ore each day ; now it is over a million tonnes a day. coal shipments have been running at a rate of around 300 million tonnes a year, at least until the recent floods. australian capacity to export lng is now around 20 million tonnes a year, up from around half that in 2004. this looks like it will increase to over 50 million tonnes within five years. the rise in demand has been driven in large part by the rapid growth of key emerging market economies such as china and india. over the past decade : the average annual growth of gdp per capita has been around 5½ per cent in india and almost 10 per cent in china ; the number of people living in cities in those two countries, especially china, has risen by over 250 million, which implies having to expand or create cities ( with the attendant buildings and infrastructure ) to house the entire population of australia more than 10 times over or, alternatively, to house the populations of france, germany and japan combined ; and steel production has doubled in india and it has more than quintupled in china. thus far, the demand for resources has stretched the global capacity of suppliers. prices of key raw materials have consequently been driven upwards. as a result australia ’ s terms of trade have risen sharply, to be about 65 per cent above the 20th century average level, and about 85 per cent above the level that would be expected had the downward trend observed over the 20th century continued. even assuming the terms of trade soon peak and decline somewhat, they are nonetheless, over a five - year period, at their highest since at least federation – by a good margin. with the terms of trade at their current level, australia ’ s nominal gdp is about 13 per cent higher, all other things equal, than it would have been had the terms of trade been at their 100 - year average level. of course australia has substantial foreign ownership in the resources sector so a good proportion of this income accrues to foreign investors. nonetheless, probably about half of that additional 13 per cent of gdp accrues to australians one way or another. we also know that a large expansion in the resource sector ’ s capacity to supply commodities is being planned. already, mining sector capital investment has risen from an average of around 2 per cent of gdp over the past 25 years to about 4 per cent, which exceeds the peak reached in the booms of the late 1960s and early 1980s. given the scale of possible additional investment projects that have been mooted

##hwerdt and j. turunen ( 2005 ) : “ growth in euro area labour quality ”, ecb working paper series, no 575, january 2006. oecd ( 2005 ) “ education at a glance ”. oecd ( 2005 ) “ education at a glance ”. the state of structural reforms if euro area countries now summon up their strength and ambitiously push forward with structural reform, this will support and broaden the improvement in economic activity in the euro area. this is why the ecb has always encouraged the implementation of structural reform within the so - called lisbon strategy, which was set in place by a meeting of the european council of heads of state and government, in lisbon in may 2000. five years later, progress has been made in some areas - as also indicated by an increase in the euro area employment rate. still, all in all the reforms have not been far - reaching enough. against this background, the mid - term review of the lisbon strategy in 2005 led to a re - launch of the process by shifting the strategy ’ s focus more strongly on growth and employment. as an outcome of this process, all eu countries have prepared so - called national reform programmes that outline structural reform steps for the years 2005 - 2008. these efforts are welcomed by the ecb. the potential gains to be reaped are substantial. a recent study published by the netherlands bureau for economic policy analysis finds that if europe would reach the objectives set in the lisbon strategy ( for example, full implementation of the internal market for services, a reduction of administrative burdens, improvements in human capital as well as r & d and employment targets ), eu gdp could be higher than otherwise by 12 to 23 % and employment by about 11 % by 2025. 23 other important findings relate to investment in the knowledge - based economy. analyses made by the european commission 24 show that if the effects of the increased knowledge investment foreseen within the lisbon strategy were added in, the increase in annual eu potential output growth could reach up to three quarters of a percentage point. over a ten year period, this would imply an increase in the gdp level of up to 7 or 8 %. of course, these are just crude calculations, which, however, give a notion of how large the welfare - enhancing potential of implementing structural reforms is. also the ecb ’ s monetary policy has a role to play in supporting the implementation of structural reforms. a credible monetary policy aimed at maintaining price