stood the hypothesis that economic integration – and at a later stage also monetary integration – would lead to intensified trade and fdi flows, which would mutually reinforce one another. furthermore, the more closely countries are linked through trade and fdi, the more the synchronization of their business cycles will progress. this in turn reduces the costs of a loss of customs and monetary autonomy. all these factors will ultimately lead to higher growth, promote development and stimulate the catching - up process. this line of argument is therefore essential for the assessment of the costs and benefits of removed trade barriers and monetary union. have these hypotheses been substantiated so far? has the european integration process indeed stimulated trade and investment flows? and, if so : have intensified trade and investment helped to accelerate growth and the catching - up process? empirical evidence suggests that european integration has indeed stimulated trade and fdi. in 2005, in - and outflows of foreign direct investment funds from and to the eu reached a level that was only topped by the record year 2000. the european union could attract almost half of all funds invested worldwide. we will hear more on the current trends and patterns of fdi in session 1 this morning. this leads me to the second question : have trade and investment had the desired effect of stimulating productivity and growth through knowledge and technology spillovers? how can economic policy at the national and at the eu level contribute to generating a “ win - win situation ” in which both the investors and the fdi host countries profit from capital flows? we will hear more about the benefits and costs of fdi for the home and the host countries in session 3 this afternoon and in session 4 tomorrow morning, so i do not want to address these topics prematurely. let me at this stage just emphasize two important aspects : first, the european stability architecture provides the ideal environment for trade and fdi activities. the design and the interaction of a stability - oriented common monetary policy at the euro area level, sound public finances and ambitious structural policies at the national level are all essential elements of a healthy business environment, which is conducive to fdi development. this ensures that the freedom of movement for persons, goods, services and capital, can fully materialize and bring about flexible and dynamic economies. second, the ten new eu member states are the best example of how the fdi landscape has changed in the course of the european integration process. they have experienced trade intensification and a wave of f

delisle worrell : the strength of barbadian institutions and the resolve of barbadians will see us through the crisis op - ed article by dr delisle worrell, governor of the central bank of barbados, 15 august 2013. * * * barbadians have every reason to be confident that we can cure the foreign exchange imbalance which has emerged in the last three months, and revive the growth of our economy. first, we have the highest standard of living in the caribbean, and we have earned it by transforming the economy and investing in infrastructure and human resources, over many decades. figure 1 compares the human development index ( hdi ) for barbados with the rest of the caribbean. the hdi is the best indicator of the quality of life available for countries worldwide. second, barbados has strong institutions for decision making : our social partnership is the envy of countries worldwide ; our economic information systems are the equal of many industrial countries ; our media are knowledgeable ; and we have a strong mechanism for putting policy into effect. thirdly, we have preserved the value of our dollar, protecting the value of people ’ s savings, and providing more predictable returns for investors. fourthly, we have reserves which are more than sufficient to ride out the storm, as may be seen in figure 2. with these resources we may confidently address the challenges, which are twofold. the first is to balance foreign exchange inflows and outflows. following the june 27th economic consultation, government is in discussion with the social partners on measures that will be introduced to reduce the fiscal deficit. the required adjustment is considerable, about 4. 5 % of gdp, but not sufficient to cause major social disruption, as may be seen in figure 3. the adjustment will protect the value of our currency, which is vital to barbados ’ economic prosperity. figure 4 shows how the caribbean countries which have devalued have fared, compared with those that have maintained an unchanged value of their currency in terms of the us dollar. economic growth is the second challenge. the social partners continue to pursue actions to revive the economy. investment amounting to $ 2. 3 billion is in prospect for the foreign exchange sectors, and government contemplates $ 1 billion of infrastructure and other projects. initiatives are underway to improve access to finance by small and medium enterprises. labour is charged with an urgent need to improve productivity and quality of service in every area of activity, so that barbados becomes a byword for