Again, good morning. Now we have our keynote speaker and the panelists with us. As you know, this first session is going to be dedicated to trade shocks and the responses to the protectionist threat that, according to almost everybody, is the main risk, the main downside risk for the world economy. Let me introduce, rapidly, first our keynote speaker, Marco Putti, Director General of Economic and Financial Issues in the European Commission, one of the main exports of the European economy. In other words, our panelists, first, Bosjan Vasle, Governor of the Bank of Slovenia, colleague of the Governing Council, second, Anita Angelosca-Besosca, Governor of the National Bank of the Republic of North Macedonia, Devorah Revoltella, Director of the Economics Department of the European Investment Bank, and Sergey Kuriyev, Chief Economist of the European Bank for Reconstruction and Development. Now, the discussion is going to be open by Marco, who is going to make the keynote speech, and Marco, the floor is yours. Okay. Thank you, Luis. Go to the podium. Right. Thank you very much. The ECB, Luis, for having invited me. Great pleasure to be here. With the initial speeches of President Draghi, the managing director, set this in very nicely and made my life actually quite a bit easier. What I'm going to do in my speech is basically, in certain cases, to put flesh on the bones of what they have said, and in other cases, putting a bit of bones on the flesh they have introduced here. Now, this conference is about the CC countries, which include countries which are already members of the EU, and I will refer to them as EU 11, and countries that are candidates, potential candidates for future membership, countries that do not have such a status. So what I'm going to do also for comparative advantages, I will focus mainly on the EU 11 countries, but at the end draw some conclusions also for the others and for the broader region as a whole. EU 11 economies are amongst the most open economies globally, and moreover, the trade openness increased, and the nature of the trade flows changed rapidly in this millennium in large part because they joined the EU. I think you see this in my slide. There are important characteristics of EU 11 countries that are different from those of other countries with similar degrees of trade openness. Their institutions and their social support systems are less developed than those of small, open EU 15 countries or the old countries of the EU, and their households are much less financial savings to smooth their consumption. As the capacity of an economy to absorb shocks and manage the necessary structural changes greatly depends on the quality of institution and on that of the social support system, this is an important difference within the EU. As trade flows are significantly influenced by decisions of firms on the location of the production and labour migration, these characteristics of the EU 11 countries are highly relevant to understanding how trade and other shocks impact them. In what follows, I will focus on two closely interrelated aspects of rabid trade integration and the underlying FDI, so it's on the one hand the impact on long-term growth potential and on the other hand on the degree of resilience of these economies. While most economists would agree on the positive economic effects of closer trade integration at the aggregate level, there is an increasing awareness of the importance of the aspects such as income distribution and more broadly equal trans-system fairness, agglomeration effects and the resulting regional disparities and the increasing prices of housing and regional labour market mismatch, labour migration and the resulting fiscal and social implications. One of the important lessons of the recent crisis in Europe is that the focus on narrowly defined aggregate economic growth and economic resilience is not sufficient to understand the long-term impact of economic shocks. Shocks that stimulate growth but can also trigger a crisis, so a broader focus that entails social and political aspects is necessary to understand current developments and to formulate adequate policies. If left unaddressed, negative social trends created by market forces can lead to reform reversals, so that's an important message, reform reversals, temptations and ultimately to an erosion or growth potential and economic resilience. So the emergence of global value chains, we have heard it from President Draghi and the Managing Director, changed the nature and the impact of trade integration. So the ICT revolution of the 1990s made it easier, safer and more profitable for leading firms in advanced countries to combine the know-how with low-cost labour available in nearby countries. However, as trade costs are further reduced, the global, including Europe, but also extra EU component of value chains is likely to increase. Similarly, as service components of global value chain increases, competitive pressure from global market forces increases. This leads to a constant relocation of the different elements of global value chains increasing possible reshoring of certain parts to EU-15, so the old member states, but also offshoring of core elements of EU-15 to EU-11 or countries outside the EU. So one can expect these complex trends to continue and further strengthen in the future. The process of trade integration and the creation of global value chains also drove a significant inflow of FTI into EU-11 countries with import and model technology and capital deepening, as well as rapid modernisation of the product structure, having a positive impact on productivity of local suppliers. I mean, this confirms recent empirical evidence, which shows that domestic markets have been in both knowledge spillovers and factor reallocation as a consequence of multinational production. The policy mix that facilitates reallocation includes improving credit access and labour supply, particularly skilled labour, while eliminating regulatory barriers, reforms that have been carried out in CC countries. As we trade, many of the underlined forces that promote FDI were global and geographical proximity helped, but EU accession provided a fertile ground for these forces to work, as it helped improve institutions and create a higher degree of legal certainty for investors, is a point also stressed by the initial speakers. FTI-11 countries benefited significantly from the reduction of barriers to trade. A recent paper by Merle-Baden and Puris estimates that supplying inputs to a multinational just across the border is productivity enhancing only when countries share an EU border. These spillovers effect become even larger and stronger when borders become seamless, as