The Dynamic Relationship between Industrial Structure and Economic Growth for the Conversion of Old and New Kinetic Energy: An Empirical Analysis of the Shandong Province Based on VAR Model

Purpose This paper, focusing on the dynamic process of economic development and industrial structure in the Shandong province since the 21st century, analyzes its economic structure by constructing a VAR model to provide economic and policy recommendations for the sustainable development of Shandong’s economy. Design/Methodology/Approach This paper selects the output value of the three industries in Shandong from the past 20 years, mainly using the real GDP, GDP growth rate, and the proportion of the output value of the three industries to construct a VAT model, and analyzes the order of gravity of the industrial structure of the economies. This paper also discusses the dynamic impact of the output value of Shandong’s agriculture, industry and service industries on real GDP per capita from an absolute value perspective. Findings After theoretical and empirical analysis, this paper finds that Shandong’s current economic growth industrial structure is “2-1-3”, while the transition to “3-2-1”may be more effective and healthier in the future. The increasing proportion of investment in the modern emerging service industry and emphasis on the technological transformation will empower the primary and secondary industries and realize the transformation from an “industrial economy” to a “service-oriented economy”. Research Implications This study provides theoretical and empirical evidence for the formulation of targeted industrial development policies. It also holds that in the short term, the economy of Shandong may also be facing the risk of slowing down and steady economic growth, but with the completion of economic structural transformation, these pressures will disappear.