case, this comes down to issues such as improving the efficiency of insolvency regimes, out - of - court restructuring frameworks and judicial systems. 4 bbva ( 2013 ). revista situacion espana, 2013 q2. for more on this point see speech by peter praet, “ repairing the bank lending channel : the next steps ”, 17 november 2014. bis central bankers ’ speeches however, we know that it is not just raising the quantity of investment that matters for longterm growth ; the quality of investments, and how they contribute to tfp growth, is just as significant. indeed, it is telling that since 2000 total investment has been slightly higher as a percentage of gdp in the euro area than in the us, while producing a much inferior tfp performance. two factors can help explain this discrepancy : first, the relatively higher share that us firms have invested ict capital, and second, the efficiency with which they have turned that investment into productivity gains. and it is structural factors which, at least in part, account for these two differences. first, while there is variance within the euro area, on the whole there is a relatively higher proportion of micro and small firms in europe than in the us. european firms are also more static, in the sense that they do not grow or shrink over time. for example, the average size of a manufacturing sector start - up in the us and italy is roughly the same within its first two years – 5 – 10 employees. after ten years, however, the average us firm has grown to around 75 employees, while the average italian still has below 15 employees. 5 this matters because the size and growth rate of firms tends to have strong impact on ict diffusion. small firms are generally characterised by a relatively lower accumulation of ict capital due to the higher fixed costs they face. 6 they also tend towards higher risk aversion and encounter greater difficulties in collecting resources to finance more innovative projects. 7 an economy populated by small firms that do not grow is therefore likely to be one with lower investment in ict, and therefore lower tfp growth. the reasons why euro area firms grow more slowly are complex, but structural policies certainly play a role. in italy, for example, regulations that kick - in at the 15 employees threshold appear to have encouraged firms to stay small ( although these are de facto now no longer in force ). 8 a similar phenomenon has been observed in france, where size - contingent regulations appear to

commission ’ s new ageing report shows, the economic age dependency ratio – the ratio between the inactive elderly ( 65 + ) and total employment – is projected expected to rise from 44. 6 % in 2013 towards 66. 4 % in 2060. 17 only with higher productivity growth can so few sustainably support so many. conclusion let me conclude. what i have argued today is that structural reforms can raise long - run growth in two ways : by raising the trend of long - term growth, and by reducing the fluctuations around that trend. both these aspects are particularly important for economies in a monetary union. this makes structural reforms commensurately more pressing. bloom, n., sadun, r., and j. van reenen. “ americans do it better : us multinationals and the productivity miracle. ” american economic review, vol. 102, no. 1, february 2012. see also pellegrino, b., and zingales, l. “ diagnosing the italian disease. ” unpublished manuscript, september 2014. ibid. bloom, n., and van reenen, j. “ measuring and explaining management practices across firms and countries. ” the quarterly journal of economics vol. 122, no. 4, november 2007. bugamelli, m., cannari l., lotti f. and s. magri ( 2011 ), “ il gap innovativo del sistema produttivo italiano : radici e possibili rimedi ”, banca d ’ italia occasional papers no. 121, april 2012. european commission ( 2015 ), the 2015 ageing report. bis central bankers ’ speeches this is not to say that all the euro area ’ s problems are structural. demand policies remain crucial to close a still - large output gap and to secure a strong cyclical recovery. and it is possible that some issues that are currently considered to be structural, such a high longterm unemployment, could reverse in a stronger demand environment. that is to say, if hysteresis operates in the downswing, it may also reverse in the upswing. yet according to all estimates potential growth in the euro area is weak, and has been on a declining trend for at least 15 years. a strong and sustained recovery cannot therefore come from demand policies alone. it has to entail reforms that improve the allocative efficiency of the economy and unlock its supply capacity.