of basic logic in terms of macroeconomic theory for the conduct of sound economic policy. let me move on to the second issue i want to address which is to what extent differences in economic and corporate management style, for example between the united states and japan, affect economic growth. against the backdrop of prolonged economic stagnation in recent years in japan, there has been growing recognition that we should further incorporate into our system the us style management which emphasizes market - oriented economic management and shareholder - oriented corporate management. simply put, regarding economic management, competition should be further intensified. the relaxation and lifting of regulations should be promoted. the financial system should be shifted from one led by banks to one led by the capital market. and, on the corporate management front, corporate governance should put more emphasis on shareholders. needless to say, employment adjustment should be more drastic. from time to time such an argument goes to the extreme that further development of japan ’ s economy cannot be expected unless we completely shift from japanese style to us style management. i think this is overly pessimistic because japanese style management is not something which never changes, but is rather something which has evolved in response to changes in the economic environment. of course, i am not saying that current japanese style economic and corporate management has no problems. indeed, i often mention the importance of structural reform, and am sometimes criticized for going beyond my position as central bank governor by making too strong a statement on the subject. nevertheless, i strongly believe japan needs structural reform. first of all, let me emphasize that the growth potential of the economy can be increased largely by improvements on the supply side, that is, achieving steady productivity gains, rather than the short - term boosting on the demand side. for example, if we compare the productivity of workers in 1998, the figure for japan was about 40 % lower than that for the united states based on purchasing power parity in the imf ’ s world economic outlook, and about 30 % lower when based on the actual exchange rate. of course, if the sole objective is higher labor productivity, it can be achieved by investing a huge amount of capital and raising capital per worker. but, in this case, capital productivity and return on capital would decline. furthermore, growth driven only by the huge investment of resources would eventually reach a limit. for sustainable growth, we need to establish an indigenous mechanism that promotes growth by combining labor and capital in an optimal manner under given prices and which generates innovation in

widespread in order to give the manager the necessary leeway to balance the various legitimate interests – stakeholders – in the most beneficial way for the firm ; and third, by developing and providing a new figure or “ legal entity ” that congregates the shareholdings of a given family and awards the function of ownership of a given firm to an institution, i. e. creating the “ family holding ” figure, through the legal classification of a centralised management model of the holdings of the members of one family ; this model should be optional, supplemental and adjusted to the specific features of family businesses, with a statutory and tax treatment that : – promotes the holding company ’ s commitment towards its holdings and their locations ; – guarantees the necessary legal certainty ; – is simple and easy to access by smaller firms. finally, economic policy actors can make an important contribution by fostering widespread knowledge and open discussion on the impact of the quality of management on business productivity and the well - being of society. this contribution is being made today by the economic and social council. the same contribution is also made by banco de portugal, – through the inclusion of the topic of management quality in its research agenda ; – through the production, publishing and analysis of quality statistical information that can support the study of the topic ; and – by raising the banking system ’ s awareness of the strategic importance of considering management models, in addition to the actual collateral, in the risk assessment of firms and their projects. 4 / 5 bis central bankers'speeches in short, there is no doubt that the quality of management is central to the challenge of promoting productivity. the good news is that portugal still has much to gain from activating this ‘ lever ’. in our day and age, marked by such a strong heterogeneity and weak overall productivity, it is imperative that we do not miss this strategic opportunity. finally, let me thank you again for the invitation to be with you at this conference. i will be available should you wish to comment or ask any questions. references bandiera, o., guiso, l., prat, a., and sadun, r. ( 2015 ), matching firms, managers, and incentives, journal of labor economics 33, no. 3 ( part 1 ) : 623 - 681 bloom, n., eifert, b., mahajan, a., mckenzie, d. and roberts, j. ( 2013 ), does management matter? evidence