 Thanks for organizing this great conference and thank you all for coming to this session. It is a great opportunity for us to present some of the work we are doing with colleagues at the fund and the bank on what we think is a very timely and important issue, the issue of diversification and structural transformation in low income countries. In a minute I will provide the motivation why we care about diversification and transformation in the IMF. You may be thinking this is a bigger issue, especially for the World Bank, but I think we are thinking more of the macro perspective than the micro perspective, but I'll get to that in a minute. Let me start with the motivation. Why care about diversification and transformation? I think the first bullet is our starting point. The idea is that leaks have historically been heavily dependent on a very narrow set of products, especially commodities and traditionals, and on a few, very few export markets. Now speaking to authorities, so for example I worked for the team going to Tanzania and Uganda, it's been a long standing ambition for many of these low income countries to diversify, but we have very limited experience of what aspects of diversification are important, especially as you will see in a minute I'm referring to the macro perspective. It is true that over the last 20 years or so with the growth spurt that Governor Dulu was speaking to us about earlier this morning, a lot of these, some of these countries have diversified, and I'll give you an example of a few, but there is a lot of heterogeneity in the leak sample. Some have done very well in the diversification, transformation dimension, but some have not. So the attempt of this initial paper, we have an entire project agenda on this, which is funded by the way, but the umbrella paper that set the stage is based on stylized facts, facts that I will provide to you here and in 10, 15 minutes and later we can discuss different dimensions aspects of these stylized facts. Ultimately what we want to do with this project is of course to inform the policy debate on diversification, structural transformation, which is basically the theme of this conference, but more closely related to sub-Saharan Africa. Now again you may have been thinking why the fund, why the IMF is interested in a subject like this. Historically, you know, it's a subject that the World Bank is an expert on. Now we believe that the subject of diversification and structural transformation is macro-critical. So in other words, it's macro-critical in two dimensions. One, it is associated with growth and it is also related to reducing volatility. And here I'm going to just show you only a couple of cross-country pictures, figures, and again if you want to talk about this we can speak during the discussion session. What we have here is on the vertical axis, real GDP growth and the horizontal axis, we have our index of diversification, which basically as we increase this index of diversification, we have basically more concentration. So basically this tells you that as countries become more concentrated, there is lower growth. So there is an association between more concentration and lower growth or put it another way, there is a positive relationship between diversification and growth. We have done a lot of analysis with this, at least at this point at the association level. One dimension that is interesting is when we look at diversification spurts in extensive periods of time where countries transform or diversify their economies. And we have split our sample between fragile and non-fragile states. Fragile states are states that the World Bank defines as very low capacity, about 20 or 25 countries, and non-fragile states, which are the rest. And what we find is that basically diversification episodes or spurts are associated with sharp increase in growth, especially for the non-fragile state leaks. Now the story extends to volatility as you may expect. We do a similar exercise, but instead of having growth on the left-hand side, we have volatility or a measure of volatility, and we get this positive relationship between concentration again and volatility, or an inverse relationship between diversification and volatility. And also we perform the exercise with our newly developed spurred diversification episodes. And what we find is that output volatility diminishes after major diversification episodes. Now this is very broad brush analysis, we can talk about this later on, but this is a response to the big question why the fund is interested in this issue. It's macro-critical, it's related to growth, it's related to volatility, and more recently we get a lot of demand from our state holders on exactly this question, and of course you will see in a minute why. So in the next 10 minutes, what I'd like to impress you upon is the ability we have nowadays to do work with low-income countries, especially on issues of diversification and transformation, and especially coming from export data, which is pretty good. It's very current and it extends to many or all low-income countries. So I will emphasize on three dimensions here. First, we will talk about trade diversification indices across products and partners. Then I will introduce you to a new dimension that perhaps you have never heard before, is the quality upgrading dimension, which we view as a dimension of diversification. So the idea is that countries can expand on the product variety, they can export new goods, or they can stick to what they produce and increase the quality of these products. We have developed a quality index here, which is sort of first, this is new to this literature. And finally, I'd like to impress you upon the idea that you can take this cross-country analysis and bring it down very easily to case studies. So I'll show you a case study we've done on Tanzania, a country I have worked on and no more, but this can be extended in many other countries. And in the end, I will leave you with some main takeaways to enrich our discussion later on. So it would be a mission not to replicate the trademark of this literature, which is this cross, very broad cross-sectional relationship between diversification and per capita GDP. This is work by a few artists. I mean, Imps and Warziak in the AER is the pioneer paper that showcased this U-shaped relationship. Basically what this says is, first of all, let me describe the axis, the vertical axis is a diversification index. And the way you measure it is that the lower the index, the greater the diversification. And then on the horizontal axis you have per capita GDP. So what you see is that earlier in development countries benefit from diversification and then from reconcentration. So what you see here is basically early