Foundations for Growth and Competitiveness

Sustained growth depends on strong enabling conditions that allow businesses and individuals to thrive. These foundations – that include macroeconomic and financial stability, effective governance, high-quality infrastructure, and strong human capital – shape the environment in which economic activity occurs. Without progress in these areas, the benefits of other reforms, such as those influencing market incentives or specific sectors, are likely to remain limited. As a consequence, strengthening these fundamentals is essential to support long-term prosperity and competitiveness.

Economic growth depends on a stable macroeconomic environment that provides a predictable climate for households and firms. When macroeconomic conditions are unstable, businesses tend to delay investment and hiring decisions, households cut back on spending, and capital can quickly flow elsewhere. 

Well-functioning financial markets channel credit to productive activities, while helping contain excessive credit growth that can lead to financial instability and economic volatility.

By supporting productive activities, including investment, innovation, and firm growth, financial institutions play a central role in fostering economic growth and competitiveness.

A strong rule of law provides a predictable and transparent framework in which individuals and businesses can operate with confidence. By ensuring that laws are applied fairly, contracts are enforced, and property rights are protected, a strong rule‑of‑law supports investment, competition, and long‑term economic growth.

Public integrity is central to maintaining trust in government and ensuring that public policies serve the common good. Transparent decision‑making, effective accountability and oversight, safeguards against conflicts of interest, and evidence‑based policymaking all help strengthen confidence in public institutions and support more effective, sustainable policy outcomes and growth.

Embedding digital tools, data, and user‑centred approaches into policy design and service delivery strengthens the effectiveness and responsiveness of the public sector. By using data strategically, designing services digitally from the outset, and enabling collaboration across government, digital government can improve efficiency, transparency, and policy outcomes. More proactive and platform‑based approaches also help governments better anticipate citizens’ needs and deliver more seamless public services. These improvements not only make governments more accessible and responsive but also create a more dynamic and business-friendly environment that fosters growth and competitiveness.

Evaluating regulatory quality ensures that laws and regulations effectively achieve their objectives. Systematic assessment of regulations before adoption, combined with regular ex‑post evaluation, helps governments identify unintended effects, reduce unnecessary burdens, and adapt regulations over time, ensuring that regulatory frameworks remain fit for purpose and responsive to changing economic and social needs.

Effective stakeholder engagement helps improve the quality and legitimacy of laws and regulations by ensuring that diverse perspectives are considered throughout the regulatory process. Early and meaningful consultation can identify potential impacts, reduce unintended consequences, and support better‑designed regulations that are more effective, transparent, and easier to implement.

Robust regulatory frameworks are vital to ensure that public infrastructure projects are well-planned, transparent, and efficiently delivered. Clear and predictable permitting procedures, accountable and independent regulators, and effective public procurement processes help attract investment and improve infrastructure quality, while strong governance and long‑term planning help align infrastructure investment with fiscal sustainability and broader development objectives.

Safeguarding public integrity in infrastructure decision-making is essential to maintaining trust in government and ensuring an efficient use of public resources. Large-scale projects, often involving complex public-private partnerships and procurement processes, carry heightened risks of corruption and conflicts of interest. Strong oversight mechanisms, internal controls, and auditing procedures help prevent integrity breaches at every stage of the infrastructure life cycle, ensuring that public investment translates into genuine productivity and growth gains.

The availability and accessibility of physical infrastructure underpin a country’s productive capacity. Indicators such as the density of roads and rail lines and access to electricity or public transport provide insight into the reach and efficiency of national infrastructure networks. While these measures do not fully capture quality or depreciation, they remain key to assessing the adequacy of physical capital needed to support economic activity, mobility, and long-term development.

Effective transport regulation supports economic growth and connectivity by promoting competition, efficiency, and quality of service across air, rail, and road transport. Well‑designed rules help lower barriers to entry, encourage investment and innovation, and ensure that transport services are provided on fair and transparent terms. By improving market functioning and reducing unnecessary regulatory burdens, sound transport regulation enhances mobility, lowers costs for firms and households, and strengthens overall productivity.

Building environmentally-sustainable and climate-resilient infrastructure is critical to safeguarding long-term economic growth. Integrating sustainability into infrastructure planning and investment helps reduce environmental risks, limit carbon emissions, and enhance resilience to climate impacts. Well-designed frameworks ensure that infrastructure systems remain reliable and efficient even under changing climatic conditions, protecting both economic stability and the well-being of communities.

Digital infrastructure is a key enabler of modern economic activity. Reliable and affordable digital networks support innovation, business development, and the delivery of public services, while improving connectivity between firms, citizens, and governments. Ensuring broad and equitable access to digital infrastructure helps reduce regional disparities, accelerates digital adoption, and underpins growth and competitiveness in increasingly technology-driven economies.

Well-designed ICT policies boost productivity and competitiveness by supporting the adoption and effective use of digital technologies. By fostering an environment supportive of digital tools, these policies help firms – especially smaller ones – leverage tools like artificial intelligence and cloud computing to improve efficiency, stimulate innovation, and contribute to broader economic growth. 

Effective regulation of electronic communications markets supports competition, innovation, and investment in digital infrastructure. Well‑designed rules for fixed and mobile communications help lower barriers to entry, promote efficient market outcomes, and encourage the rollout of high‑quality, affordable services. By strengthening connectivity and reducing costs for firms and households, sound e‑communications regulation supports digitalisation, productivity growth, and broader economic competitiveness.

Educational attainment supports productivity growth by strengthening skills, fostering employment and innovation, and enabling firms to adopt and diffuse new technologies. Investing in education helps ensure that the labour force is fully utilised in support of long‑term growth.

Student performance in areas such as mathematics, reading, and science, provides information on the quality of learning outcomes and, together with educational attainment, is another strong predictor of long-run productivity. 

Adult competencies, including over literacy, numeracy, and problem‑solving abilities, reflect the effective skills of the workforce that underpin the use of technology and adaptation to change. Strong competencies support productivity growth by improving work processes, enabling more efficient allocation of labour across firms and sectors, and raising returns to investment in advanced technologies, while also strengthening employment outcomes.

Digital skills determine how effectively workers and firms can use ICT and adapt to technological change. Strong digital skills support productivity growth by enabling faster adoption of digital tools, more efficient processes, and better data‑driven decision‑making. They also help ensure that investment in digital technologies translates into real productivity gains, while supporting employment by easing transitions into more technology‑intensive activities.

Continuing education and lifelong learning support productivity growth by enabling workers to adapt their skills to technological change and evolving labour‑market needs. By strengthening workforce adaptability and supporting the effective use of new technologies, lifelong learning helps sustain employment, reduce skills mismatches and contribute to long-term growth.

Early childhood education supports long‑term economic growth by building the cognitive and socio‑emotional foundations that underpin skills development throughout the life course. By strengthening human capital and future workforce adaptability, it raises growth potential while also supporting parental labour‑force participation, particularly among women. Affordable provision and adequate staffing are essential to ensure high enrolment and the quality of early learning needed to deliver these long‑term benefits.