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Research notes · regions

Can a government close a regional gap by directing land to poorer places?

Place-based Land Policy and Spatial Misallocation

Min Fang (2026) · Working paper

Article ↗ · Replication data ↗ (openICPSR)

The archive requires an account we do not hold, so the files were not opened. What follows rests on the published abstract and on this platform's own observations.

What the authors found

Fang studies a major Chinese land policy that allocated more urban land quota to underdeveloped inland regions in order to narrow regional development gaps. The finding is that place-based intervention of this kind creates spatial misallocation: land is directed away from the coastal cities where it would be most productively used, and the aggregate cost of that misallocation has to be set against whatever regional convergence is achieved.

What our data adds

Europe runs the same policy at scale through cohesion funding, and the distribution it operates on is in this database. Measured per head, the ninetieth percentile European region produces 4.5 times the tenth percentile in euro, or 2.6 times in purchasing power standards. That is the gap cohesion policy addresses, and it is considerably smaller than it looks when regions are compared on their total output. Whether closing it is worth the misallocation is the trade-off Fang quantifies for China, and it is live for the European programme this data describes but does not evaluate.

Regional GDP per head, purchasing power standards

The distribution European cohesion policy operates on.

FigureValueIndicator
p90/p10, GDP per head in euro 4.5x NAMA_10R_2GDP.EUR_HAB
p90/p10, in purchasing power standards 2.6x NAMA_10R_2GDP.PPS_EU27_2020_HAB
Richest to poorest region, per head 21.2x NAMA_10R_2GDP.EUR_HAB
The same ratio on total GDP, for contrast 530x NAMA_10R_2GDP.MIO_EUR

Every figure here is computed from observations in this database and can be charted, downloaded or queried.

What this cannot show

Which ratio you quote is close to an argument in itself. On total GDP the spread between European regions is 530-fold; per head in euro it is 21-fold; per head in purchasing power standards it is 9-fold. All three are correct arithmetic on the same regions, and a case for or against regional transfers could be built on any of them. This note uses per head because size is not a development gap. Nothing here identifies cohesion spending, so it cannot connect policy to outcome in either direction.

The data behind it

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