is the case in the Schengen area. So point estimates implied an increase of one standard deviation in FDI activity across the border results in a productivity level that is about 2.6% higher for cross-border EU and cross-border Schengen effects, respectively. As a result, inwards FDI relative to GDP in EU-11 countries has caught up with a trend observed in the most developed small open economies in the EU and in the world, as you can see from my slide here. The same, however, has not been true for upward FDI and this, as I will show you later, is a key element in understanding the macroeconomic developments in the case of shocks and in the case of the recent experience with the crisis. As overall capital stock relative to GDP is smaller in EU-11 than EU-15 countries, the share of FDI in total stock of capital is higher. You can see this in my, in this slide. Put differently, foreign capital and thus foreign influence in the corporate sector is more important in these countries, particularly in their exports or tradeable sector. Proximity to Germany and the abundance of a low-cost but relatively skilled labor force made the EU-11 countries perfect targets for integration into European, mostly German, global value chain. They were at the right place, at the right time, and in the right conditions to benefit from this global process. The closer to the center of gravity, the better for the transport infrastructure and the more so even within countries. So increasing FDI has also further accelerated the already strong acclimatization effects and increased the demand for and the wage premium on higher skills. FDI is highly concentrated in main urban areas, particularly in capital and in areas that are close to the main West European manufacturing firms creating global value chains. So as the, my next slide here shows FDI is particularly high around capital cities, such as Warsaw, Prague, Bratislava, these are the green colored areas and in areas close to Germany with, with urban centers, this is the case of Gior in Hungary where Audi has the main production site. So large differences exist within countries, for example, between the region where Warsaw is in Poland, where FDI relative to GDP is very high and this is in green and the mostly rural region, region surrounding, surrounding this region, where FDI relative to GDP is very low. So, and you can see in the charts these are in, in black. As my next slide shows here, actually borrowing from the, from the EBRD trimming actually a bit your, your figure, but it's, that's what come from your, from your report. The creation of global value chain had a major agglomeration effect also in the countries in which the firms creating global value chains are located most visibly in Germany. So the location of newly created jobs seems to be rather different from that of the eliminated ones. As a result, decline in localized product, population density is as strong in the middle Germany, also in the western part, as is in some of the regions in the CZ countries. So the process of trade integration and the creation of global value chains have major social and political implications not only in these countries, but also in countries of all countries of the EU, even in the highly successful ones. I mean, one of the salient characteristics of the crisis experience, so the, the recent financial crisis of U11 countries was that in many of these countries the decline in domestic demand was actually much bigger relative to the decline in GDP than in the core EU countries. With the help of a calibrated DSG model, we can pinpoint two, two important characteristics of EU 11 countries that can explain a large part of this phenomenon, which is certainly multidimensional, and will, I think, remain relevant moving forward. The first one is the high share of foreign ownership of product capacity without a comparative, a comparable magnitude or outward FDI. So this is the first element. The second element is a large share of hand-to-mouth consumers that these people who have little savings and thus have to leave, to live out of their current income, which is partly a consequence of the first characteristics. So these two elements are important. As combined, as a combined effect of these two characteristics, the income share of unconstrained households whose consumption would react less to shocks is significantly lower in Sisi countries compared to the old EU 15 economy. So you, you can see that, you can see in these charts, these characteristics have important implications on how the economy reacts to a global recessionary shocks in the EU economy with high foreign ownership of productive assets relative to an EU 15 economy and relative to the somewhat hypothetical case of an EU 11 economy without sizeable foreign ownership. So domestic demand, particularly consumption, declined considerably more sharply in these countries. And the decline in investment also you can see from the chart is somewhat bigger reflecting the accelerator effect of higher consumption decline. Given the high share of non-tradables in consumptions, a much larger decline in consumption, which is not fully passed on to imports, implies that the non-tradable sectors decline much more in new 11 economy with sizeable foreign ownership. Moreover, despite relatively flexible labor market, hysteresis remains significant and equally important investment recover considerably more gradually. In short, you put all these elements together, growth potential may be reduced more. So not only actual production, but also potential output can be more volatile than in more mature economies. And I think you can see here this seem to be the case in my next slide. So if we add up these two effects, i.e. a bigger shock to the non-tradable sector in a renewed reallocation of modern export-oriented production in EU 11 countries, the outcome is that winners win even more and losers lose even more. So the growth potential at the aggregate level may have been largely restored. You can see actually the growth potential going up in my chart, but the vulnerabilities I discussed above have actually increased. In the absence of an efficient state with high quality public expenditure and the social support system, this may destabilize societies and domestic politics. The emergence of reform reversal in the region is a likely manifestation of this impact. In the charts I show earlier, so would you slide the models incorporated exchange rate flexibility. So it's a shock with exchange rate flexibility. Flexible exchange rate regimes, especially when they are allowed to work, can help absorb external shocks and be particularly helpful when external shocks are symmetric. This is also confirmed