most important import partner for trade in goods. as far as trade in services is concerned, the two regions share even closer connections. and it is precisely in the area of services that the eu still has some catching up to do in terms of intensifying competition. mark - ups on the cost of services are, on average, higher than in the usa. one could say that the european commission ’ s services directive has failed to live up to expectations. thus, achieving a single market for services and ensuring the unhindered cross - border provision of services promise significant economic benefits. 3. 3 barriers to market entry obstacles to growth exist across individual member states in the form of red tape for business start - ups, to cite one example. frequent administrative formalities, long approval periods and high fees make starting a business more complicated and expensive than necessary. in the world bank ’ s doing business table, for instance, germany ranks 114th in the “ ease of starting a business ” category. speaking of which, switzerland did not fare spectacularly well in this category either, coming in at 69th place. other european countries also found d t jorgenson ( 2001 ), information technology and the u. s. economy, american economic review, vol 91, no 1, pp 1 – 32. b van ark, m o ’ mahoney and m p timmer ( 2008 ), the productivity gap between europe and the united states : trends and causes, journal of economic perspectives, vol 22, no 1, pp 25 – 44. copenhagen economics ( 2010 ), the economic impact of a european digital single market, final report. bis central bankers ’ speeches themselves in mid - table positions at best. 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. for example, studies6 indicate that the differences between the costs of entering the market in the usa and in the eu, while relatively small, could still account for 10 % to 20 % of the eu ’ s productivity shortfall. the costs of removing red tape are comparatively low and could help strengthen growth. 3. 4 labour markets ladies and gentlemen, market entry barriers can severely hamper productivity. but productivity is not only subdued by regulations in the product market. in order for the economy to flourish, resources must be utilised

, in particular, should be beneficial. also, in japan the recession seems to have bottomed out. a recovery of the world economy from its recession was by no means a foregone conclusion. nevertheless, the remarkable stabilisation points to strong underlying resilience, fostered by increasingly flexible markets and by timely policy responses. however, the mild recession has not managed to purge all of the excesses accumulated during the previous expansion. the recovery is currently accompanied by several ongoing adjustment processes, with disequilibria that built up throughout the 1990s still being corrected. most visible and much commented on are the marked declines in the stock markets, which have lost further ground worldwide over the past couple of days. moreover, the us dollar has depreciated against other major currencies, thus facilitating the necessary adjustment of the large us current account deficit. equally, the reduced inflow of capital into emerging market economies should be seen as part of the correction of unsustainable trends. this applies also to fdi. particularly in latin america, the earlier high fdi inflows were in large measure attributable to privatisations of utilities, financial institutions and other enterprises, not to greenfield investments. with the supply of such investment opportunities declining, fdi inflows are bound to decline as well. of course, we would be better off today if some of the imbalances could have been prevented. the correction of these imbalances now contributes to economic slack. this raises the question of the extent to which the build - up of the bubbles in the stock markets and, in some countries, on the housing market was due to overly expansionary policies. whether central banks should try to prick such bubbles is open to debate. a good part of the current slack in the world economy reflects a return to more normal underlying conditions. inflated expectations are in a process of being corrected. it is also true that we are moving through a recovery period in which the risks tend to be more on the downside than on the upside. let me mention four potential downside factors. first, risk aversion has soared, as the credibility of profit forecasts has been dented by misreported earnings and uncertainty about the impact of stock options. in this jittery environment, any news that might further impair investor confidence can have a negative impact on the stock markets. the us congress has been quick to take legislative action in an attempt to restore confidence in