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. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

The 'beneficial brain drain' hypothesis suggests that skilled migration can be good for a sending country because the incentives it creates for training increase that country's supply of skilled labour. To work, this hypothesis requires that the degree of screening of migrants by the host country is limited and that the possibility of migration actually encourages home country residents to obtain education. We studied the implications of doctors' migration by conducting a survey among overseas doctors in the UK. The results suggest that the overseas doctors who come to the UK are carefully screened and that only a minority of doctors from developing countries considered the possibility of migration when they chose to obtain medical education. The incentive effect is thus probably not large enough to increase the skills -supply in developing countries. Doctors do, however, remit income to their home countries and many intend to return after completing their training in the UK, so there could be benefits via these routes.JEL classification: F22, J44, J61

Inequality has increased in many of the transition economies. At the same time, spending on education has declined. In this paper we survey the factors driving these changes. We then set up a small general equilibrium model to simulate the effect of different policy choices on the path of inequality over the transition. We show that the policies selected in Central Europe engender a relatively rapid spike in inequality but with a Kuznets curve. In the simulations that broadly capture features of the policy regime dominating in Russia and the FSU, we find no Kuznets curve. We then turn to the longer run and look at the way in which both trade liberalization and technological and organizational change are likely to affect the relative demand for types of labour. We show how substantial technological and organizational change -obvious features of transition -can result in raising inequality. Persistence in inequality can be expected to depend critically on the pace at which the acquisition of skills takes place in the economy -and, hence, on the evolution of the educational system. As such, policies aimed at raising adaptability -such as quality educational systems -can be expected to dampen the increase in wage inequality.JEL classification: D31, D63, H42, P21.

This paper uses a unique new data set on manufacturing firms in Brazil and India to estimate production functions, augmented by information and communications technology (ICT). We find a strong positive association between ICT capital and productivity in both countries that is robust to several different specification tests. The paper also breaks new ground when using the Indian data to investigate the effect of the institutional and policy environment on ICT capital investment and productivity. We find that poorer infrastructure quality and labor market policy are associated with lower levels of ICT adoption, while poorer infrastructure is also associated with lower returns to investment. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.