on in development, you see more diversification up until 25 or 30 thousand dollars. And then for whatever reason, that we'll try to explain later or we can discuss, there is a tendency for re-concentrating. So at the beginning you exploit more on producing more goods and exporting more varieties, but then as time goes by, perhaps because of increasing your education, you specialize more. So this is the evidence. Now this is the evidence where we also support what we manage to do in order to tackle issues of diversification in low income countries is to extend this very well known data set by Finstra, which started basically in 1988, all the way back to 1962 and include all low income countries. So this data is now available for 178 countries going back to 1962. Actually, if you know this data, that's where the dirty work had to happen, you know, because we had all the information we needed, but this information did not include low income countries. What we buy by extending that data is a lot, actually, because the time series dimension of this relationship only unravels once you go back to 1962, actually. So before you were getting the cross-country relationship, now you get also the time series dimension of it. Now what I wanted to show here is to focus, to emphasize where the low income countries lie in this cross-section. As you can see, it's very much to the left, indicating lower development, but also notice the huge variability, which is, of course, very interesting in trying to explain. Perhaps more interesting is to look at the time series dimension of this data. And here what we have on my left panel is diversification indices across time by income group. The red is low income countries, the green is middle income countries, and the blue is low income countries. Again, higher diversification means, sorry, higher number, higher index means lower diversification. So the first thing that jumps out of this figure is that, of course, low income countries are less diversified. They are very high up here. And of course, high income are very diversified. They are down here. The interesting thing that I think is very worth noting is that since 1990s or mid-1990s it's even better. You start seeing an increase in diversification which is indicated by this lowering of this index, right? And it's quite dramatic, if you will. I mean, this is only 15 years, but it's quite dramatic. And if you see the right-hand side panel, this is primarily driven by two groups. Thank you. The sub-Saharan African countries and East Asia. But sub-Saharan Africa is basically a main contributor. Okay, now changes in diversification are parallel by shifts in relative importance of agriculture. Basically what we show here is with the red bar is the share of agriculture in sub-Saharan Africa from 2006 to 2010 compared to the share in 1965 to 1970. So you see a drastic decrease in the share in agriculture and the opposite in manufacturing. We can see for example in East Asia, in 1965 the share of manufacturing was very small and that was true for almost. That's not so much the case in sub-Saharan Africa. Something that again was indicated by Governor Dullo. Okay, what we want to emphasize here is that there is also great diversification in partners. So not only in products but also who you trade with. And this is in particular in sub-Saharan Africa after 2006. I mean it's spectacular how much of the increase that you see in the number of new export partners in sub-Saharan Africa is greater increase than any other region in the world. And this is what we want to say with these figures is that this is primarily driven by looking at eastward. The links are becoming weaker with Europe and stronger with China. Now I want to spend one minute on quality upgrading. So countries have the choice of increasing the number of goods exported so they can increase the number of varieties they export that they export or they can stick with what they produce and increase quality. And here I will skip a couple of slides and show you some of the figures that we obtain from our new measure of quality upgrading. Basically what we find is that quality upgrading is crucial component of development. This is sort of a new result. This is new data particularly when countries go from low to low middle. It's not so important once you reach middle income status. As you can see our index becomes flat. That means you achieve very high quality after $10,000 and above. But before that there is a lot of scope for increasing in quality. And the interesting surprising result we obtain here is that when we do the same exercise splitting the index between manufacturing and agriculture we see the same tendency for manufacturing as well as agriculture. Indicating that there is a lot of scope for quality upgrading in the agricultural sector as well. We are able to split the quality measure all the way down to the good level. Here is for example across countries. We can do that for Asian countries and we can do this for Sub-Saharan African countries and going back to 1960s. So if you are interested in a particular case we can show you what has been the quality improvement over a period of time. We can talk about this later. This data is also able to do something intriguing I think not only to show where for example Sub-Saharan Africa is in terms of quality but also its potential. So in other words where Sub-Saharan Africa can export and have potential. And here of course it's clear that the potential is huge but actual quality is very low compared to Asia. This is something again that if you are interested we can talk further. One case study and then I'll conclude. We have done a lot of case studies. One is Tanzania for example consistent with what Professor Dulu was talking about. We can identify an increase in manufacturing which is given by the red bar here but also a huge increase in exporters movement away from India and towards China and Switzerland which is interesting but we think this is because of gold. And here is a nice picture where and I'll leave you with that where we show where Tanzania stands in terms of quality. We show you the share of the percentage exports in terms of total share with the blue bar charts. So these two which is commodities and traditional goods would be the goods that are most exported. We can show you the ladder of quality, the potential, and where they belong. So what this shows is that they have a lot of opportunity for quality upgrading. And I'll leave you with these conclusions. We think that diversification and structural transformation is hugely important for development. They are very macro relevant and you know at the fund we are trying to look deeper into these issues in terms of drivers and so on. Thank you.