Christian Noyer: Productivity, competitiveness and globalisation Speech by Mr Christian Noyer, Governor of the Bank of France, at the international symposium on “Productivity, competitiveness and globalisation”, Paris, 4 November 2005. *  *  *  Ladies and Gentlemen, It is my great pleasure to open this symposium, which brings together central bankers and representatives of international institutions, prominent academics and high-ranking managers of private banks from both mature and emerging economies to discuss a subject that is of interest and concern to all. A large body of theoretical and empirical literature has been devoted to the issues of productivity, competitiveness and globalisation in response to major macroeconomic and financial changes. The following changes, in particular, may be cited: the end of the catch-up with US productivity levels by the other industrialised countries, the emergence of new players in the international division of labour and world trade and, lastly, the considerable increase in capital flows. The Banque de France has taken part in the research on these subjects through its work on productivity and offshoring. This rich body of work may now be summarised and the speakers at this symposium will contribute to this in the course of three sessions and a round table. The first session, chaired by Jean-Claude Trichet, President of the European Central Bank, will focus on developments in productivity and competitiveness and aim to present the main concepts and stylised facts in these areas.
The new international division of labour thus affects every stage of the production process; it influences the localisation of added value and raises the question of the financing of the external imbalances of economies that focus on the design and marketing of products rather than their manufacture. The second session will deal with the impact of trends in productivity and competitiveness on international capital allocation and global imbalances. These trends may have contributed to the increase in global imbalances reflected in current account balances, and highlight several paradoxes. The first paradox is that of the US economy, which combines the structural surge in its productivity with a possible loss in competitiveness illustrated by the increase in its external deficit. This paradox is perhaps only apparent if we consider that the improvement in the US’ relative productivity performance is mainly in the non-tradable sector and as compared to the industrialised rather than the emerging economies. In addition, while this pick-up in productivity does boost the profitability of investments, logically, it goes hand in hand with an excess of investment over national savings that calls for increasing foreign capital inflows. However, the predominant nature of capital inflows to the United States changed at the start of the 2000s, switching from mainly purchases of equities and foreign direct investment by the private sector to purchases of government securities by central banks, which are not motivated by the search for increased profitability. This leads us to the second paradox, a twin to the first, i.e.