Do land revenue windfalls create a political resource curse? Evidence from China

By analyzing a panel on the political turnovers of 4390 county leaders in China during 1999-2008, we find that the revenue windfalls accrued to these officials from land sales have undermined the effectiveness of the promotion system for government officials. Instead of rewarding efforts made to boost GDP growth, promotion is positively correlated with signaling efforts, and with corruption. The robust positive relationship between land revenue windfalls and political turnover, or specifically promotion, suggests that those who are politically connected to their superiors and those beyond the prime age for promotion are the primary beneficiaries. The case for corruption is substantiated by the evidence inferred from anti-corruption crackdowns, which reveals that the additional effect of land revenue on political turnover and size of bureaucracy (a proxy for corruption) decreases significantly in crackdowns but that land revenue has no effect on city construction expenditure (a proxy for signaling). (C) 2016 Elsevier B.V. All rights reserved.