Reform also enhanced investment. Inward investment in Japan grew fastest in deregulated sectors such as distribution, financial services, and telecommunications. A supportive effect of regulatory reform is to expand the scope for trade. In Japan, regulatory reform reduced trade tensions due to possible regulatory barriers, and improved the trading environment. Addressing a lack of flexibility and innovation in the supply-side of the economy , thereby reducing national vulnerability to economic shocks .
Rigidities are an increasing constraint to growth.
An extraordinary surge in innovation and faster introduction of new technologies, services, and business practices multiplied benefits for consumers and produced new high-growth industries. Direct and indirect effects of sectoral reform helped increase flexibility in the labour market and elsewhere. These effects allowed the US economy to adapt more quickly to changes in technology and to external shocks, improved the trade-offs between inflation, growth, and unemployment, and boosted the US lead in productivity. Helping to increase employment rates by creating new job opportunities , and by doing so reducing fiscal demands on social security, particularly important in aging populations. Broad programs to increase competition create jobs, though heavy costs may be borne by workers who face job losses.