by our model simulation. I have some charts here in the background that if you like to see them later, if this is taken away, the volatility of output becomes somewhat bigger. Exchange rate regimes we have seen in the past several years in CC regions have continuously moved towards the two extremes, floating and fixed regimes. And EU 11 countries with the latter regime, with the exception of Bulgaria, have already joined the Euro area, and Bulgaria has applied for entering ERM 2. Regarding the EU 11 countries that have not yet joined the Euro area or expressed interest to do so, they have floating rates and adjustment tools at their disposal. I think they serve them well during the crisis, albeit could not eliminate the consequences of poor policies. I think this is an important message. Exchange rate cannot compensate important policy mistakes. Moreover, with foreign exchange denominated loans greatly reduced now in the aftermath of the crisis, they can use exchange rate flexibility more than before the crisis. But like during the crisis, exchange rate flexibility will not be a panacea for poor macroeconomic policies and lack of structural reforms. Actually, just the opposite. With poor policies, the volatility of the exchange rate can well aggravate the situation. So let me move to the policy options moving forward. Policy options to react to trade shocks can range from short terminus of protecting rents tied to vested interests to, on the opposite side, long-term strategies consisting of adopting appropriate structural reforms and enhancing the quality of institutions to retain the position of an attractive investment destination, but also for moving up the value chain and leapfrogging. We see these different responses simultaneously present in the current situation in the world. Here, Mrs. Lagarde mentioned this. Trade protectionism of any form would be particularly detrimental for CC countries. And this is well understood in these countries. What is perhaps less well understood by some policymakers in these countries is that restrictions on foreign entry of FDI in the non-tradable sector, such as retail trade, in sector that are less exposed to competition from the outside, so certain service sectors, also reduce their competitiveness and capacity to attract FDI in the tradable sector. So there is an interplay here between tradable and non-tradable sectors. Success in attracting FDI is certainly important for potential growth looking forward, but make also CC countries more vulnerable to external shocks, as I try to illustrate in the model simulation. Therefore, the right balance in sequencing or reform is needed to make the convergence not only fast but also sustainable, which is economically, socially, but also politically. As you can see in my final slide, given the strong exposure to global shocks, social policy reforms should address all three dimensions, pre-market, in-market, and post-market, to make CC countries more socially and thus politically more resilient. Institutional reforms are key on all fronts and can also help build capacity and use EU funds more efficiently. Continued capital imports will remain a necessary element of our development strategy and risk diversification is essential for such a small and highly specialized open economies. The crisis clearly demonstrated the vulnerability of that financing, those reforms that can reduce these vulnerabilities, such as completion of banking union, reforms that can make alternative source of finance more easily available, such as the completion of capital markets union, are essential part of this strategy. So a lot is requested in terms of domestic reforms for these countries, but a number of reforms at the EU level are also conducive to stronger resilience and catching up in these countries. So most of what I have said so far applies also to countries in the CC region that are not yet EU member states, but which are as candidate or potential candidate at different stages of the EU accession process. As the experience of EU 11 countries shows, the prospects of future EU membership constitutes an important anchor for political, economic, and institutional reforms. It can accelerate trade integration, FDI influence, and increase the participation in global value chains, and so do national reforms. In fact, comprehensive reforms are indispensable to comply with the criteria for future EU membership, but the opposite is also true. Slowing down reforms or worse, reversing them makes the EU membership a more distance option and makes these countries less desirable for FDI. Hence, the central law of reforms for CC countries is confirmed. Infrastructure is also crucial as the type of FDI and the part of the global value chain that are likely to move to this part of Europe or the stage of developments heavily relies on transportation. The other side of the coin is that increased vulnerability and strong agglomeration effects and including outward migration for the region is equally, if not more important, to bear in mind for these countries. So to conclude, to maintain the high growth potential of these countries and thus to support rapid and sustainable convergence that meets the expectations of the people in this part of the world, CC countries should make themselves ready to benefit from the new trends in the global and the European economy. However, success on this front will expose them even more to global shocks and make them more vulnerable on other fronts. Therefore, they need to learn to live with them better by increasing their economic, social and political resilience to these shocks. This is also in the best interest of the EU as a whole and reforms at the EU level can also help with this process. Thank you very much. Thank you very much, Marco. You have made a comprehensive presentation that I think that is going to be very useful because you have covered all the important elements of the discussion that we are going to have afterwards, starting with the common features of these CC economies and with some policy recommendations that for sure are going to give rise to debate afterwards. So now, well, we are going to open the floor to the panelists. You are going to have each of you seven minutes for your presentations. I will start with, we will start with Bosnia and Vasti, then the governor of the central bank of Slovenia and also a member of the governing council. So good morning, dear friends, and thank you for having me here. It is a very distinguished panel and also a very interesting one, namely, as was already emphasized today two or three decades ago, a majority of our economies decided to change our economies to build a new growth model, which was very much