The OECD said Japan and the large continental European economies could boost productivity significantly if they increased competition in product markets.
"Japan and much of continental Europe could increase productivity levels by between 2 and 6 per cent if they were to align their product market regulations with those in countries with the most competition-friendly environments," the OECD said in a study to appear in the final version of its semiannual Economic Outlook.
Greece and Portugal could increase productivity by 10 per cent or more by such measures, because they have relatively strict regulations in product markets, it said.
The OECD said increased competition improves productivity through a more efficient use of resources, but it can also boost real wages as prices are lowered through increased competition.
There is also a positive impact on employment, with reforms undertaken between the late 1970s and the late 1990s, such as the liberalisation of telecommunications industries, increasing employment rates in OECD countries by an average of 1.5 percentage points.
Employment rates rose by as much as 2.5 percentage points in economies where pro-competition policies were pursued most vigorously, it said.
AFP