of which i have mentioned earlier, inflation has been much lower in sweden than in other countries. compared with the united states and the euro area, the difference is between 0. 5 and 1 percentage point on average for the past three years, depending on which inflation measure is used. in 2004, the difference was as much as 2 percentage points. when one looks ahead, which is important in this context, according to consensus forecast, forecasters are expecting higher inflation in the euro area and the united states than in sweden, ” continued mr heikensten. ” it is clear that the krona has developed more weakly since the spring than the riksbank expected. as you know, we do not have a target for the exchange rate. however, it is an important factor when we assess future inflation. in this context it is not the present exchange rate that is decisive, but how we see it developing in a slightly longer - term perspective. there is no reason to depart from the basic assessment we made earlier ; there are still strong reasons in favour of a stronger krona. it is not merely that swedish macro data in general has developed well over a number of years compared with, for instance, the euro area ; most forecasts indicate that this development will continue. sweden is also one of the countries that has had the highest trade surplus as a percentage of gdp over a number of years, which is one indication among many that the value of the krona has been relatively low. however, even if we should not – as i see it – change our basic assessment that the krona will strengthen, its value at present is rather different. there is therefore reason to take into consideration a risk scenario for inflation linked to a weaker exchange rate. just as the riksbank emphasised during 2003 and 2004 that the strong krona was one reason behind the low inflation rate, there is reason to point out that the weakening of the krona this year, particularly if it persists, could result in higher inflation, ” said mr heikensten. ” all in all, i do not at present see any reason to change my view of inflation now to any great extent, compared with the october assessment. however, in my opinion, the changes that have occurred would appear to indicate slightly stronger economic growth and perhaps also the risk of a slightly more rapid rate of price increase, mainly connected with international inflation and a weak krona. given the information we have now, the financial markets ’ expectations

growth and reducing poverty rates. modern economic analysis has confirmed much of what adam smith inferred from a far less impressive set of data. today's economists generally point to three important characteristics influencing growth : ( 1 ) the extent of a country's openness to trade and its integration with the rest of the world, ( 2 ) the quality of a country's institutional infrastructure, and ( 3 ) the success of its policymakers in implementing the measures necessary for macroeconomic stability. by openness and integration we generally mean the ability for goods and services, capital, and more broadly, the flow of information, people, technology, and ideas to move across the borders of a country. this freedom of movement may enhance growth by intensifying competitive pressures, increasing specialization, and allowing access to larger markets. free trade allows the more efficient use of resources which, in turn, raises both the productivity of the domestic workforce and the level of national income. adam smith cited comparative advantage. he observed : if a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage. one recent study of the effects of openness on growth demonstrated that when countries are divided into two groups - - those with generally open economies and those with generally closed economies - open economies have experienced average growth that is 2 ½ percentage points higher than the growth of closed economies. furthermore, when developing economies are ranked according to their historical record of openness, economies such as hong kong, malaysia, singapore, and thailand are near the top of the list. these asian economies are some of the same ones that participated in the region's so - called growth miracle. for another example of a country that has benefited from free trade, we need look no further than mexico - - our host today. during the early 1980s, mexico's non - oil merchandise exports were running a bit below $ 10 billion a year, or about 5 percent of its gross domestic product. by 2001, however, mexico's exports of such goods had soared to more than $ 145 billion, or nearly 24 percent of gdp. the strength of exports has contributed importantly to the ongoing transformation of mexico's economy. a good portion of this export growth has occurred in the context of the north american free trade agreement, but the most important effects of nafta may be the increased openness of mexico '