This article uses data on 27,000 firms from 50 countries, half of which are transition economies, together with the specific case of Serbia to examine the relationship between productivity, the investment climate and private ownership of firms. As government capacity to address the investment climate constraints is limited, the prioritization of the constraints is critical. Identification of the relative effects of various investment climate constraints and ownership on productivity should serve as a guide for such prioritization. Although ownership has recently received less attention in policy decisions than previously, according to the econometric analysis of productivity reported in the paper, private ownership is an equally or more important determinant of productivity than other components of the investment climate. The importance of ownership shows that an unfinished privatization and restructuring agenda might have negative effects on productivity, in parallel to poor investment climate. Another important finding is that countries in which firms complain more about infrastructure tend to have less productive firms.
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Paper provided by Centre for Economic Reform and Transformation, Heriot Watt University in its series CERT Discussion Papers with number
0503.
Find related papers by JEL classification: P3 - Economic Systems - - Socialist Institutions and Their Transitions D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
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