Final answer:
To improve the economy, governments can reduce mandated wages to decrease taxes, encourage foreign investment, and stimulate domestic savings. Reforming business regulations and offering retraining for the structurally unemployed can also help. Investment in human and physical capital, technology, and supportive market policies are vital for sustained economic growth.
Step-by-step explanation:
To help the economy strive to be better, governments can adopt several measures. Reducing government-mandated wages to lower government spending and thus, decrease tax rates can enhance firms' ability to hire more workers, which can reduce unemployment and stimulate economic growth. Additionally, encouraging more foreign investment and promoting policies that boost domestic savings are crucial steps.
Reforming business rules to encourage companies to take on new employees and establishing institutions that facilitate the flow of information about jobs can improve the efficiency of labor markets. For those facing structural unemployment, implementing retraining programs is essential to help them reenter the workforce with relevant skills. Increasing investment in human capital, physical capital, and technological advancements are also key strategies to foster economic development.
Moreover, addressing labor shortages through policies like encouraging immigration or fostering higher birth rates can be part of the equation. Governments should aim to create a market-oriented economy with supportive policies that contribute to GDP per capita and labor productivity growth.