[7]  According to European Commission estimates, the average annual contribution from TFP to growth in potential output was 0.6 p.p in the euro area and 0.9 p.p in the US between 2001 and 2015. The equivalent figures for capital accumulation are 0.5 and 0.8 p.p., while labour contributed by 0.2 p.p. in both cases. [8]  For a similar argument made in a different context, see: Krugman, P. (1994), “The Myth of Asia’s Miracle”, Foreign Affairs, 73:6. [9]  See Cœuré, B. (2014b), “Credit and Investment in the European Recovery”, speech at the IMF/Banka Slovenije high-level seminar on “Reinvigorating Credit Growth in Central, Eastern and Southern European Economies”, Portoroz, 26 September. [10]  See Hege et al. (2009), “Venture Capital Performance: The Disparity Between Europe and the United States”, The paper provides evidence for the existence of a gap between the value generated by US venture capital investments and European investments that is statistically significant and very large in economic terms. [11]  See ECB (2016): “Financial Integration in Europe”, https://www.ecb.europa.eu/pub/pdf/other/ financialintegrationineurope201604.en.pdf. [12]  See, for instance, Pellegrino and Zingales (2014), “Diagnosing the Italian Disease”, available at http://www.haas.berkeley.edu/groups/finance/Diagnosing.pdf. The paper says that the slowdown in Italy’s labour productivity is also associated with its failure to take full advantage of the ICT revolution. [13]  See Jones, B.F (2005): “Age and Great Invention”, NBER Working Paper No. 11359. [14]  See European Commission (2015), 2015 Ageing Report.
Moreover, many product and service sectors are represented by powerful lobby groups with vested interests that sometimes conflict with the interests of consumers and society as a whole. The Greek programme is one example; the authorities there faced strong resistance from pressure groups[25]. I have absolutely no doubt that one  BIS central bankers’ speeches  3  would meet similar obstacles when reforming, say, the German or French product and service markets. In fact, both these countries have been opposed to wider service sector reform at European level. And Germany is one of the countries that has realised the smallest share of potential benefits from the Services Directive according to the European Commission[26]. Strengthening the single market and governance If we view the euro area as a single economy and not as the sum of its 19 national members, we must have a common growth strategy based on identifying our structural weaknesses. The key words must in my view be “productivity” and “employment”, which are positive-sum games – not “competitiveness”, which could end up as a zero-sum game. The Member States will not lend much support to euro area growth by merely competing for their neighbours’ market shares. We have to act together to raise productivity and employment. Improving the functioning of the service market in the euro area is therefore important not only because of its large share of overall gross value added, 65% on average in the euro area, but also because 75% of the total labour force is employed in this sector.