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How can potential growth be increased in the euro zone?

- "In this Flash we will look at the long-term problem - and not the cyclical problem - of shortfall in potential growth in the euro zone, which is spectacular in a period of population ageing."
- "If long-term growth is to be increased in the euro zone, a number of structural economic policies must be implemented:
• despite the high risk aversion among savers, regulators and wage earners, ensuring that:
1) savings are used for financing of long-term investments, and not "wasted";
2) the financing of social welfare does not choke off growth and investment;
3) wage earners head into the most efficient jobs and sectors;
• reindustrialisation, and development of sophisticated services, to prevent jobs from moving downmarket into unsophisticated services; this raises the issues of the most pertinent sectors, the most efficient methods and countries’ comparative advantages;
• not implementing a "macro-prudential supervision" that kills off growth by imposing useless constraints that eliminate the advantages of monetary and economic unification."

Natixis Flash Economics 373 20100722

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