We use two large samples of firms to assess the effects of business environment constraints, competition, export orientation, and ownership on firm performance. We deal with omitted variables, errors in variables, and endogeneity, and find that few business constraints affect performance. Replicating the analysis with Doing Business and Heritage Foundation indicators of the business environment yields similar results. In fact, country fixed effects, reflecting time-invariant differences in the business environment as well as other factors such as health care and education, matter more for firm performance than differences in the business environment across firms within countries.

This paper uses a unique new data set on nearly a thousand manufacturing firms in Brazil and India to investigate the determinants of ICT adoption and its impact on performance in both countries. The descriptive evidence shows that Brazilian firms on average use ICT more intensively than their Indian counterparts but changes over time have been rather similar in both places. Within countries ICT intensity is strongly related to size, ownership structure, share of administrative workers and education. The econometric evidence documents a strong relationship between ICT capital and productivity in both countries, even after controlling for several other factors, including firm-specific fixed-effects. The rate of return of ICT investment seems to be much larger than usually found in more developed countries. Specific types of organisational changes matter for the return of ICT, but only for high adopters. Firms report several constraints to ICT investment in both countries and power disruption seems to significantly depress adoption and returns to ICT expenditures in India. This may be indicative of the impact of a cluster of poor institutions and/or infrastructure on performance.

Transition has involved major job destruction and creation. This paper examines the skill content of these changes using a detailed three country firm survey. It shows that transition has exerted a strong bias against unskilled labour who have lost employment disproportionately. Moreover, job creation in new firms tends to be biased against workers with low educational attainments and skills. The skill content of blue collar work has also shifted upwards. Although there is variation across the sampled countries, these appear to be common features. They will have major longer run implications for the level and structure of employment and for inequality through the distribution of earnings.

The Indian software industry is a prime example of globalisation. The industry has been characterised by large cross-border mobility of its skilled labour force. Using a unique survey of Indian software firms, our paper quantifies the extent and impact of mobility on firm behaviour and performance. Cross-border labour mobility in the paper refers to both temporary and permanent labour flows by Indian software professionals. The picture that emerges is of a highly mobile world in which temporary mobility has been an important characteristic of the industry. A significant number of workers have work experience abroad in a developed country. Moreover, the share of skilled workers with such experience has been positively associated with the incidence of skilled migration from the firm. This suggests network effects are at work. In terms of the impact on performance - as measured by the change in turnover per worker and the change in the employment size of the firm - the paper finds little evidence of a robust adverse effect. Further, the evidence suggests that there have been important external effects at work, as through changes in the willingness of workers to acquire skills, as well as through increased provision of educational services. These have further abated the risk of a brain drain. However, the software industry may be rather different from other industries. Our results need to be interpreted as the outcome of a particular case of skilled migration and not one necessarily representative of all types of skilled migration and source sectors.

The ‘beneficial brain drain’ hypothesis suggests that skilled migration can be good for a sending country because the incentives it creates for obtaining training increase that country's net supply of skilled labour. Necessary conditions for this hypothesis to work are that the possibility of migration significantly affects decisions to take medical training and that migrants are not strongly screened by the host country. We conducted a survey among overseas doctors in the UK in 2002, which suggested that neither condition is likely to be fulfilled. Apart from the ‘beneficial brain drain’ argument, the survey findings also cast light on the backgrounds and motives of migrant doctors, and finds evidence that there could, nonetheless, be other benefits to sending countries via routes like remittances and return migration.

We analyze a large stratified random sample of firms that provide us with measures of performance and each firm’s top manager’s perception of the severity of business environment constraints faced by his/her firm. Unlike most existing studies that rely on external and aggregated proxy measures of the business environment, defined to include legal and institutional features, we have information from each surveyed firm. Specifically, we use the 2005 and 2002 Business Environment and Enterprise Performance Survey (BEEPS) to assess the effect on performance of ownership, competition, export orientation and the business environment of the firm. We employ a variety of approaches to deal with the problem of omitted variables, errors in variables and endogeneity that plague studies in this area. We find that foreign ownership and competition have an impact on performance – measured as the level of sales controlling for inputs. Export orientation of the firm does not have an effect on performance once ownership is taken into account. When we analyze the impact of perceived constraints, we show that few retain explanatory power once they are introduced jointly rather than one at a time, or when country, industry and year fixed effects are introduced. Indeed, country fixed effects largely absorb the explanatory power of the constraints faced by individual firms. Replicating the analysis with commonly used country-level indicators of the business environment, we do not find much of a relationship between constraints and performance. Our analysis brings into question an important part of the conventional wisdom in this area. It indicates that country fixed effects, reflecting time-invariant differences in the business environment but also other factors, matter for firm performance, but that differences in the business environment observed across firms within countries do not. Moreover, the limited firm- and country-level variations in the business environment over time do not appear to affect performance either. This suggests that the effect of business environment on performance and the analysts’ ability to identify this effect are more limited than has been assumed to date.

