performing economies in terms of per capita output are the productivity differences for every hour worked, rather than the number of hours worked. the solution to achieving sustainable growth of our gdp per capita should therefore focus on activating the ‘ levers ’ that determine the productivity of our workers. from among the main productivity ‘ levers ’, it is usual to highlight the following four : 1. employee skills ; 2. capital levels per worker ; 3. the innovation ecosystem ; and 1 / 5 bis central bankers'speeches 4. the attractiveness of the business environment. two ‘ levers ’ are often ignored, which are decisive if all others are to achieve their maximum potential : these are, on the one hand, the entrepreneurial capacity ( i would call it the ‘ entrepreneurial drive ’ of a given community ) and, on the other hand, the nature, robustness and quality of the management models. for the combination of capital and labour to result in the production that is desired by the market, a firm needs an entrepreneur, an organisation and a management model. i will focus today on the importance of the model and the quality of management for firms and organisations ’ sustainable development and, consequently, for potential output growth ; for the capacity of a given community to strike a balance between aspirations and possibilities ; and, through redistribution, for safeguarding social cohesion, or containing causal factors of conflict or social disharmony. the management model reflects the way in which the manager coordinates environment, organisation and strategy. that is, the management model defines an organisation, which designs a strategy in such a way as to take the best advantage and even influence the environment that surrounds it. this coordination can lead to a differentiation of the firm ’ s performance from that it would naturally have had, if it had only passively adjusted to its environment. one example of this differentiation can be seen in the comparison between the evolution of large textile manufacturers in vale do ave and galicia in the last few decades. the differences in performance are not found in the sectoral category, which is identical, or in the workers, who come from the same social stratum, or in their geographical location, as they are close to each other. the differences arise precisely from the management models used. widely known academic studies, written namely by professor john van reenen, estimate that approximately 30 % of the productivity differences between countries are explained by differences in management quality. for the specific case of the portuguese economy, this estimate is not very different

public finance workshop on fiscal - structural reforms opening remarks by banco de portugal governor, carlos da silva costa 1 lisbon, 3 july 2017 good morning ladies and gentlemen, it is a great pleasure to be here today to open this workshop on ‘ fiscal - structural reforms : towards economic growth and the sustainability of public finances ’. on behalf of banco de portugal and the organising team, a very warm welcome to you all! as you are aware, this workshop, hosted by banco de portugal, was organised in the context of the annual meeting away from frankfurt of the working group on public finances of the european system of central banks. the workshop gathers here today an outstanding group of fiscal experts coming from central banks, fiscal councils, and other national and international institutions. let me take this opportunity to reaffirm in particular the importance of fiscal councils and other independent fiscal watchdogs for the pursuit of sound public finances in our countries. global economic activity is gradually recovering. however, structural challenges persist in many countries, including low productivity growth, high unemployment, insufficient levels of investment, high public and private indebtedness as well as weaknesses in the financial sector. how can structural reforms help? these reforms are key to improving long - term economic growth prospects and to reducing our economies ’ vulnerabilities to future adverse shocks. however, it should also be taken into consideration that they may be associated with some negative effects in the short and medium term, as reform implementation is not without economic and social costs. structural reforms may be linked to fiscal policies through various channels. this workshop will focus on a specific subset of structural reforms, namely fiscal - structural 1 version prepared for presentation. www. bportugal. pt reforms. fiscal - structural reforms encompass areas like taxation, social security and pension systems, healthcare, education, justice, the institutional framework and public finance management, among others. they should be distinguished from the standard use of discretionary fiscal policy to fulfil short - to medium - term objectives. the post - crisis period has witnessed a reduction in fiscal imbalances in europe. however, debt ratios remain at record highs and risks to the sustainability of public finances persist in several countries. fiscal space for expansionary policies is limited and further consolidation is needed. against this background, fiscal - structural reforms gain prominence as an approach to improve the efficiency and quality of public finances. indeed, if well designed and implemented, they can support inclusive economic growth, ensuring their long - run sustainability. notwithstanding their potential benefits