quality of education below the college level. to be sure, substantial reforms in math and science education have been under way for some time, and i am encouraged that policymakers, educators and the business community recognize the significant contribution that a stronger elementary and secondary education system will make in boosting the potential productivity of new generations of workers. i hope that we will see that the efforts to date have paid off in raising the achievement of us students when the results of the 1998 - 99 international comparisons for eighth graders are published. whatever the outcome, the pressures to advance our education system will continue to be intense. as the conceptual share of the value added in our economic processes expands further, the ability to think abstractly will be increasingly important across a broad range of professions. critical awareness and the abilities to hypothesize, to interpret and to communicate are essential elements of successful innovation in a conceptual - based economy. as with many skills, such learning is most effective when it is begun at an early age. and most educators believe that exposure to a wide range of subjects - including literature, music, art and languages - plays a considerable role in fostering the development of these skills. as you know, school districts are also being challenged to evaluate how new information technologies can be best employed in their curricula. unfortunately, this goal has too often been narrowly interpreted as teaching students how to type on the computer or permitting students to research projects over the internet. incorporating new technologies into the educational process is indeed likely to be an important element in improving our schools, but it must involve more than simply wiring the classroom. human capital - in the form of our teachers - and technology are complements in producing education output just as they are in other business activities. to achieve the most effective outcome from new technologies, we must provide teachers with the necessary training to use them effectively and to provide forums for teachers and education researchers to share ideas and approaches on how best to integrate technology into the curriculum. and we must create partnerships among the states, the school systems, labor and industry to develop appropriate standards and guidelines for the teaching of information technology in the classroom. a crucial concern today - and i know that the national governors ’ association is working hard to address this issue - is that the supply of qualified teachers will be insufficient to meet the demand. indeed, a substantial number of teachers are scheduled to retire over the next decade, and how to replace them and meet the additional demand from rising enrollments is certain to be a

turmoil would be on the real economy internationally and in sweden. economic activity in the united states had been weaker than expected and our forecast for us growth was revised sharply downwards in april. in the euro area too, economic activity appeared to be slightly weaker. we assumed therefore that growth in the world economy would be somewhat weaker in 2008 and 2009. in sweden on the other hand, economic activity was somewhat stronger than expected. nevertheless, it was assumed that the weaker prospects for economic activity internationally would lead to a slowing down of growth in sweden as well later this year and early next year. signs of this slowdown were already beginning to appear, for example in the data in the national institute of economic research ’ s economic tendency survey and in the statistics on retail sales and new job vacancies. our assessment, however, was that the slowdown in sweden would be relatively moderate. gdp growth remained good, and the potential for future growth was still relatively favourable. the level of saving among households and in the public sector was high. property prices were fairly stable and the direct effects of the financial turmoil were expected to be relatively slight. at the same time, inflation was high both in sweden and abroad. this related above all to higher energy and food prices on the world market. inflation expectations in sweden also remained high, and were also way above the inflation target even in the longer term. we thus had to take various counteracting factors into account. on the one hand, growth in the swedish economy was still good and both inflation and inflation expectations were high. on the other hand, the turmoil on the financial markets and weaker growth in the world economy were expected to curb growth and inflation in sweden. this led to our decision to hold the repo rate unchanged at 4. 25 per cent, a decision i voted in favour of. we also held to our forecast that the repo rate would remain at this level over the coming year in order to bring inflation back to the target over a period of a couple of years and to enable production and employment to develop in a balanced way. we also emphasised that there was still considerable uncertainty over future developments. personally, i saw an evident risk that the slowdown in the united states could become more prolonged than was assumed in the forecast. i also saw a risk that the rapid price increases in the world energy and food markets could subdue demand and thereby growth in the rest of the world, which could also further hold back swedish growth and inflation. there were