This would lower production costs and improve competitiveness. •  Second, the size of the government sector should be reduced to facilitate a shift in production from non-tradables to tradables, allowing a competitive export sector to flourish.
According to an overview published by the European Commission5, there have so far only been modest changes in the pattern of industrial concentration and geographical specialisation within the euro area. While production specialisation has gradually increased since the 1970s, export specialisation appears to have decreased, which could be partly explained by the increased importance of intra-industry trade.