Research on the Law of China’s Rural Land Institutional Changes: An Analytical Framework of Economic Efficiency and Distributive Equity

Abstract

Institutions affect economic development and social stability, and the characteristics of institutional change are a complex and widely discussed topic. This paper constructs a theoretical analysis framework to describe the relationship between institutional change, resource conditions, and overall social welfare, so as to explore the preconditions for the formation of institutions with greater equity and higher economic efficiency. On the basis of this analytical framework, we conduct a case study on China’s rural land institutional changes over the past 70 years to explore the law of institutional changes. We found that when resources are scarce, economic efficiency and distributive equity usually pose difficulty to being improved and present a substitution relationship, while only when resources are sufficient could they realise these goals. The findings indicate that for regions with meagre resources, the advantageous sectors need to be identified and prioritised at the beginning of the development so as to recognise the appropriate initial resource accumulation. A certain accumulation of resources is the prerequisite for creating institutions that could improve economic efficiency and offer equitable distribution.