. specifically, while us industry was adding about 4¼ % per year to its stock of industrial capital, ohio was adding capital to its industry at a 5 % clip. in 1998 and 1999, slightly more than 2, 100 new major projects were begun in ohio, which puts the state among the top five states in attracting and expanding business. moreover, about 6 % of these business expansions were financed by foreign investors, of which slightly more than one - third were asian investors and about one - half were european. the ohio department of development estimates that 851 foreign - owned corporations provided only slightly less than one in twenty jobs in the state last year. almost 75 % of the foreign establishments were in the manufacturing sector, where trade opportunities have been the greatest. and the single largest regional concentration of foreign - owned businesses in the state was in cuyahoga county, with 145 establishments. what has this investment wrought? today, output per hour in the region ’ s manufacturing sector is hardly reminiscent of the economy of fifteen years ago. in industrial machinery manufacturing, for example, new capital expenditures almost doubled between 1987 and 1996, well in excess of the national average. at the same time, the productivity of ohio industrial machinery workers jumped from more than 10 % below the national average to more than 10 % above the national average. this story can be repeated for a number of industries throughout the region. the cost of growth economic transformation has not come without cost. between 1977 and 1987, us industry reduced production jobs in manufacturing by 1. 4 million workers. more than 200, 000 - or 15 % - of those jobs were in ohio. of those job losses, over half were centered in two industries - primary metals manufacturing and industrial machinery manufacturing - each losing more than 50, 000 jobs over the decade. in fact, the region ’ s new competitiveness could probably not have occurred were it not for the dramatic changes this area ’ s economy experienced in the 1980s. is economic progress possible that does not make obsolete the methods and practices of the earlier, less efficient economy? in his 1950 book capitalism, socialism, and democracy, economist joseph schumpeter described capitalism as a system “ that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. ” schumpeter saw that economies continually bounce from one growth path to another, all the time remaking themselves. he coined the phrase “ creative destruction ” to describe this process.

. there are differences though at a more detailed level. in the us there is only a narrow exemption from the clearing obligation for non - financial entities that enter into certain hedging transactions. in the eu the clearing obligation applies to financial counterparties when dealing with other financial counterparties ; non financial counterparties only become subject to the clearing obligation when their positions exceed a certain threshold. nevertheless, an obligation to clear eligible derivatives through ccps can only mitigate part of the risk associated with derivatives. after all, there will always be a need for bespoke contracts that cannot be standardised. by implication, there will be an otc derivative market for tailor made or more complex products. therefore, improvements of risks management systems are desirable, also for institutions outside the banking sector. requirements to register derivatives contracts in central repositories, especially those that are not cleared through central counterparties, will contribute to transparency. also, national authorities will have to cooperate closely and share relevant information in order to assess where systemic risk might be building up. certain capital requirements / basel iii another recent initiative to mitigate counterparty risk in the derivatives markets is a proposal of the basel committee for banking supervision. the basis idea is straightforward : the capital weight for derivatives that are bilaterally cleared will be higher than those for derivatives cleared through ccps. in this way, the additional risk for these trades can – at least – to some extent be taken into account. it also provides an incentive to clear derivatives through ccps. the costs associated with the use of a ccp might be a lesser burden if capital needs to be reserved for bilaterally traded derivatives. in addition, the requirements for banks to use internal models for calculating capital requirements for derivatives will be tightened. this proposal also includes a reconsideration of the zero risk weight for ccps, even when the ccp complies with international standards. ccps will become systemically important, as more and more derivatives will be cleared through ccps. there will be a concentration of risks on ccps. therefore, the basel committee also proposes to increase the capital charge for exposure on ccps [ the current charge for ccps is 0 % ]. the capital charges will be calibrated in such way that the incentive to use ccps will be preserved. the establishment of an international dispute resolution facility that contributes to legal certainty in the otc derivatives markets, fits well in a broad range of initiatives to enhance financial stability. dnb therefore welcomes