Speaking of raising labor productivity, firms will be more strongly motivated to do so through creating a competitive environment by abolishing competition-restricting regulations, including those on market entry and on prices, than through support policies such as the provision of subsidies for firms.
If the government promotes its initiatives toward enhancing competition, such as abolishment of the so-called bedrock regulations, many firms are expected to enter the market. In such situation, if more firms take advantage of accommodative financial conditions, capital investment will be reinforced and technological innovation will progress, leading the potential growth rate to rise and monetary easing effects to become larger.