international business depend. ” since this sober forecast, the international monetary fund has revised upwards its projection for global economic activity, with stronger growth expected in the united states, united kingdom and the euro area than previously expected. however, the economic recovery is likely to be uneven and output in some countries, including in some of our major trading partners, is not anticipated to reach pre - crisis levels until 2011. the uncertainty about the pace of the recovery requires us to be prudent in our economic management. at the same time, we must position ourselves to take advantage of the recovery when it comes. my remarks, this morning, focus on the issue of productivity enhancement as a mechanism of strengthening that recovery. we rely on our ability to sell our goods and services abroad for our economic success while other countries are at the same time aggressively seeking to sell to us or to set up operations locally. this requires us to be competitive in our domestic market and in our export production. our efforts to enhance our competitiveness are closely linked with improved productivity. we know that factors such as size, the lack of domestic competition and access to finance can retard the pace at which productivity enhancing measures are introduced. however, while these factors may seem to be a disincentive to change, we must not resile from our commitment to pursue productivity enhancements. clearly there is a role for government in creating the enabling framework for productivity improvements, but productivity occurs at the firm level. in this regard, it is important to remember that even for firms operating in the domestic market, competition comes not only from other local firms but also from external entities that are adopting new technologies and deriving the scale economies by exporting to economies that have not. how we achieve gains in productivity is complex since the factors that drive long - term productivity growth are complementary to each other. for example, new investments in capital goods and enhancement to labour skills are often required to take advantage of productivity enhancing new technologies. i wish to suggest that productivity is as important in the public sector as it is in the private sector. we need to ask ourselves whether we can we produce the services we currently provide with no dimunition in quality at a lower cost? conversely can we produce a higher quality of service without increased costs? as a services - based economy, some of our productivity gains can probably be achieved by simply being conscious of the need to maintain a customer focus so that we can understand the customer and provide him with what he wants. our competitive

banks, once montenegro joins the eu. i am confident that this report will help to develop the central bank ’ s strategy, to strengthen its role as an institution and to smooth the path towards eu accession. let me say that our experts could not have produced such a comprehensive report without the excellent cooperation of the central bank of montenegro and the commitment of governor dakic and his team to this project. the needs assessment report and the recommendations, however, are not the only tangible outcomes. throughout the whole programme, staff members of the central bank have met many colleagues from eurosystem national central banks as well as from the ecb and have established an excellent network of contacts. they can thus draw on the expertise of many bis central bankers ’ speeches national central banks that are actively participating in a number of other initiatives in the region. our institutional relations with the central bank of montenegro, and with other central banks in the western balkans more generally, go beyond technical cooperation. in november last year, i was pleased to welcome governor dakic and vice governors fabris and milosevic to frankfurt for the second high - level policy dialogue between our respective institutions. the ecb conducts such dialogues with all the central banks of those countries which are negotiating to join the eu. the ecb also launched a regional workshop series last year that provides opportunities for policy discussions and technical cooperation. both of these are based on the regular monitoring and analysis of economic and financial developments in countries which are prospective eu members. the ecb and the entire eurosystem engage in these activities with central banks of eu candidate and potential candidate countries on account of the strong economic and financial links between the euro area and the western balkans, the prospect of eu integration, and the associated need for sustainable convergence. economic and financial links between the euro area and the western balkans, including montenegro, are very close. for example, banks with headquarters in the euro area account for around half of the assets of the montenegrin banking sector, while around one third of montenegro ’ s total trade is with the euro area. we therefore have a mutual interest in each other ’ s well - being. capital inflows from the eu together with this region ’ s growing integration into pan - european production chains will help the economies here to catch up and will gradually contribute to higher living standards – provided, of course, that sound domestic policies are in place to make this happen. similarly, economic growth in the euro area and the rest of the eu will have a positive impact on