Petroleum investment,  3  Svensson, L.E.O. (2005): “Further developments of inflation targeting”. Memo to Sveriges Riksbank’s conference: “Inflation targeting: implementation, communication and effectiveness”10 – 12. June 2005. 4  BIS Review 80/2006  favourable prices in important export markets and a strong upturn in the world economy have also contributed to solid growth in the Norwegian economy. So far in the cyclical upturn, the mainland economy has grown by an average of close to 4 per cent annually. Although the underlying rise in consumer prices has picked up from its trough two years ago, it remains moderate and well below the inflation target, even three years into this cyclical upturn. The global economy is now in the strongest upturn since the early 1970s. Developments are particularly favourable in Asia, and the situation in a number of countries in Europe appears to be improving. Growth in the US has been high for a long period, but has declined somewhat so far this year. There are prospects that a weaker US housing market may lead to increased household saving and lower consumer demand. The effect of these developments on the global economy will depend on the scale and timing of the correction. International equity markets have stabilised following a turbulent period in May and have edged up through the summer. Norges Bank’s assessment is that global growth will abate somewhat from 2006 to 2007, but will remain solid. However, many observers have pointed out that the risk of weaker developments may have increased somewhat recently.

4  See Hélène Rey, 2013, “Dilemma not trilemma: The global financial cycle and monetary policy independence”, paper presented at the Jackson Hole Economic Policy Symposium. Incidentally, Hélène Rey was the 2006 Germán Bernácer Prize winner. 5  For more details on the construction of the measure see Scott Baker, Nicholas Bloom and Steven J. Davis, 2012, “Measuring economic policy uncertainty”, working paper, Stanford University. 2  BIS central bankers’ speeches  account for a significant proportion (10–30%) of the differences in productivity between firms and between countries.6 Their research did not stop at documenting the impact of the differences in management practices. They also offered suggestions for policy interventions that could encourage the uptake of good management behaviour. Competitive and flexible markets enable managers to re-optimise resources within and outside the firm more easily. Educational standards matter as well. Better-managed firms have better educated workers and they use them more efficiently. Moreover, better educated managers have necessary skills to adopt state-of-theart management practices and adapt to changing environment. This enables them to maintain and improve their global competitive position. Multinational companies also have a strong positive effect, as they transplant their management styles to the countries in which they operate.7 These research-based conclusions highlight a key role of structural reforms in the wake of the global economic crisis. Countries with more competitive market conditions, better education and more investment in R&D and innovation policies can maximise the beneficial impact of managerial capital on productivity and growth.