growth and reducing poverty rates. modern economic analysis has confirmed much of what adam smith inferred from a far less impressive set of data. today's economists generally point to three important characteristics influencing growth : ( 1 ) the extent of a country's openness to trade and its integration with the rest of the world, ( 2 ) the quality of a country's institutional infrastructure, and ( 3 ) the success of its policymakers in implementing the measures necessary for macroeconomic stability. by openness and integration we generally mean the ability for goods and services, capital, and more broadly, the flow of information, people, technology, and ideas to move across the borders of a country. this freedom of movement may enhance growth by intensifying competitive pressures, increasing specialization, and allowing access to larger markets. free trade allows the more efficient use of resources which, in turn, raises both the productivity of the domestic workforce and the level of national income. adam smith cited comparative advantage. he observed : if a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage. one recent study of the effects of openness on growth demonstrated that when countries are divided into two groups - - those with generally open economies and those with generally closed economies - open economies have experienced average growth that is 2 ½ percentage points higher than the growth of closed economies. furthermore, when developing economies are ranked according to their historical record of openness, economies such as hong kong, malaysia, singapore, and thailand are near the top of the list. these asian economies are some of the same ones that participated in the region's so - called growth miracle. for another example of a country that has benefited from free trade, we need look no further than mexico - - our host today. during the early 1980s, mexico's non - oil merchandise exports were running a bit below $ 10 billion a year, or about 5 percent of its gross domestic product. by 2001, however, mexico's exports of such goods had soared to more than $ 145 billion, or nearly 24 percent of gdp. the strength of exports has contributed importantly to the ongoing transformation of mexico's economy. a good portion of this export growth has occurred in the context of the north american free trade agreement, but the most important effects of nafta may be the increased openness of mexico '

many households thus appreciated by a good deal more than their earned income after tax. fortunately, the households have generally managed the rising property values prudently. the increased housing wealth can probably only explain " additional consumption " of kr. 7 - 8 billion. instead, the price increases have increased net worth. 2005 saw an increase in net worth – even when housing wealth is excluded. substantial borrowing, e. g. from mortgage - credit institutes, was the order of the day, but to a great extent the loans were used to acquire financial claims, including for pension saving purposes. the households have quickly adopted the new loan types. all in all, the use of the new loan types gives no grounds for concern. an interest - rate increase by 1 percentage point for adjustable - rate loans would on average lead to an increase in the households'interest expenditure on mortgage - credit loans by 1. 2 per cent of gross income. this corresponds to an annual increase of kr. 6, 000 before tax for a household income of kr. 500, 000. there will always be some exposed groups, who will have bitten off more than they can chew. but the extent of this does not by a long way pose a threat to financial stability. however, in the present situation there is every reason to think carefully about ones personal finances, to avoid ending up in the exposed category. history has proven the danish mortgage - credit system to be a good system that has facilitated considerable product development. the annual meeting of the association of danish mortgage banks is a good occasion for listing some of the qualities of the danish system. thanks to the legal framework, including loan limits and the balance principle, it is a very safe system. this plays an important role for the rating agencies. the system has also created a large and liquid bond market. a particularly important aspect is that the system offers individuals access to highly transparent home financing based on the market yield for the issued bonds plus administration fees. there is no doubt that new home - financing products will continue to be developed. the coming year will probably see some innovation in the bond area. denmark will have to adapt its legal framework to gilt - edged or covered bonds. the special collateral requirements could make covered bonds particularly attractive to investors and could thus also benefit borrowers. initially it will be easier for the banks to accommodate the special collateral requirements under eu legislation, while it will be considerably more difficult for the mortgage - credit institutes, unless they reduce the loan limits.