Urbanization and industrial structure are two economic development systems that affect and promote each other. The former's rapid development will contribute to continuous adjustment of the latter and the latter's upgrading and optimization will stimulate the former uninterruptedly. Firstly, the characteristics of urbanization and industrial structure evolution from 1978 to 2009 in Shandong are analyzed in the paper, showing that the urbanization process and industrial structure evolution

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... se to each other sequentially. Next, from the perspective of empirical test, the long-term mechanism involving urbanization, industrialization and tertiary industry development, as well as causal relation between the three factors are investigated by the method of cointegration analysis and error correction model. The empirical results indicate that the tertiary industry stimulates urbanization better than the second industry and long-term stationary equilibrium relationship between the three factors exists. Finally, the Granger causality test reveals that urbanization plays an important role in the development of secondary industry, but the hypothesis that the evolution of industrial structure stimulates the urbanization is not been supported.