innovation, it is of great practical importance to probe what effects land disposition, which underpinned the previous round of rapid economic growth, and may have an exertion on developing innovation. Based on a deep exploration of the potential positive and negative influences of land disposition in relation to the effects of land finance on urban innovation, we employed a dynamic spatial Durbin model, along with panel data from 266 Chinese prefecture-level cities over the period 2004–2017. The empirical results show that the development of China’s urban innovation has had significant path dependence, spatial agglomeration, and inhibiting effects on neighboring cities, and these effects are attributed to inter-governmental competition and the Matthew effect. Overall, the combined impacts of land disposition modes on urban innovation have changed, from facilitative in the early stage to inhibitory at present. In the developed cities of east China, the facilitative effect of land disposition has weakened gradually, and tends to disappear entirely, while the change in impact over time in less developed mid-western cities is consistent with the national sample. This study broadens our understanding of the role of land disposition in China’s urban innovative development and has meaningful direct implications for policymakers.