We look at the differences in regional unemployment rates in six major transition countries and their persistence over time. We analyse the role various adjustment mechanisms play. While movement out of the labour force seems to be one consequence in many regions with high relative unemployment, there are also signs of emerging wage flexibility. Employment creation, by contrast, has not picked up in regions of high unemployment. Labour mobility also remains very limited in size although it appears to respond to basic economic incentives. Policies addressing housing market imperfections and information asymmetries are necessary to increase worker mobility and to integrate better national labour markets.

We provide a first empirical attempt at understanding the scale and type of skilled migration from the Indian software sector and the consequences for firms experiencing loss of skilled workers. The paper draws on some unique survey evidence of software firms in India. The results are not generally consistent with an adverse or brain drain story but provide a more nuanced interpretation. Not only has skilled migration taken a variety of firms - including significant temporary migration - but the evidence suggests that the impact of mobility on performance in the sending firms has not been unambiguously adverse. There is some evidence of associated wage pressure at the height of the software boom in the late 1990s. But there is also evidence of a strong supply side response as workers acquired training and entered the sector.

Skilled migration has increased in recent years, often stimulated by the explicit use of targeted visa programmes by developed countries. This paper examines the available analytical and empirical literature on the brain drain to try and understand better whether skille migration from developing countries must always be harmful to the country of origin. We show that early generation models ? mostly dating to the 1970s ? found that such migration would be harmful, mostly though the impact on wages and employment, as well as through fiscal costs. A more recent literature has argued that a beneficial brain drain can arise if migration has educational externatilities. As human capital rises, growth will also be positively affected. However, we show that if screening is applied such benefits may disappear or become smaller. Recent empirical work on the health and software sectors provides some contrasting evidence.

The migration of skilled individuals from developing countries has typically been considered to be costly for the sending country, due to lost investments in education, high fiscal costs and labour market distortions. Economic theory, however, raises the possibility of a beneficial brain drain primarily through improved incentives to acquire human capital. Our survey of empirical and theoretical work shows under what circumstances a developing country can benefit from skilled migration. It argues that the sectoral aspects of migration and screening of migrants in the receiving country are of major importance in determining the welfare implications of the brain drain. These issues, as well as the size of the sending country, duration of migration and the effect of diaspora populations, should be addressed in future empirical work on skilled migration. JEL

This paper analyzes the causes and consequences of non-monetary transactions in Russia, drawing on a large enterprise survey. We show that barter and offsets are linked to liquidity problems at the level of the firm and to arrears in particular. We find evidence that the state has channeled implicit subsidies to enterprises in the form of tax and utility offsets. The findings help explain the rise of non-monetary transactions during much of the 1990s. We show that non-monetary transactions inhibit enterprise restructuring. Our findings suggest that a policy solution to the non-cash problem would require the state and public utilities to phase out arrears and offsets.

Abstract A distinguishing feature of the transition in cast and central Europe (ECE) and Russia by comparison with the former Soviet Union (FSU) has been the behaviour of the labour market, especially unemployment. The contrast is particularly pronounced when using registrations data. Seven and more years into their respective transitions, unemployment in ECE averaged over 10 per cent of the labour force as against under 3 per cent in Russia. Part of this discrepancy is rightly attributed to measurement error. Some official estimates of unemployment based supposedly on labour force survey data suggest a far smaller gap; unemployment in Russia, for example, exceeded 11 per cent at cnd-1998, rather than the 2.5 per cent rate shown by registrations data. However, the first is more an estimate than a robust measure and even if correct, given the size of shocks to output and the speed at which privatization was carried out, Russian unemployment still remains low relative to east and central Europe (ECE), as can be observed in Figure 11.1.