policy in germany and the euro area. this debate has often prompted calls for increased investment as the best way to foster growth, the argument being that such investment would raise the productive capital stock, thus stoking long - term growth potential. at the same time, it would also push up the demand for machinery and equipment and in so doing stimulate the economy, both at home and abroad. thanks to the globalised economy, greater investment in germany, for example, would also benefit the rest of the euro area. without doubt, the import content of private investment is at least higher than the rather modest content constituted by government expenditure, another reason why i am against calls for a government stimulus package in germany aimed at boosting the economy in the euro area. that said, if we take a closer look at the solow model we see that, more often than not, quite the reverse is true. in a market economy, demand for investment cannot simply be conjured up by decree with a view to boosting growth potential. conversely, it is also true that increased growth and therefore higher income expectations enhance enterprises ’ willingness to invest. hence, expectations pertaining to growth and income are of pivotal importance. in the case of germany, however, demographic change has tended to exert a dampening influence, its shrinking labour force being a paramount factor hindering economic growth. for example, enterprises are finding it increasingly difficult to recruit the specialists they require. this has prompted many german enterprises to invest abroad, as reflected in germany ’ s high current account surpluses. regarding the low level of investment in germany, many commentators point to public investment, the scale of which can be directly influenced by the state. but here, too, the nexus identified by the solow model applies. rates of investment lying above the growth potential of a developed economy are unlikely to increase prosperity, a fact that applies not just to public investment but also private investment. since public net investment has been negative for some time now, there would nevertheless actually seem to be room for improvement in this area as well. no less important than the question of how much should be spent on public investment is the question of how this bis central bankers ’ speeches money should be spent. because, as every private investor is aware, not every investment is ultimately worth the money, and the same holds true for the public sector. in any case, public investment only represents a relatively small share of total investment. and as i already indicated : such investment cannot be steered ar

in its home country. however, this principle did not make it into the final version of the directive. yet implementing the home country principle for services, too, would have great potential – after all, services account for over two - thirds of value added in europe. another way to leverage growth potential were if the single market were to fully enter the digital age. fragmentation is still part and parcel of the digital economy, in particular for legal aspects such as protecting privacy and personal data, content and copyright, the liability of h badinger ( 2005 ), “ growth effects of economic integration : evidence from the eu member states ”, review of world economics 141, pp 50 – 78. bis central bankers ’ speeches online intermediaries, electronic payments and electronic contracts. the eu does not yet consist of one digital single market but 28 individual digital markets. studies 2 show that creating a harmonised and well regulated digital single market has the same potential as implementing the single market in its original form, which is to say an upturn in growth of as much as 4 %. in germany alone, as many as 420, 000 new jobs could be created between 2015 and 2020. 4. barriers to market entry however, in the services sector barriers are not just at the european level. in germany, they also exist for business start - ups in the form of red tape – things like mandatory administrative formalities, approval periods and fees incurred. in the world bank ’ s doing business table, germany ranks 114th in the “ ease of starting a business ” category. in other words, there is plenty of room for improvement. even though an enterprise ’ s direct costs may appear to be manageable at first glance, the economic cost of difficulties entering the market and, as a result, weaker competition should not be underestimated. studies 3 indicate that the relatively small differences between costs of entering the market in the usa and in the eu could still account for 10 % to 20 % of the eu ’ s productivity shortfall. the costs of removing red tape are comparatively low and could strengthen growth. 5. venture capital markets new, innovative enterprises are key to an economy ’ s productivity and highly competitive position. it is thus all the more important for these enterprises to have sufficient funding. a comparison between the usa and europe shows that there is still some way to go here. new, innovative enterprises are often too small and banks frequently struggle to assess them, so they regularly raise capital in the form of equity. venture capital