up, among others, by the imf in its advice on the optimal policy mix for the euro area. while countries with elevated public debt levels should focus on consistent consolidation of public finances, those with available fiscal space should use it to increase growth - enhancing public investment. in its global policy agenda, the imf has underlined the added value of coordinated action, helping to address challenges related to constrained policy space at national level. the same point was recently raised by reza moghadam, former director of the imf ’ s european department, arguing for a more widespread coordinated fiscal easing in the euro area in order to prevent a slowdown from slipping into a recession. while several caveats must be taken into account, any such fiscal easing should, if the 1 / 2 bis central bankers'speeches slowdown is judged persistent, be undertaken within the limits of debt sustainability and be differentiated according to fiscal space available. in this way, one would enable a more balanced macroeconomic policy mix. that ’ s why there are obvious merits in the idea. as the saying goes, monetary policy should indeed not be the only game in town. without further ado, or say, let me again welcome prof. thygesen and dr. szczurek, and now give the floor to them! 2 / 2 bis central bankers'speeches

caused the great financial crisis. in short, suppliers hired subcontractors, who themselves hired sub - contractors, and so on. as a result, an oecd report suggests that supply chains are increasingly designed to contain risks as well as costs. 6 often, this implies shorter and more transparent value chains. and given the intimate relation between digitalisation and trade, this trend could be amplified further in the future by rising cyber risk and risks to data integrity. the second factor relates to shifts in comparative advantages. 3 / 10 bis central bankers'speeches in the past, wage differentials for unskilled labour made the international fragmentation of production processes worthwhile. some of those wage differentials are now less marked as emerging economies continue to develop. in china, for example, real wages have increased by a factor of ten since 1995. the implications for trade are twofold. first, as the chinese and other emerging market economies mature and incomes grow, there is a rising shift from investment to consumption. this results in a lower trade intensity of demand. we already see that chinese import growth has slowed markedly. the second implication is that outsourcing of production processes has become less profitable. in the short term, this is unlikely to unravel existing value chains that also benefit from important supplier network effects – that is, from local upstream and downstream inputs and services. but in the long run it might lead to businesses reconsidering their offshoring practices. this brings me to my third point. shifts in comparative advantage could simply mean that other, less developed economies will take over from the more mature economies at the lower end of global value chains, following the traditional “ flying geese ” pattern. like nomads, firms move on and global value chains move with them. lumpy technological change could even help some of these economies leapfrog and jump directly to the most advanced stage of technology – the so - called “ advantage of backwardness ”. 7 i would like to suggest, however, that the fourth industrial revolution – and the associated increase in automation and the use of artificial intelligence – may mark a move away from this model. the reason is that the increased use of robots has the potential to modify the relative factor intensities in the production of certain goods and services and may thereby sever the link between, say, cheap labour and the location of unskilled manufacturing activities. 8 put simply, if robots can deliver the same output more cheaply, more efficiently and closer