based on the openness of our economies and hence on the international trade. And of course, when there are some adverse shocks into this area, it's influencing all of us quite significantly. So for the purpose of this presentation, I prepared a few slides and I split countries we are talking about today. So these countries in two groups, the first one are these who already adopted Euro and then the rest of them. And as you can quite clearly see here, the growth model based on trade and openness and majority of countries almost doubled export market share in less than two decades, as opposed to the controlling group of countries which are Euro area member states which are not included in the first group. So this is even more through for the countries who adopted Euro, which are benefiting from your membership and also reflecting the fact that trade is inside this block is very Euro oriented. So looking at the same phenomenon from other angle is through global value chains and I prepared here a measure of global value chain participation, which is based on the sum of downstream participation and upstream participation and it's measured as a share of gross exports. Now, you can see that there is an increasing trend in all three group of countries, but still the highest integration is visible for Euro area countries inside this block and for non Euro area CZ countries as well. And what is also important is that upstream participation, which is basically a measuring portion of export used by another country in the production of their exports is on the upward trend and also downstream participation is also on the upward trend and this downstream participation is basically measuring the content of import into our exports. So what is even more important for us is that not only volumes, but also the quality of exports is improving. As you can clearly see, almost or more than 40% of increase is due to high tech in CZ Euro area countries and then there is an increase in the medium high tech, which is also at around one third almost and then decrease in medium low tech and even higher degrees in low tech. And the same is true for CZ non Euro area countries, whereas the situation in Euro area countries is quite a different high tech is on the downward trend and medium tech is on the upward trend. However, looking at the absolute levels, CZ countries are still slightly behind the Euro 12 group. The drivers, which are behind these developments or behind GDP growth and also export growth are, as you can see, very different in these two group of countries. On one side in CZ countries, there is a huge contribution of increased productivity, whereas employment is the main driver of growth in Euro area countries, which are not in CZ bloc. So the quality, one can understand this as an improvement, additional improvement in the quality of GDP, the composition, and also in the export, the composition. And in addition to that, a real unit labor cost also decreased in the CZ group as a whole, as opposed to Euro area where there is only a small decrease. But there are some differences between the countries which already adopted Euro and those which has not. And you can see that there is a difference between the productivity and compensation for an employee. And as one can interpret this result, the higher wage growth also has some improvement of related to the living cost standards. Although there is a deterioration in the unit labor cost developments. So what can we do at the end of the day when there is a negative shock coming from the international trade and going basically directly to our growth model? It was already mentioned that when we are talking about the short-term prospects, there is actually very little we can do. But when we are thinking medium term or longer term, there are, of course, the whole area of structural reforms which can help to mitigate these negative developments. And there are basically two areas I would like to emphasize. The first one is productivity. And the second one is improvement in technological structure. Namely, the productivity growth is the main driver of our GDP and our export and implementing measures to improve these productivity levels. And growth will, of course, contribute to the overall result.  I may start with improvement in education, improvement in the labor market, so distribution of effects inside the labor market. There is a field of research and development and also innovation which can be reached through the prudent investments, which can also have positive effects on the mix of policy mix. We are currently seeing in the EU area and in these countries as well, because if there are countries with enough fiscal space, it can have positive effects for the policy mix as well. And, of course, there is also a broad area of red type of different measures which are not very supportive to the performance of our economy and can be addressed in order to improve this performance. Now just to end it, the one area of reform is also related to deeper EU integration, namely if we are, which we are probably not in a position to influence significantly the overall flows on the global level, we can do much in terms of block we are living in and by this, I mean, completion of the banking and capital union which can help to improve the situation in the EU area. Thank you. Thank you very much. Bolsian, our next panel is this... I don't have a slide, should I speak from here?  Okay, first of all, let me thank you for the invitation. It's really a pleasure being here and having the possibility to reflect on the challenges that small and open economies such as North Macedonia are faced in the new global trade context. I was asked to more reflect from the perspective of the North Macedonia as a specific small economy. So North Macedonia is small and open economy which is characterized by high trade and financial openness which accounts more than 100% of GDP which is principle means that's an economy that is subject to a different kind of external shocks that can easily transmit in a domestic economy, affect different segments of the economy and especially given the monetary regime of the fact of fixed exchange rate which means that in principle room for accommodative monetary policy depends to a critical extent on external environment that it's implication at the level on the official reserves. Looking at developments in the region, trade integration in the region, it's clear that it has started accelerating at the early years of transition as was our case. Of course, underpinned by implementation a lot of structural reforms, trade liberalization, elimination on different kind of trade barriers but it has been particularly rapid in the