6 / 16  BIS central bankers' speeches  Global value chains as a source of TFP growth in the future In sum, therefore, this diagnosis highlights two key facts: CESEE economies have a lack of capital, and a strong reliance on global production processes. The easy answer, of course, is to brush away weakness in FDI inflows as a temporary phenomenon.
After all, if the law of declining marginal returns on capital continues to hold, we should still expect capital to flow into catching-up economies, rebooting TFP growth. I would be somewhat more cautious, however. It is true that weakness in trade and investment, worldwide, has been part of the collateral damage from the crisis. As we leave this legacy behind, headwinds should fade too.