What should be done to raise medium- to long-term growth potential? In short, it is critical to promote initiatives that address the aforementioned factors affecting the potential growth rate.
Namely, it is essential to (1) encourage forward-looking investment by firms and increase the capital stock, (2) enhance labor supply capacity by raising the labor participation of women and the elderly as well as utilizing high-skilled foreigners, and (3) raise productivity through regulatory and institutional reforms.