period preceding the global crisis. To great extent, it can be explained by the abandoned capital inflows that were present in region, fueling consumption, fueling import and to some extent also due to higher FDIs in the region fueling the export from the region. In the post crisis period in the context of downward adjustment of the capital inflows in the region and weaker global outlook, there has been a slowing down of the trade integration almost across all countries in the region. However, we have followed, our pattern has a lot of similarities with this pattern but also some differences, one notable differences that in fact in the pre-crisis period our pace of trade integration was slower and then it significantly accelerated in the post-crisis period. What can explain this deviation from the common trend? First of all, we didn't face abandoned capital inflows in the pre-crisis period, which means that we had a more moderate cycle on average. Second, in a post-crisis period, a lot of reforms, especially in the segment of the business environment, were stepped up which was, which is also visible, the fact that through different kind of indicators, for example, doing business indicators where the country currently is ranked 10th position, of course, there are many things still to be done, but the fact that these changes were conducive to FDIs, maybe not such sizable FDIs, but what has been very important for us FDIs in the tradeable sector, it has been mostly in the automobile industry, investments that have started operating in the free economic zones, operated, opened by the government. This process for our economy has brought a lot of benefits. First of all, it has increased the competitiveness, which is clearly visible through different pattern of development of productivity and competitiveness in the segments that profess with FDI and different pattern in the other segments of our economy. Then also it changed the structure of the economy, it changed the export structure, reducing our resilience on two dominant segments, which are very low value-added segments, such as textile and metal industry. It also had other spillover effects through the rest of the economy, and what is very important for us is that this process meant a durable way of financing the growth, because growth was mainly driven by FDI, stable inflows that increase our financial openness, but in a way it was financed by stronger, by more reliable and stable inflows. So on the one hand overall, it meant looking from a more broader perspective, this process meant improvement of our fundamentals, which can mean stronger economy to deal with any potential shocks, but on the other hand it also meant increased vulnerability of the economy because trade openness significantly increased. Of course it's not the case only with our economy, if I look the data across the region, trade openness has significantly increased across all countries in the region, and dominantly it has been driven by the export segment. So in this context, when we are faced with such high openness and not just trade, but also financial openness, we are faced with really in the current environment, we are faced with a lot of challenges. The fact that to what extent one economy is vulnerable to external environment, of course it doesn't depend only on the level of the trade openness, it depends on the structure, export concentration, export sophistication, but it also depends on the financial openness, level of financial openness because these trade shocks can translate also to financial markets through the confidence channel and have more broader worsening of the perspectives to the region. It also will depend a lot on the reaction on the financial markets, it will depend on policy room to react on such developments. And looking the data across the region, although there are similar trends, I will say that there are still a lot of differences across countries, even purely looking just trade openness. In this region, trade openness ranges from 60% of GDP to 180% of GDP with quite different structures inside, quite different level of exposure for example to global value change. And in fact, global value change, the level of the represent, I mean, can significantly amplify the effect because all of the reasons that were discussed so far. Looking at the financial openness, even the difference is bigger. It ranges from 100% of GDP when I speak about financial openness that they can account financial assets and financial abilities to up to 300% of GDP. So quite differences across countries. In our case, what is important in de facto, we are heavily exposed to developments to the European Union. As was mentioned by Ms. Lagarde, yes, we are not directly exposed to US economy, Chinese economy. We are not exporting directly the automobiles in these economies, but indirectly where we can be significantly hit. For example, we have reduced the resilience I mentioned to some traditional industries, but we have significantly increased the dependence on our automobile industry. For example, our export of automobile industry now accounts roughly 50% of our export. It's mostly global value change. It's mostly German. So we heavily depend not on domestic demand in the EU, but external demand for the EU products. In this context, what is important for us as a small economy, other economies in the region as well, is to strengthen the resilience of the economy and to strengthen the resilience of the economy despite pursuing with sound macroeconomic policies, which means building policy buffers to be able to better confront with any shocks, also continuing with the structural reforms in the region that are key for increasing the productivity. In the whole region, accounts on average 60% from the German productivity. In our case, it's even worse, just 44% of the German productivity. And this is a key because we will have to fight for a smaller piece of the trade pie, which will be smaller now. So competitiveness even now needs to get more attention. And there are a couple of specific segments that I think also deserve attention in our specific case. We have to structure policies in a way to reduce the concentration on any industry, being also industry which has a high value, reducing concentration on countries. We are also, our export is also concentrated with Germany, although good side of this, this is an economy with good fundamentals. We still export sophistication has increased, but still there is a long way to go. And regional trade, not to forget the regional trade. Regional trade, I looked at it, I was even surprised, I was not, I know that it was declining. I thought that it's more in relative term because we are now becoming