. at the beginning of the 1990s, the erstwhile closed - off states of the eastern bloc gradually began to open up, and so too did china and other asian countries. since then, economic integration worldwide has been considerable. today, the value of goods and services traded internationally is three and a half times higher than it was then. average real per capita income worldwide has increased by two thirds. the proportion of the world ’ s population living in extreme poverty has fallen from just under 40 % to 10 %. this rapid improvement in prosperity was made possible by the better use of the three factors needed for growth : labour, capital and technology. 1 / 5 bis central bankers'speeches after 1990 we saw an increasingly international division of labour. countries specialised in areas where they were particularly proficient compared with their trading partners. the manufacture of labour - intensive products was outsourced to countries with relatively low wage levels. this increasing division of labour resulted on the one hand in rising incomes, above all in the new production countries, and on the other hand in a decline in goods prices worldwide. this effect was strengthened further by international competition. with increasing economic integration, capital, the second factor influencing growth, could be invested globally. foreign direct investment and loans helped in the construction of production facilities and infrastructures in the newly opened regions of the world. the high levels of savings in the advanced economies were thus put to productive use in the catch - up growth of these regions. that leaves the third factor : technology. the integration of the global economy led to a massive transfer of knowledge between countries, which greatly accelerated the economic development of the poorer nations. furthermore, the growth in the number of people participating in the global economy meant that there were a lot more ideas and innovations. more ( and more highly specialised ) workers, better and more broadly invested capital and a rapid exchange of knowledge – all this led to higher economic growth and greater prosperity worldwide. globalisation also had a major impact on monetary policy. the most important change in this respect was the increasingly global production of goods, which reduced inflationary pressure. the latter also fell because the global economy was able to satisfy increases in demand in individual countries comparatively easily. in the less integrated economy of the cold war era, higher demand quickly led to bottlenecks and rising prices. with inflationary pressure lower, central banks were able to react more strongly to adverse economic developments. and this was often appropriate, in retrospect. for the global integration of the financial

. 2010. “ the financial market impact of quantitative easing. ” bank of england working paper no. 393. july 2010, revised august 2010. krogstrup, signe. 2012. “ the effects of the snb ’ s liquidity expansion on asset prices at the zero lower bound. ” snb internal note. february 2012. krogstrup, signe, samuel reynard and barbara sutter. 2012. “ liquidity effects of quantitative easing on long - term interest rates. ” snb working paper. january 2012. ( forthcoming ). taylor, john b. 2009. competing explanations : a global savings glut. pp. 6 – 7. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches