Over the past twenty years, world trade has increased twice as fast as GDP growth, direct investment has increased three times as much and both foreign exchange and equity trading have increased approximately ten times faster than GDP. There are several explanations for this, including the deregulation of the financial markets during the 1980s. Another contributory factor is that China and India are participating to an increasing degree in the global economy. China is currently the world’s fourth largest trading nation, and its share of global trading has increased from 1.5 to almost 5 per cent since the beginning of the 1990s. At the same time, private consumption in China has increased from a few per cent of US consumption to the equivalent of more than one tenth. What can explain the inflation rate slowing down? Over the past year, lower import prices and higher productivity than expected have contributed to the Riksbank revising down the forecasts for future inflation, particularly in recent months. It was concluded in the Inflation Report published a couple of weeks ago that the unexpectedly low rate of increase in imported inflation (adjusted for oil prices) was partly due to lower international price pressure. Strong productivity growth has also contributed. There appear to be a number of structural changes behind the increase in productivity, which are at least partly connected with globalisation. If one disregards the temporary increases in inflation caused by high prices for energy, for instance, one can observe a gradual decline in inflation over the past decade.

In practice, it can be difficult to reconcile the numerous national laws regulating the services sector with the ambition of creating free competition. Nevertheless, whatever happens, many of the new jobs created in the future will be in the services sector, in both the private and public sectors. Final remarks - some political reflections Globalisation has not merely liberated production capacity; it also limits the national state’s influence over the terms for production and employment. There are two possibilities available to compensate this loss: One is to increase the power of attraction in relation to capital and competence on the international markets, which can lead to new businesses being established in, or moved to, Sweden and thereby to new jobs and increased growth. Attractiveness can refer, for instance, to stable rules for economic policy and entrepreneurship, well-educated labour and spearhead competence, good quality of life, access to risk capital, good infrastructure, internationally pioneering technology and research environments as well as efficient incentive and taxation systems. The other possibility is an international political cooperation to balance market forces. This entails, among other things, creating the conditions for taking responsibility for the environment, fairer distribution of income policy and investments in infrastructure, research and development. For Sweden, the EU is the arena closest to hand for cooperation between countries in ensuring that the long-term perspective, social conditions and the best interests of society are taken into account in economic developments. 6  BIS Review 21/2004