| Author: | Lin, Xin |
| Title: | Production factor dynamics and rural entrepreneurial activity in China |
| Advisors: | Shen, Jianfu Jeff (BRE) Hui, C. M. Eddie (BRE) |
| Degree: | Ph.D. |
| Year: | 2026 |
| Department: | Department of Building and Real Estate |
| Pages: | xii, 199 pages : color illustrations, maps |
| Language: | English |
| Abstract: | Rural entrepreneurial activity is widely recognized as a critical engine for economic growth, poverty alleviation, and narrowing the urban-rural divide in developing nations. However, the growth of these rural firms around the world is often disappointingly slow, particularly driven by limited access to fundamental production factors, such as continuous land, skilled labor, and advance capital. While the nature and influence of these production factors are rapidly evolving in the 21st century due to global institutional reforms and the digital revolution, it remains unclear how these transitionary factors determine the emergence of rural entrepreneurial activities. Understanding these new dynamics is essential for crafting effective rural development policies. This dissertation aims to bridge the knowledge gap by investigating the determinants of rural entrepreneurial activity from the perspective of production factor dynamics. Three types of production factors are examined: land property rights, human capital, and digital infrastructure. Firstly, the dissertation investigates whether strengthening communal rights can address coordination failure induced by fragmented security and promote rural entrepreneurial activity. Based on China's ambitious land reform that permits rural collectives to directly sell or rent their construction land to enterprises, this work discovers that collective land transfer rights boost rural entrepreneurial activity by 25%. This positive firm growth is entirely concentrated in regions where collective coordination is simpler to achieve (i.e., less rugged areas and regions with denser clan networks). Two specific pathways behind the entrepreneurial growth are identified: lower land use costs for firms and increased land wealth for local residents. The reform also facilitates expansion into non-farm wage employment, mainly due to more active participation in the labor market rather than via a decline in the agricultural sector. This section emphasizes the importance of communal rights and collective negotiation in reducing coordination costs and offers new insights into promoting rural development in developing countries. Secondly, the dissertation investigates whether high-calibre external leaders can effectively drive development in underdeveloped regions with weak institutions. Specifically, this section leverages the staggered rollout of China's Village First Secretary (VFS) program, which temporarily deploys high-calibre cadres from upper-level government agencies or state-owned enterprises to serve as local leaders in underdeveloped rural villages, to examine the impact of external leadership on rural entrepreneurial activity. Using a panel dataset covering 357 villages across 28 provinces, this work identifies sector-specific growth effects of VFSs on rural entrepreneurial activity with DID estimators. The arrival of VFSs significantly promotes the growth of rural firms in the agricultural and manufacturing sectors by 44% and 29%, respectively. This effect is more pronounced in villages with better access to entrepreneurial complements, weaker clan cultures, and highly educated local collaborators. The success of VFSs is driven by knowledge transfer and institutional capital support, which may help mitigate information and resource gaps within villages, rather than by trust-building, which may rely on long-term interventions. These findings shed light on the effectiveness of deploying high-skill leaders in short-term assignments to rural communities, providing valuable insights for other developing countries to tackle poverty. Thirdly, the dissertation investigates the heterogeneous impact of digital infrastructure, such as broadband, on rural entrepreneurial activity. Building on the ongoing debate and mixed findings over the economic impact of rural broadband, this study aims to reconcile this literature by proposing and testing a novel theoretical framework centered on the remote substitutability of industries. This study hypothesizes that broadband unleashes two opposing forces: an enabling effect for local, non-substitutable enterprises and a crowding-out effect for substitutable businesses exposed to new, remote competition. Using the staggered, state-led rollout of broadband infrastructure across thousands of rural towns in China as a quasi-experimental setting, the empirical analysis provides robust support for this hypothesis. Broadband access significantly promotes rural firm entry in non-substitutable sectors like local services and agriculture, while simultaneously suppressing the formation of new enterprises in substitutable sectors like retail and manufacturing. Furthermore, these dual effects are not uniform; they are significantly more pronounced in China's most remote and economically less-developed regions, where broadband can serve as a powerful agent of market integration. This dissertation makes a threefold contribution to the literature on rural development by providing a context-specific analysis of how key production factors—land, human capital, and digital infrastructure—shape entrepreneurship. First, it moves beyond the conventional focus on individual property rights, presenting causal evidence that strengthening communal land rights is critical for overcoming coordination failures and unlocking entrepreneurial potential in contexts of fragmented ownership. Second, in its analysis of human capital, the study reveals that high-calibre external leaders can effectively stimulate local enterprise not through long-term trust-building, but through the short-term injection of knowledge and institutional capital. Finally, the dissertation reconciles a contentious debate by proposing a novel "remote substitutability" framework. This theory explains the dual effect of broadband infrastructure, which simultaneously enables non-substitutable local enterprises while crowding out substitutable businesses exposed to new remote competition. Taken together, by leveraging quasi-experimental evidence from large-scale reforms in China, this research underscores the critical importance of physical capital, human capital, and digital capital in fostering rural economic transformation in developing countries. |
| Rights: | All rights reserved |
| Access: | open access |
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