Emerging market economies now make up a much larger share of global trade, the global economy, and global growth. As an illustration, emerging market economies have accounted for 70 percent of global economic growth since the crisis—double their share from two decades ago.3 This growth has provided much-needed support to world economic activity, as advanced economies have recovered slowly from the crisis. Rising economic integration is also evident when we examine the trade relationship between Brazil and the United States. Bilateral trade flows in goods have risen from $ billion in 1994 to nearly $ billion in 2016. The United States is Brazil’s second-largest export market, and an important destination for manufactured goods. In 2016, the stock of U.S. direct investment in Brazil was $ billion, up from $ billion in 1994.4 Recent initiatives announced by the Brazilian authorities—including a large and transparent infrastructure concession program and greater foreign participation in the oil and gas and aviation industries—underscore the potential for further increases in foreign direct investment. The Benefits of Open Trade Increased trade, through its longer-term impact on productivity, has been a key contributor to global growth and prosperity since the Second World War. Openness to trade brings many benefits to the supply side of the economy, including: larger markets, greater specialization opportunities, and the increased ability to exploit economies of scale and scope; faster transmission of technology and innovation; and greater competitive pressure on domestic firms to increase their productivity.

However, the further integration of national capital markets towards a truly European financial market would be an important step towards safeguarding markets against country-specific shocks. Finally, greater efforts must be made to remove existing barriers in product markets. Since the early 1990s state enterprises have undergone extensive privatisation, the use of state aid has fallen and market entry barriers have been lowered, although not evenly across all countries or sectors. In addition, there are still significant barriers to the further removal of price pressures, and these will need to be phased out. EU Neighbouring Regions The ten countries that are about to join the European Union have made considerable economic progress in recent years in terms of macroeconomic stabilisation and structural reforms. As a group and individually, these countries have achieved significant and sustained improvements in their economic fundamentals. In this regard, the perspective of EU accession has been an important anchor for policies. However, the process of catching-up in real incomes has been significantly slower than expected at the start of transition, and today, as they prepare to join the EU, there is still a significant GDP per capita gap with the current Member States. Improving the growth performance of acceding  2  BIS Review 39/2003  countries remains an issue of vital importance. While EU membership itself and the lagged effects of earlier reforms should foster the catching-up process, sustained policy action is needed to further improve the growth environment in the acceding countries.