during this period, norway has experienced a considerable rise in prices for source : the technical reporting committee on income settlements, report no. 1, 2005, preliminary version. the estimates take account of both actual hourly wages and indirect costs. aftenposten, october 1982 export products such as oil and aluminium, partly owing to high demand in china. sweden, on the other hand, has been influenced by a slower rise in prices for goods such as ict products. the close trade relations between norway and sweden are of benefit to both countries. even if petroleum exports to sweden rose sharply in the 1970s, norway still ran a trade deficit with sweden. we have needed goods from sweden to build up our petroleum sector, and increased wealth has enabled us to increase goods imports from sweden. norway has thus maintained its import share of traditional goods from sweden while our export share to sweden has declined. weaker business sector competitiveness in norway in relation to that of sweden is probably one important factor. looking ahead, some of the features we have observed over the past 30 years may change. there is an imbalance between the cost level in norway and in sweden. the cost differential cannot be sustained in the longer term. the high cost level in the norwegian business sector is adapted to a situation where we are developing the petroleum sector and phasing in the use of petroleum revenues into the mainland economy. after a period, we will be able to cover a smaller share of our imports using current petroleum revenues and by drawing on capital in the petroleum fund. the norwegian cost level will then have to be dampened, also compared with that of sweden. competitiveness may in the longer run be brought back to the level prevailing at the end of the 1960s before norway became an oil nation. during such a period of adaptation, which may start in 5 or 10 or 15 years, a flexible exchange rate, with a fall in the norwegian krone against the swedish krona, will have to play an important role. where do we stand today? tariff barriers for trade in goods are low. the eu / eea agreement also provides for increased trade in services. during the 1990s, capital mobility has increased to a level that is higher than 100 year ago. free capital flows and free trade pave the way for high economic growth and prosperity, but also entail challenges. competition has increased in many industries. labour - intensive processes are being transferred to new eu member states such as the baltic countries. some multinational companies have streamlined various production processes and

stanley fischer : issues pertaining to the israeli economy address by professor stanley fischer, governor of the bank of israel, to the sderot conference for society, sderot, 7 november 2006. * * * first of all i would like to stress that society and economy are two sides of the same coin. particularly in israel, because of its uniqueness, it is impossible to waive the good of society for the good of the economy, but it is equally clear that it is impossible to forego the good of the economy for the sake of society. one complements the other. as in economic policies, so too in social policies one must distinguish between short - term and longterm tools. so it is important to use tools that in the short term will help improve the welfare system for the weaker members of society who cannot join the labor force. however we must not forget that the most important thing for society - and for the economy, for the state, and for its security too - is the long term, and what stands at its center, in the long run, is sustainable growth. so a sensible policy should strike the right balance between short - term and long - term tools, as they can be substituted one for the other. before i get into these topics, i will begin with an overview of the state of the economy. a. state of the economy the israeli economy is today in a very good state, even after the war. the economy has enjoyed rapid growth now for three years, and the bank of israel forecasts that gdp will grow this year by 4. 6 percent. this is a rapid rate of growth by international standards, and israel is also enjoying an increase in investments and exports, a balance of payments surplus, a particularly high rate of foreign investments, rising productivity and an improvement in employment data. inflation in israel is low, levels of interest rate are similar to elsewhere and the markets demonstrate strength and stability. and what led to this extremely good state of the economy? a combination of three factors : the first : the structural changes in the economy during the past 15 years - the liberalization of the foreign exchange market, making it more flexible, privatization, the development of the capital market, opening it up to competition from abroad etc ; the second : the responsible macroeconomic policies of the ministry of finance and the bank of israel ; and the third : the background factors which are not always dependent on us. i am referring here to world economic developments and the security