more exposed to EU as part of the global way you change. But even in nominal terms, regional trade has been declining. And this can offer a lot of benefits for region as a whole. And I will stop here, thank you. Thank you very much, Anita. Our third panelist is Deborah. Thank you very much. And again, thank you very much for inviting me to be a panelist in this very interesting debate. And I think at this stage, I will just mention the key messages and then move on to the second part of the presentation. I think we have elaborated a lot on the first part of the message that I had as I don't want to repeat it too much. The main message that I wanted to bring to the table is that a centralist in Europe is a group of open economies where integrated in the global value chains. We heard already that they have increased very much their sensitivities to shocks. The key fact is that in the last years, structural factor have prevailed, with the structural factors being very much the European integration and the global, the integration in the global value chains. So these structural factors have somehow covered the very strong sensitivity to potential trade stock. But the challenge is the challenge of the future. And this is the part where I will mostly focus. And the challenges are really related to the structural factor like the globalization, technological change, aging and outward immigration as we heard this morning already. And these are the elements that should be at the core of the policy action in the region to guarantee continued productivity growth. So the key answer to me are working on removing structural impediment mostly on the business environment, working on skills, working on digitalization, innovation, and working on finance for innovation. So I skip at the first part where I was talking about the structural trend of integration in the global, in the European integration and the global value change and then in global trade. Despite the dynamics in world trade, I only keep one element of this. That is when we use a firm level data and also survey data that we collect at the EIB to look at the exporter premium. And we see that the exporter premium is quite irrelevant in the region. The exporters end up being much more productive, much more innovating. They end up having stronger growth, stronger financials, and being less finance constrained. So in fact, at the micro level, we see that being an exporter has been giving a premium to firms and leading to faster transformation. But I switch to the second part, so the structural challenge adds and the policy challenge for the region. Again, I look at micro data, firm level data, and partly related to a survey that we run at the European Investment Bank. We ask which are the key structural impediments to firm for their investment decision. And in the region, we see a number of impediments and some much stronger than at the European level overall. The first one is skills, but I elaborate on this later. The first, the second and third one are labor regulation and business regulation that in the region weight more than at the European level overall. This is quite important because labor market regulation and business regulation as an impediment to firm are impeding the transformation and reallocation of resources. So they impede the natural change needed in order to have more innovativeness and more dynamism in the economy. And this is something quite important on a policy point of view where structural rigidities are still part of the normalities in some of the countries in the region. I go back to the first impediment. And the first impediment for investment in the region is still related to availability of skills. We have done analysis and I'm sure that the circuit will continue on the topic. There is a strong component related to the outward migration from the region which is one of the important element and it also calls into question whether Europe with an integrated labor market should have more coordination in term of skills policy at the European level. But the issue of skill is important on the one side because of aging, because of the outward migration but also because it's posing a particular constraint to the technological transformation of the region. What we see is again coming from our own survey that particularly certain skills are lacking in a global market where top skills move to Europe to other countries, the region is really starting to lack what was one of the key element of the region was really to come out from a communist time with very strong STEM skills. And this is now changing because of the outward migration part. And also what we find is that the firms that are more innovative are those complaining the most for lack of skills. These skills issues again is very important also because the technological transformation is generating substantial change in the labor market with a number of jobs being at the risk of transformation. And if you don't have the higher skills level and if you don't have the incentive for generating the year skill level, the positive part of the technological change and digitalization that is the growing and enhancing part and the labor generating enhancing part can be compromised. So the digitalization process in the region can lead only to destructional jobs rather than creation of new jobs. I switch to the second point where policy action is quite important in this related to digitalization. And again through our survey we compare European and US firms and we look at the level of digitalization. What we see is that Europe and Central Eastern Europe as well seems to be more or less at a par with the US in terms of digitalization in manufacturing is lagging behind in the service sector and Central Eastern Europe more than the rest of Europe. What is interesting is also to look at which firm lagging at the European level it's a lot of the small and the micro firms in Central Eastern Europe is a little bit more also of the medium and large firms. Why lagging behind in digitalization is an issue. The issue is that lagging behind in digitalization may have a permanent cost in term of productivity. There may be winner takes all issues that will generate this delay to have a cost for the society that is a long term cost for the society. So moving forward on that point of view on sporing digitalization in quite important for the region. And this is a European commission indicator of digitalization readiness and you would see most of the Central Eastern European countries quite on the right side. I am almost at the last two messages on innovation, smart environment what we see is that the region again is lagging behind in innovation capacity. The