## Well-Designed Regulatory and Institutional Reforms Can Boost Economic Growth

_IMF Blog, August 25, 2026_

## Source details

**Canonical URL:** [Well-Designed Regulatory and Institutional Reforms Can Boost Economic Growth](https://www.imf.org/en/blogs/articles/2026/08/25/well-designed-regulatory-and-institutional-reforms-can-boost-economic-growth)

## Other formats

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## Bibliographic details
- Authors: Nicolas Fernandez-Arias, Marwa Ibrahim, Colombe Ladreit
- Published: August 25, 2026

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### Overview
- Publication: Nicolas Fernandez-Arias, Marwa Ibrahim, Colombe Ladreit; August 25, 2026.
- Context: Group of Twenty economies account for about 85 percent of global output.
- Outlook: Forecast annual growth for the G20 of just 3 percent in 2031, near the lowest since the global financial crisis.
- Central message: Poorly designed structural policies, excessive or mis-targeted regulations, and weak institutional frameworks are significant impediments to medium-term growth.

### Survey findings on impediments to growth
- IMF G20 country-team survey highlights three prevalent policy-related impediments:
  - business regulations and labor markets;
  - intrajurisdictional barriers;
  - investment barriers.
- Regulatory constraints by prevalence:
  - Around half of the G20’s advanced economies face constraints from excessive labor-market, product-market, or consumer protection regulations.
  - Three quarters of G20 emerging markets face constraints from excessive labor-market, product-market, or consumer protection regulations.
  - Some economies have too little regulation in these areas.
- Advanced-economy specific impediments noted:
  - inadequate policies to address demographic challenges, such as population aging;
  - restrictions on housing and land use.
- Emerging-market specific impediments noted:
  - underdeveloped capital markets;
  - weak public-investment management;
  - deficiencies in governance and institutions.
- European Union: differences in regulations, licensing, permitting, and financial markets create intrajurisdictional barriers preventing free movement of workers, capital, goods, and services across the bloc.

### Evidence on reform impacts and calibration
- News-based measures of major deregulatory reforms show association with a boost to investment and growth in several G20 advanced economies.
- Cross-country evidence: liberalizing labor-market reforms are associated with output gains only where existing regulations are relatively restrictive.
- Implication: the challenge is not simply to reduce regulation, but to get it right—careful calibration is essential.

### Trends and political economy constraints
- Market-friendly reforms (e.g., easing entry in regulated sectors) have become less frequent since the 1980s and 1990s.
- IMF country teams identified political economy factors as a key constraint in most G20 economies, including:
  - disagreements between stakeholder groups in an economy;
  - disagreements between different levels of government;
  - disagreements between different economies in a union.
- Required enablers to overcome political-economy constraints:
  - credible institutions;
  - clear communication and engagement with affected groups;
  - measures to mitigate adverse effects, such as retraining or reskilling programs or gradual implementation of reforms.

### Role of regulation and institutions for technological adoption
- Well-designed regulation is critical to capture productivity benefits from adopting new technologies while mitigating risks.
- The 2026 report highlights that more market-friendly telecommunications frameworks have supported:
  - investment in digital infrastructure;
  - broader internet diffusion;
  - foundations for the adoption of artificial intelligence.

### Policy recommendations and priorities
- Strengthen regulatory and institutional frameworks to minimize policy-related impediments and ensure benefits outweigh costs.
- Calibrate reforms to country-specific starting points—especially for labor-market liberalization where regulations are currently restrictive.
- Address institutional weaknesses that impede the efficiency and scale of public and private investment, including public financial management and governance.
- Use mitigation measures to manage distributional effects and political economy resistance (retraining, reskilling, gradual implementation).
- Maintain sound macroeconomic policies as the bedrock for growth while pursuing well-designed structural reforms.

*This blog is based on the 2026 G20 Report on Strong, Sustainable, Balanced, and Inclusive Growth, prepared by IMF staff.*

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## Content in this bundle

- **G20 Report on Strong Sustainable Balanced and Inclusive Growth**
  - [G20 Report on Strong Sustainable Balanced and Inclusive Growth (Markdown version)](/-/media/files/research/imf-and-g20/2026/g20-report-on-strong-sustainable-balanced-and-inclusive-growth.pdf.md){rel="alternate" type="text/markdown"}
  - [G20 Report on Strong Sustainable Balanced and Inclusive Growth (PDF)](/-/media/files/research/imf-and-g20/2026/g20-report-on-strong-sustainable-balanced-and-inclusive-growth.pdf){rel="external" type="application/pdf"}

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## References

- [get it right](https://www.imf.org/en/news/articles/2025/02/27/pr25048-imf-md-statement-conclusion-1st-mtg-g20-fin-ministers-central-bank-governors)
- [SSBIG dashboard](https://data.imf.org/en/dashboards/ssbig%20dashboard)

_Source: https://www.imf.org/en/blogs/articles/2026/08/25/well-designed-regulatory-and-institutional-reforms-can-boost-economic-growth_