The productivity challenge  In recent decades the increase in total factor productivity (TFP), which measures the efficiency with which productive factors are used, has been notably meagre in Spain. Indeed, TFP posted negative growth rates for much of the 2000s. In Spain, it has averaged growth over the past 20 years of approximately 0.2%, 0.2 pp less than the euro area average, according to European Commission estimates. 10/18  Such poor productivity has a cost in terms of wealth. A simple calculation helps illustrate the fact that, if Spanish TFP had performed like that of the euro area, income per employee would today in Spain be almost 90% of the euro area average, as opposed to its current level of 83%. The latest economic literature stresses the role of business dynamism in productivity. Specifically, innovative business start-ups and the destruction of relatively unproductive firms are at the root of productivity gains. On Eurostat data, the pattern of business start-ups in Spain prior to the crisis was relatively similar to other advanced economies, and the destruction of firms somewhat lower. Yet during the crisis the rate of business start-ups underwent a sharper fall than that observed in other economies, while destruction increased, being concentrated moreover in the least productive companies. Since 2013 the business sector has proven somewhat more dynamic.
They also depend upon other key players like the Ministry of Finance and they depend upon the efficient working of the financial markets. Other preconditions for Inflation Targeting can partly be met by the Bank of Albania. The full implementation of Inflation Targeting can therefore take place ONLY conditionally. One can compare this situation with the tailoring of a suit for a special occasion. Let me make this comparison. One can find a good tailor and ask him to make a suit for a special occasion. All measures can be taken, such as the length of the arms and the length of the legs. The suitable materials can be found. One needs the appropriate fabric, in the appropriate color. Upon all these preconditions of (1) the good tailor (2) the precise measures (3) suitable materials, the tailor can start the tailoring of the suit. But, there is still no guarantee that the suit will fit you perfect. Or, it may happen that you look appealing in the tailor-shop, but not at the day of the special occasion. For instance, the temperature may have fallen so that you need an additional coat, or even a different fabric. Or, the environment of the special occasion may make you look overdressed. You tried to make it perfect, but the environment is lagging behind. Factors that you could not influence yourself can make you look different from how you had wished to look with the new suit.