Open up regulated professions – pharmacies, notaries, and taxicabs, for example – and inefficient suppliers will be driven out by more productive firms.
Privatize state enterprises, and the new management will rationalize production (and shed all the excess workers who owe their jobs to political patronage).
These changes do not directly induce economic growth, but they increase the economy’s potential – or long-run – income. Growth itself occurs as the economy begins to converge to this higher level of long-run income.
Many academic studies have found that the rate of convergence tends to be about 2% per year. That is, each year, an economy tends to close 2% of the gap between its actual and potential income levels. more> http://tinyurl.com/oky64a8