close to balance to a deficit of some 2 % of gdp from 1994 to 1996. notwithstanding this development, on balance, the decision to join the eu was without a doubt beneficial for austria as a whole, not only in the medium and long run, but even in the short run. to what extent can our experience be relevant to central and eastern europe? basically, european integration was conceived as a project aimed at ensuring peace, stability and prosperity in europe. this aim is not restricted to western europe only. the most recent and forthcoming enlargement of the european union should be seen as the realization of the eu ’ s longer - term objective of providing a framework for political stability and economic progress throughout europe. but i am afraid that we have sometimes become very selective in our perception of central and eastern europe. we tend to take note only of certain developments and give some well - meant advice. and sometimes i have the impression that we easily fail to appreciate the enormous progress that has already been made in most of the – let me say “ former ” – transition countries, especially in those which are most advanced in reforms and transformation. however, the latest enlargement of may 2004, as well as the forthcoming enlargement with bulgaria and romania, is the well - deserved confirmation of the impressive progress these countries have made. let me congratulate you on these major achievements! having said this, there is a consistent need for economic reform in all societies. while the reforms which can be characterized as transition - specific sooner or later come to an end, other reforms will never be complete, and the need for further adjustments will always arise. constant reform efforts are the key to achieving a path of sustainable high real growth. maintaining a faster pace of average real growth than in the european union is a minimum requirement for keeping the catching - up process going in central and eastern europe. we all need and benefit from this catching - up process, both in europe as a whole and at the global level, as we cannot afford to let the gap between rich and poor countries persist or become wider. notwithstanding the progress made so far, a balanced and consistent policy mix will be of crucial importance also for central and eastern europe in its catching - up and integration efforts. let me focus on two aspects of this policy mix : first, structural reforms are the key to long - term success. existing productive capacities have to be reshaped and new ones have to be built, above all in the service sector. in particular,

some 0. 3 % to 0. 5 % and at the same time increased real gdp growth by some 0. 3 % to 0. 8 % per annum in austria, finland and sweden. 2 a comparison by the oesterreichische nationalbank of austria, finland and sweden, all of which have been eu member states since 1995, and non - member switzerland, concludes that productivity increases in austria, finland and sweden have been nearly three times as high than those in switzerland since 1995. 3 over the past decades, austria has thus become a leading small, open economy in europe. this positive economic performance is mirrored by gdp per capita figures, where austria ranks third in the eu, right behind luxembourg and denmark. at 4. 5 %, the unemployment rate is the third - lowest in the eu. 4 youth and long - term unemployment is also kept at comparatively low levels. the employment rate of 15 - to 64 - year olds, measured in terms of full employment, is one of the highest in europe. another often cited positive feature of the austrian economy is the cooperative social climate, which has been fostered by the system of " social partnership. " the dialogue between the social partners has facilitated the favorable development of unit labor costs, which, together with germany ’ s, have been the slowest - rising unit labor costs in the eu over the last decade. thus, austria augmented its share of eu exports to 3. 4 % by 2003 from 2. 9 % in 1995. but austria has benefited not only from eu membership and the single market, but also from the fall of the iron curtain in 1989 and from the transition and integration process in central and eastern europe, including – as i always do when i refer to this region – southeastern europe. foreign direct investment ( fdi ) in the region and bilateral trade intensified very significantly. in the case of austria, bilateral trade with central and eastern europe5v has tripled since 1993 in real terms. the respective data for bulgaria and austria reflect these developments : austria ’ s exports to bulgaria more than tripled and imports from bulgaria even quadrupled in real terms since 1993. in addition, austrian investors are among the most important foreign direct investors in bulgaria. for instance, two of austria ’ s big financial players in the region, bank austria and raiffeisen international, are active in bulgaria through their subsidiaries ( “ hvb bank biochim ” and “ hebrosbank ” respectively “ raiffeisenbank ( bulgaria