As the empirical evidence demonstrates, structural reform can lead to improved productivity performance and broad-based macroeconomic benefits.7 This strengthens the domestic sources of growth, thus making the economy less vulnerable to external developments, while increasing the potential to compete in international markets and the attractiveness of the economy to foreign investment flows.
In addition, aggregate demand may be effectively stimulated by structural reform measures, not only directly, but also through, for instance, the higher efficiency with which other countercyclical policy measures operate owing to reform-enhanced transmission mechanisms.