among the most prominent causes are those structural features of the european economies that are undermining investment incentives and impeding the efficient allocation of resources. there is, for example, some empirical evidence of a negative correlation between anti - competitive regulation and the contribution made to productivity growth by services using ict. 7 the impact of structural features determining the “ viscosity ” of economies may of course change over time. in my view, rapid technological changes and the globalisation of economies, both of which require the restructuring of economies, have made the remaining rigidities and the “ viscosity ” of european economies more costly in terms of productivity and growth performance over the past decade. in this respect, i would agree with the findings of the paper on market structures and productivity presented at this conference by mr scarpetta and mr nicoletti. the demographic trend combines population growth, which was 0. 4 % on average for the euro area and 1. 0 % for the united states, as well as changes in the age structure, defined as the working age population as a share of the total population, which remained constant in the euro area while increasing by 0. 2 % on average in the united states. electrical machinery, post and communication services. source : eu klems. note that these figures are calculated as averages of the growth rates observed over the period in question. see, for example, a. alesina, s. ardagna, g. nicoletti and f. schiantarelli ( 2005 ), “ regulation and investment ”, journal of the european economic association 3, pp. 791 - 825, in which the authors find that regulatory reforms have had a significant positive impact on capital accumulation in the transport, communication and utilities sectors, especially in the long run. in g. nicoletti and s. scarpetta ( 2003 ), “ regulation, productivity and growth ”, economic policy, april, the authors find that various anti - competitive product market regulations significantly reduce total factor productivity growth at the industry level. in their contribution to this conference, j. albert, g. nicoletti and s. scarpetta provide a broad survey of the relevant literature and some additional evidence. on the basis of this diagnosis, the best contribution that macroeconomic policy can make to long - term growth is to provide an environment conducive to employment, investment and increases in our economies ’ capacity to adjust in response to technological and economic change. i should like to highlight two

increases in participation rates and employment. and this appears even more urgent if we consider that, over the same period, europe ’ s growth performance has been constrained by its low rate of population growth and the ageing of its society. as regards demographic trends, the working age population of the euro area grew by an average of 0. 4 % per year over the period 1996 - 2006, compared with 1. 3 % in the united european commission – ameco database. european commission – ameco database. eurostat. states. 4 these demographic trends therefore account for 0. 9 percentage point of the euro area - us growth differential, “ in favour ” of the us. taken together, labour utilisation and demographic trends can explain 0. 5 percentage point of the difference between the growth rates of the united states and the euro area, “ in favour ” of the us. on the basis of a 1. 1 percentage point difference in annual average growth between the us and the euro area over the period 1996 - 2006, the remaining differential of 0. 6 % for real gdp growth indeed stems from annual average labour productivity growth of 1. 3 % in the euro area and 1. 9 % in the united states. it is true that the positive labour supply shock over the past decade might have contributed to the disappointing productivity growth seen in the euro area. however, standard growth accounting analyses show that developments in labour supply are only part of the story. the slowdown in labour productivity growth can be attributed to a large extent to a marked deceleration in total factor productivity. those countries that have tended to compensate for the positive labour supply shock by increasing investment growth and / or exploiting the potential efficiency gains offered by new technology in particular have enjoyed stronger labour productivity growth. for instance, over the period 1996 - 2005 the direct contribution of ict to labour productivity growth, as measured by the contribution of ict capital services, has in the united states been roughly double that observed in the euro area ( 0. 63 percentage point in the united states, compared with 0. 37 percentage point in the euro area ). similarly, hourly labour productivity growth in ict manufacturing and service sectors 5 grew by an average of 12. 6 % and 6. 5 % in the united states and the euro area respectively over that period. 6 there could, of course, be many reasons for this decline in total factor productivity growth rates, and this conference has been useful in shedding light on some explanatory factors.