Using the panel regression model and the growth data of 169 countries in the world, we empirically verify how the industrial structural transformation affects TFP. The conclusions of this paper are as follows. Industrial structural transformation is essential to increase TFP, and the effects present an inverted U-type curve, namely the facilitating effect on the left side of the curve and the inhibiting effect on the right side. What causes this result is the industrial structural transformation, which accelerates the softening process of industrial structure with the increase of knowledge production and consumption in the economy, and drives intensive economic growth with the promotion of TFP. However, if the industrial structure is transforming so much as to hollowing out, then the TFP will be inhibited by the industrial capital running off overseas and financial institutions being distracted from their intended purpose. Examining Chinese industrial structural transformation since reform and opening up, we find it shows the same trend with TFP. Therefore, we can infer that Chinese industrial structural transformation is still on the left side of the U-type curve, and thus at present, promoting the structural transformation will increase TFP and drive high quality development. In pursuing high-quality development at the current stage, China should reduce its growth rate expectations, pay more attention to supply-side structural reforms, and promote the increase of total factor productivity by accelerating structural transformation.
