brothers, investment levels in the eu - 28 are about 18 % below their peak ; in some euro area economies under stress, investment was cut by about one - half. taking into account some necessary correction of previous overinvestment in the construction sector, a prolonged period of below - trend business investment will certainly weigh on future productivity growth. the investment gap can be partly explained by financial constraints, in particular for smes, start - ups and infrastructure. another factor is demand uncertainty, triggered by private and public deleveraging – typical for balance sheet recessions. having said that, one should not forget that because the level of economic activity differs widely between the euro area average and the cesee region, the latter has the best longterm growth prospects in europe – even if convergence will, most likely, proceed more slowly than in the past ( with the annual growth differential dropping from up to 4 to below 2 percentage points ). thanks to its proximity and its traditional ties to the cesee region, austria is in an excellent position to take advantage of this growth process. cesee ’ s share in austria ’ s total goods exports rose to 22 % ( 2013 ) – with the euro area countries still accounting for half of all austrian exports. conversely, austrian banks ’ high international exposure is concentrated with their cesee subsidiaries despite a slight decline in the respective exposures due to reduced activities in countries like hungary and ukraine. while a tendency toward greater diversity is desirable, banks ought to promote a sustainable growth model in countries with adequate economic and legal conditions – in the spirit of the vienna initiative. how to maintain the hope for convergence as enshrined in article 3 of the treaty, which states that the european union “ shall promote economic, social and territorial cohesion ”? i think that the new european commission is setting the right priorities by proposing an investment package combined with regulatory reforms targeted toward fostering smart infrastructure, education, research and energy. not only should this package provide shortterm stimulus but also improve the potential for long - term growth in europe. at the same time, a reform of industrial policy focusing on new companies in the manufacturing sector of vulnerable member states could help create export capacities. at the same time, the process toward a governance structure worth of a “ genuine emu ” as outlined by the presidents of the european central bank, the european commission, the european council and the eurogroup in 2012 contributes to confidence building. while the successful creation of the banking union marked a major step

and a much higher level of freedom. the cesee region in particular saw a period of accelerated growth rates in the years prior to the global financial crisis. this was a win - win situation not just for the acceding countries but also for the eu, in general, and for austria with its strong trade and investment links to the cesee region, in particular. the episode following the introduction of the euro in 1999 and up to the beginning of the financial crisis was beneficial to the euro area. but those countries who apparently profited the most had to find out that they had built their performance on the untenable foundation of private debt backed by overvalued assets. the crisis has revealed that the previously remarkable catching - up process is neither automatic nor irreversible. the new central european member states fared relatively well in terms of trade performance even after the financial crisis. by contrast, a dramatic stop of private financing flows required the economies under stress in the euro area, the baltics and the balkans to quickly adjust their external imbalances. even though they improved their competitiveness, external rebalancing resulted in internal imbalances such as high unemployment and overcapacities, while the development of new export capacities was hampered by financial constraints and weak european and foreign demand. hence, a lot of the adjustment had to take place via diminished import demand caused by painful cuts in bis central bankers ’ speeches income and employment. whether this import reduction is sustainable depends on the structural nature of the related economic slump – something we will only know with a sufficient degree of certainty at the beginning of a new cycle. a very interesting aspect of external imbalances is their relation to the patterns of sectoral specialization in a given economy. the countries featuring the best export performance prior to and after the financial crisis are exactly those that have a large manufacturing sector. the four countries that form the visegrad group have been fortunate in terms of foreign direct investment, which enabled their re - industrialization. via cross - border production networks, these economies are involved in a “ new industrial core ” of europe together with germany and austria. those countries, however, that have not been able to establish sufficient tradable industries and have neither abundant natural resources nor tourist attractions have difficulties to escape the dilemma of either chronic disequilibria or contractive deleveraging. even worse, investment, which is crucial for future growth, has been cut over proportionally. six years after the collapse of lehman