Industrial land policy, firm heterogeneity and firm location choice: Evidence from China

Using micro-level data of Chinese manufacture firms for the year 2009, this paper estimates a conditional logit model to examine the impact of industrial land supply and allocation policies on firm location choice. It is found that both expanding industrial land supply and balanced industrial land allocation policies are positively related to firm location choice. It is also found that the impact of industrial land policy varies with firm heterogeneity in terms of ownership and industry-specific attribute. Compared to their peers, joint ventures are less sensitive to industrial land supply policy, whereas firms in labor-intensive industries are more sensitive to industrial land allocation policy. The estimation result is robust after controlling for other key factors which influence firm location choice. These findings support the argument that industrial land policy plays an important role in determining the spatial distribution of manufacture firms.