First, ULC growth differences may reflect the effects of catching-up processes, especially in countries such as Ireland, Portugal and Greece where the so-called Balassa-Samuelson effect 4 could have  3  It should be added that productivity figures in some countries, especially for Italy, may be subject to “measurement distortions” resulting, for example, from changes in employment following the registration of immigrant workers.
As that boom progressed, investors in many industrial countries found themselves more heavily concentrated in the recently higher valued securities of companies in the developed world, whose rates of return, in many instances, had fallen to levels perceived as uncompetitive with the earnings potential in emerging economies, especially in Asia. The resultant diversification induced a sharp increase in capital flows into those economies.