typically, productivity performance is often poor in a downturn as output growth falls back but employment does not respond immediately. this performance was also recorded despite a peaking in information technology investment, but perhaps the impact of previous investment was only evident with a lag. in contrast, in europe, the downturn saw further declines in productivity growth, although there has been some improvement recently. possible explanations for these trends and the implications of their continuation will be central to the afternoon session. clearly, the prospects for european productivity growth are very important, not least, because in the future population ageing will mean that each worker will be supporting more dependents. before concluding, i would like to say something about the links between the conference topics and central banking. there are a number of important ways in which monetary policy and potential output growth interact. for example, it is important for monetary policymakers to have a reasonably accurate estimate of the sustainable rate of growth of the economy, so that the stance of policy can be adjusted in a timely fashion to avoid inflationary pressures emerging in an economy. equally, monetary policy can itself contribute to maximising potential output growth by maintaining price stability. relative price movements and the required re - allocation of resources that they may indicate are important signals and they can be distorted against the background of unstable prices. it is also important to recognise what monetary policy cannot achieve. monetary policy cannot permanently raise output levels through adopting a stance that is too accommodating. this might increase demand in the short - term but it will ultimately hamper, rather than boost, the economy's growth potential and is likely to end in a damaging inflationary episode. in a specifically domestic setting, the bank sees itself as having role in contributing to policy formation, specifically, by encouraging the adoption of policies that support long - term sustainable development. it can do so by sharing the results of its economic research and facilitating the discussion of important policy issues. today's conference contributes to the bank's overall efforts to meet its goals in this regard. in conclusion, i am looking forward to an interesting and stimulating discussion and exchange of views. i will now pass you over to the bank's assistant director general, tom o'connell, who will act as chairman for today's sessions.

as well as contributing to research within the eurosystem on this important topic. the first session today will deal with the domestic economy. it will commence with an overview paper followed by others relating to two specific topics that have been, and remain, key factors in this regard. these are foreign direct investment and the role of education in improving the quality of the labour force. given the rather striking growth performance of the irish economy in recent years, i hope that the discussion of the domestic economy will be of interest to all of you, including those who have travelled from abroad. this is a particularly appropriate time to consider the prospects for overall growth and productivity performance for ireland. the much - discussed era of exceptionally strong growth - representing a delayed catch - up process, if you like - is clearly behind us now. growth still remains relatively robust by comparison with most other mature economies but it is running below the average rates of growth of the late 1990s. there are also a number of specific concerns, albeit some of a more short - term nature. in particular, growth has become somewhat unbalanced in recent years, with an unusually high reliance on the construction sector, combined with some deterioration in the economy's export performance. the productivity performance of the economy has also weakened, partly in response to this shift in the pattern of activity. the second session of today's conference will focus on the wider euro - area economy and on its potential for growth. unfortunately, developments in recent years point to a rather poor performance on a relative basis, in particular, in comparison with the us economy. europe had been catching up on the us productivity performance over much of the latter part of the last century but, since about the mid - 1990s, this process of convergence towards us living standards essentially stalled and, indeed, has even reversed itself somewhat. this reflected a pick up in us productivity growth that was not emulated in europe. measurement issues may play some role in explaining these differing trends. measures of output in the us take greater account of quality changes, so that for any given value increase in investment or the output of the high - technology sectors, greater volume growth may tend to be recorded in the us. these measurement issues are not central to the argument, however. it is clear that, abstracting from them, the underlying story, though slightly less dramatic, is essentially unchanged. an unusual feature of us developments has been the fact that productivity growth remained strong even during the downturn at the beginning of this decade.