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.