Interactive Study Of Financial Development, Technological Progress And Industrial Upgrading

Since the reform and opening up, China has been in rapid development in economy, the process of economic growth is a process of industrial upgrading. With the rapid economic development, the financial development has also leapt to a new level. As the core of modern economy, financial development is not only vital for economic growth, but also closely linked with industrial upgrading. The relationship between finance and industry upgrading has been an important issue in economic research and a large number of theoretical analysis and practical studies show that there is a close link between financial development and industrial upgrading. On the one hand, financial development can provide financial support for industrial upgrading, on the other hand, financial development has an impact on technological advances and thus can promote industrial upgrading as technological progress is the intrinsic motivation of long-term economic growth and industrial upgrading. While the new structural economics confirms that structural optimization of the financial sector leads to technique progress, thus promoting industrial upgrading. There still exists controversy about the mechanisms and ways that financial development promoting the optimization and upgrading of industrial structure. China’s financial industry is in the transition stage, the rise of the internet finance especially challenges the future of the financial industry. In order to make full use of financial development to promote technological progress and thus promote industrial upgrading, it’s important to analyze the mechanism and influences of the financial development on industrial development, which has important theoretical and practical significance for our country in transformation stage. Amount of domestic scholars have done a lot of research between the two of financial development, technological progress and industrial upgrading, but there is lack of the intrinsic link among the three, it remains to be further studied.Based on previous studies on the interaction between financial development and industrial upgrading, technological progress and financial development, this paper regard financial development, technological progress and industrial upgrading as a system, uses traditional VAR model and panel data model to explore relations of financial development, technological progress and industrial upgrading, then divide all the provinces into three parts to further analyze. The empirical findings indicate that there exists long-term equilibrium between the three. Financial development and technological progress have active impact on industrial upgrading and there is interaction between financial development and technological progress. The main Economic development of different industrial upgrading the main factor on industrial upgrading differs in different regions.The results of theoretical analysis and empirical tests show that it’s important to strengthen the financial system in order to promote industrial upgrading in China. Improvement of China’s commercial banks, capital markets and venture capital system can also affect technology progress and further promote industrial upgrading. The implementation of policy measures should differentiate from East to west region.