Title page 1

Contents 1

Abstract 2

Non-technical summary 3

1. Introduction 4

2. Literature overview 6

3. Empirical approach 8

3.1. Data 8

3.2. Methodology 11

4. Results and interpretation 15

4.1. Baseline results 15

4.2. Preconditions for effective reforms 17

5. Robustness checks 24

6. Conclusion 26

References 28

A. Appendix 33

Acknowledgements 40

Figure 1. (Log) real investment in advanced economies 4

Figure 2. Major structural reforms by policy area 9

Figure 3. Major structural reforms by country and policy area 10

Figure 4. Impact of structural reforms on investment (baseline results) 16

Figure 5. The impact of product and labour market reforms on private investment depending on the rule of law 19

Figure 6. The impact of product and labour market reforms on private investment depending on private credit-to-GDP ratio 20

Figure 7. The impact of product and labour market reforms on private investment depending on stock market capitalisation-to-GDP ratio 21

Figure 8. The impact of product and labour market reforms on private investment depending on bank credit-to-deposit ratio 23

Figure 9. Robustness check: compositional effects in baseline specification 24

Figure 10. Impact of counter reforms on investment 25

Figure 11. Real total, private and public investment (constant local currency units, billions) and reform events by country 33

Figure 12. Overlap of propensity scores for treatment and control group 37

Figure 13. Distribution of the coefficients of unconditional ATEs of placebo labour market reforms for private investment 38

Figure 14. Distribution of the coefficients of unconditional ATEs of placebo product market reforms for private investment 39

Table 1. Descriptive statistics 34

Table 2. Balance test for differences in means of covariates between reform episodes and other observations 35

Table 3. Average marginal effects from probit models of product and labour market reforms 36

Table 4. Coefficient estimates (baseline): impact of product and labour market reforms on investment using the LP-AIPW method 37