first graph is showing a way in which we cluster firms according to weather firms are not investing in R&D and not innovating, those are the basic and adopting are not doing R&D but adopting technology and the other ones are doing R&D and they are innovating. What you see is a Central Eastern Europe is lagging behind a much more basic firm some adoption and much less of the active innovator firms. So sporing the innovation side is quite important. On the other side, we built an indication of a smartness of a region. It comes from a number of indicator at the regional level on what does it mean to be a smart region. And here what you see Central Eastern Europe is lagging behind and with a very strong discrepancy with capital cities, regions versus the rest. So is again another message in term of pushing more for innovation. Financing for innovation, I couldn't work at the AIB if at this stage I don't talk about financing for innovation. And also with my yet of the Vienna initiative we are developing a working group really looking at what's happening to finance for innovation in the region. There is a relatively low public sector prioritization for innovation financing and this is showing in terms of public sector policies in the direction and on the other side, the private sector is very used to grants. So there is a lot of dependency to grants. And this brings some challenge in terms of building a normal framework for financing innovation. On top of that, very much bank-based financial system is situated in Sweden to support innovation. And there are some niche for experimentation in the region in Bulgaria, Romania, the banking are trying to do something more in terms of taking risk supporting innovation but those are extremely small. There is a venture capital market that is slowly maturing, somehow more maturing in some of the countries but it is quite isolated and there is a low integration of this venture capital market with the global pan-European market. And then again also the pan-European venture capital market is not the best example of leading a firm toward the rule of the growth phase. There are some new things, so guarantee schemes that can help in financing innovation and venture debt is a new option but still in terms of financing innovation there is a lot of work to do also on a policy point of view to try to have more going on. So the last message, I think that the challenges so far are structural. The region has to work more on these structural elements, structural impediment, business environment, skilling and re-skilling, innovation, advancement of digitalization and then finance for innovation. Thank you very much, Deborah. Finally, last but not least, Sergei. Thank you very much, Luis. Thank you very much for inviting me to speak at this distinguished conference. Indeed, much of what I wanted to say has already been said and that's why I'm not showing slides because my slides would literally show the same data, the same trends as people who've talked with and without slides before me. I will, like everybody else, say what we think about the last couple of decades, kind of taking stock of convergence and integrating in the global economy of CC region. I will also talk about newly emerging challenges and why it is hard to address those challenges. So in terms of taking stock, convergence has indeed progressed. FDI has actually been ahead of other emerging markets. Global value chain integration has been very impressive. Most of those trends, however, peaked before the crisis. In the last 10 years, further growth of trade and value chain integration has been stagnating. FDI is not as high as before the crisis and convergence still is going on but is slowing down. But the levels achieved before the crisis, which are now stagnating, are indeed impressive. So if we think about CC economies, these are countries where 50% of exports are imports. So the content of exports due to imports is higher than in other EU countries and is even higher than in Asian champions of global value chains such as Korea and Malaysia. Part of that is of course because these countries are small, they have to integrate into global value chains otherwise they cannot grow. But it is impressive that if you look at global value chains index, if you look at import content of exports, all of these countries are above EU average with possible exception of Croatia. Probably this is why the IMF conference in Croatia in July will focus on other issues on demographics this year and two years ago on governance. So, but still it is the region which depends on trade which is a major recipient of European FDI and it is an essential part of factory Europe. Now that brings us to the challenges which emerge as we speak. Madame Lagarde talked about those challenges. The trade wars are emerging. Brexit is still on the agenda, whether we like it or not. And the question is to what extent our economies are, CC economies are resilient to those. Well, first and foremost of course, the trade wars will not directly affect those economies as Madame Lagarde was talking about because these economies are not exporting to US and China directly, they're part of factory Europe. And we do not foresee trade wars within Europe. At least we attach zero probability to those events. We see that however the indirect effects may be large and this is what Christine was very precisely indicating that if you export to Germany and then Germany exports to China and if China is hit by the trade wars and slows down then the indirect effects may be substantial. And this is of course a major challenge and this is a joint challenge not just for the region but for the whole European Union. I should say that here we talk about CC but this is also a challenge for many of other countries we work in. They're also integrated. The countries in the neighborhood are also integrated in European economic space being a part of customs union such as Turkey being members of DCFTA with Europe such as Ukraine and Georgia. But since we focus on CC, let me talk about this. The second major challenge is of course automation and robotization. That may result in reshoring of jobs and we already observed that happening. We see that this region as Madame Lagarde was saying is aging and aging rapidly and this is what we talk about in our latest transition report. This region is if you like the aging capital of emerging markets. It's behind Western economies in terms of aging but outside of the advanced economies areas this is the region where aging is happening as fast faster than anywhere else. When you have aging, you have robots. There is a very strong and robust relationship between the age of median worker and number of