Cold Air Intake: Replace the restrictive factory air intake system with a cold air intake.
Exhaust
1. Header & Exhaust System: Replace the stock exhaust system with a performance exhaust system, that allows for improved flow. Additionally, consider installing a header to help exhaust gasses flow more efficiently out of the engine.
Fuel:
1. Fuel injector upgrade: Consider upgrading the factory fuel injectors to a set that can provide increased flow.
Electronic Adjustments
1. ECU Tuning: With the help of a tuner or a DIY approach, you can adjust the engine's air-fuel ratio and ignition timing for improved power and efficiency.
Mechanical Improvements
Cylinder head work: This is where the real horsepower can be found in the MK2. There are a number of reputable companies that manufacture cylinder heads for the MK2. These heads typically have larger valves, improved ports, and a higher compression ratio.
Camshaft upgrade: Another effective way to increase airflow into and out of the engine is to install a more aggressive camshaft. Camshafts are responsible for controlling the opening and closing of the valves, and a more aggressive camshaft will allow for more airflow at higher RPMs.
Bottom end work: If you are really serious about building a performance MK2, you will eventually want to consider upgrading the bottom end of the engine. This includes the pistons, connecting rods, and crankshaft. These upgrades are typically not necessary for street cars, but they can be beneficial if you plan on racing your MK2.