costs. but there are very large benefits – we need to stay competitive for the long - term welfare of the people of the euro area. what does the word competitiveness mean to economists? in a narrow sense, it is often used to refer to international price competitiveness as measured by various indicators of effective exchange rates. at the european central bank we analyse developments according to a whole host of such indicators. this concept of competitiveness is linked to the “ external performance ” of a country, typically measured in terms of export growth, shares of export markets or current account balances. developments in price competitiveness have always been important drivers of an economy ’ s ability to compete in international markets. but in recent years, other factors have become increasingly important in the face of the structural changes engendered by globalisation. these relate to export specialisation, which includes the range and the quality of the products a country exports, and the particular markets it exports to. in this regard, it is important that our countries take advantage of their high technological advancement and well - educated labour forces, to produce higher quality and more sophisticated goods and to redirect their exports towards strongly growing markets. looking even more closely into the domestic structure of an economy we come to the notion of productivity. productivity and competitiveness are two different concepts, but there are close links between them. “ competitiveness ”, when more broadly defined, includes a notion of relative productivity. under this definition, the most competitive economy is the one with the best prospects for “ generating ” highly productive firms, contributing to longer - term economic growth and, ultimately, to the welfare of its citizens. recent advances in trade theory have stressed the connections between the external and internal dimensions of competitiveness, which have become increasingly relevant in a globalising economy. some of the latest economic models of trade1 see global competition as a selection mechanism, in which only the most productive firms do business outside their national borders. 2 less productive firms, by contrast, which are unable to bear the transport and other costs related to foreign trade, are either forced out of business or remain confined to their domestic market. countries in which highly productive firms can thrive are therefore also likely to do better in terms of their overall export performance, as this will allow more firms to compete successfully in international markets. in general, these are countries with more intense domestic market competition, better technology and greater openness to foreign competitors. 3 these new models also stress the importance of countries ’ institutional

abbado, and i am also very much looking forward to this year ’ s opening concert by one of france ’ s most renowned baroque ensembles, les talens lyriques. this is the tenth year of the european cultural days. what do you think makes this cultural initiative a success? without the support of our longstanding partners and sponsors, not to mention our loyal audiences, such an initiative would be difficult to bring to fruition. our well - established partnerships with the city of frankfurt, reliable sponsors, local cultural institutions and our media partner hr2 - kultur have enabled us for many years to present a unique insight, each autumn, into the contemporary culture of a different eu member state. two years ago, together with our longstanding partner, the city of frankfurt, we began a new project : the charity concert of the european cultural days. under the heading “ a bis central bankers ’ speeches concert for you ”, artists perform for a good cause ; this year ’ s concert will be given by musicians from “ le cercle de l ’ harmonie ”. entry to the concert is free, but audience members are asked to give donations for a selected frankfurt - based charity. this year, we will be supporting the work of “ die frankfurter lesepaten ”, whose volunteers help primary school children from various cultural backgrounds aged 6 to 10 years to learn german. in choosing this charity, we would like to promote language acquisition – one of the most important factors for integration – and tolerance towards other cultures. this is in line with the underlying principle of the european cultural days : “ unity in diversity ”. bis central bankers ’ speeches