The Grey Relative Analysis of impacts of urbanization — A case study on Shandong province in China

The factors impacting the process of urbanization are always the focus of advancing front of researching the problem of urbanization. This paper makes an empirical study on the process of urbanization in Shandong. We establish the an evaluation indices system. Utilizing the grey relational analysis to analyze the relations between urbanization and employment, construction, economic development, social development during 2000-2007 in Shandong province, using the Granger causality to test the relative analysis results according to the panel-data from 1993-2007 in Shandong. We demonstrate that the proportion of employment in tertiary industry and second industry has strong relations with the level of urbanization, and the city´s infrastructure construction and public services is relative with the level of urbanization secondly high too. Then using the granger test, we find that the tertiary and second industry have an interacting relations with urbanization both cause and effect, and the cointegration relation is existing between the proportion of employment in tertiary industry, and the level of urbanization to directly manifest that the long-run equilibrium exists between the tertiary industrial and urbanization. Thus, Shandong should adopt a more vigorous policy to release the restriction of urbanization further in order to fostering the development of tertiary industry and the employment from labors flowing to urban, simultaneously government should increase the construction of infrastructure and public service to meet the needs of labors flowing absorbed by the development of tertiary and second industry, especially from the tertiary industry. And simultaneously the huge flowing labors should foster the development of tertiary industry as an counteracting force. Through the empirical study, we insist the urbanization should be the powerfully key coupling points forcing the development of urban economy and the motivation pulling the domestic products demand.