5.4.3—Supply-side policy tools

Supply-side tools include education and training, infrastructure, research support, competition policy, tax and benefit reform, immigration rules and measures affecting business costs.

Match the tool to the bottleneck: training addresses skills, infrastructure addresses networks, competition policy addresses market power, and tax or benefit design changes incentives. Each tool has costs and distributional trade-offs.

A faster port may raise productivity for exporters; a tax credit for research may increase innovation only if firms have the capability and the incentive to use it.

Listing a policy is not explaining its effect. State the intermediate mechanism and the condition that must hold for productive capacity to rise.