robots per capita but in those terms actually our economies are behind the West, behind Western European countries with the exceptions of Poland, Slovakia, Slovenia and Hungary. In other economies, for the same aging composition of the labor force we see fewer robots, significantly fewer robots than in the West. And that of course is a challenge because when you have robots in Germany, Germany no longer cares that much of wages and therefore jobs may move from Central Europe, Southern Europe to Germany. Back to Germany, this is what Mark called reshoring. Now the next challenge is the implication of success of convergence. As convergence is happening, incomes are going up, wages are going up and so the advantage of low cost scale labor is no longer as important and so you need to find a new growth model as jobs are moving further on to low wage destinations such as Southern Eastern Mediterranean for example or some areas of Turkey or Ukraine as I mentioned or Georgia and in that sense the challenge of creating new structure of growth model, new growth paradigm is there. So how do countries can respond to those new challenges? Well, this is what everybody has talked about, skills, innovation, quality of governance, quality of bureaucracy, quality of policymaking. Where do our countries rank on this? Well, these countries still have strong skills. So this is something which I actually didn't expect to find but when we looked at skills using all the wealth of data on both quantity and quality, we were expecting to find that these countries have huge quality of skills, which is true. Our countries still have a lot of, sorry, quantity of skills. The huge quantity, we still have a lot of people with higher education due to the expansion of higher education in the last 20 years, not just before the transition. However, what I was surprised to see is that quality is actually quite high still and whether you use OECD data, for example, PIAC data or World Bank data, for example, STAP data, whether you use World Bank Human Capital Project that looks at all measures of quality of education. Even if when you look at quality or quality adjusted quantity, these countries are still quite skilled. And this is important, why? Because also when we talk about reform, reversal, political pushback of globalization, in these countries globalization remains popular. Why? Because skilled people see benefits of creating middle skill and high skill jobs. And this is the research we are doing at the BRD where we look at the skill composition of trade and political approval, support of globalization in different countries. We see very clearly that if you have skilled experts going up and skilled imparts going down, then the skilled workers actually support such globalization while low skilled workers, of course, resist such globalization. Now in terms of governance and institutions, this is the region where relative to countries with similar incomes, quality of governance is low. And previous speakers mentioned specific countries, but I just can tell you that on average in most of our countries, quality of institutions are actually low relative to countries with similar income levels. Now if you ask me say a couple of years ago, I would say, for example, in bold countries, governance is amazingly high. But then we've also had scandals there as well. So another issue is innovation. So these countries have actually achieved convergence, but they've not built sustainable innovation systems. And yeah, I still have a minute. This is a very interesting process that we've observed in the last couple of decades where incomes have grown, but number of patents have not grown. Number of innovative businesses has actually lagged behind. If you compare to countries, other middle income, upper middle income countries such as Korea, Israel, China and Turkey, which have grown and in the process also built innovation. Our countries in comparable measures lagged behind. That may be because of a top-down culture of communist legacy. That may be because of ageing. I'm not an ageist person, and I'm also above middle age even in my own country. But I think younger people innovate more not because they're better, but simply because they have longer horizon in front of them, so they're more likely to be willing to take risks. In other issues, of course, brain drain and emigration, something that has been mentioned today a lot.  And of course, smarter and more innovative people are moving to countries where returns to innovation are higher, such as the UK, Germany, and the US. And in our transition report, we evaluate the cost of such brain drain, and we show that the cost is high. And we show that firms and industries that were affected by outflow of skilled workers have lost something like 20 percentage points of TFP. On the other hand, knowledge flows back. So when Polish workers go to Germany, German patents get cited in Poland. This is something that we also see, which maybe whether good or bad depends how you look at this, but we do observe remittances not just being financial, but also knowledge remittances. Now, the good news is these countries remain destinations of FDI, and we show that FDI helps to promote resilience to trade shocks and other external shocks. And in that sense, there is a reason of optimism. Now, where I would like to conclude is the need for research. We still need a lot more granular data, and we will continue exploring which firms are doing better in terms of responding to such shocks. What we've been talking about today is innovation, skills, foreign direct investment, access to markets, integration of global value chains, are important issues which may bring both costs and benefits. And so we need granular data. Now, the good news is, as Deborah mentioned, we now have a new enterprise survey in the field, BEAPS, Business Environment and Enterprise Performance Survey. The first time we do it not just with the World Bank, but with the EIB in 40 countries. And so I guess in the next conference, we will have very granular data on these particular issues. Thank you very much. Thank you very much. I think that we have listened to all the interventions, and we have very complete and comprehensive elements about the performance and the impediments and the policy recommendations for these CC countries that I think that are going to be quite relevant for the debate that we are going to have afterwards. Thank you very much because you have adjusted to the timing that we are scheduled. And now we have 40 minutes of debate. I'm going to open the floor for everybody around the table. I have to ask the cameras to stop filming as well. And well, now the floor is open for the...