This paper examines the importance of agglomeration economies and institutions vis-à-vis initial conditions and factor endowments in explaining the locational choice of foreign investors. Using a unique panel data set for 25 transition economies between 1990 and 1998, we find that the main...

How valuable are the education and skills acquired under socialism in a market economy? This paper uses data for about 3 million Hungarian wage earners, from 1986 to 1998, to throw light on this question. We find that returns to schooling reach 10 percent early on and remain at this high level....

Although the theoretical literature has identified various sizeable benefits from foreign direct investment inflows (FDI), the empirical literature has been unable to establish a positive and significant impact of FDI on the rates of economic growth of host countries. One reason for this...

What are the determinants of economic reform efforts? This paper tries to throw light on this question by examining recent reforms in Brazil, a country which followed a gradualist approach and was a late-starter among Latin American economies. We argue that these first generation reforms (trade...

Although recet research has repeatedly found a negative association between investment and socio-political instability (SPI), the existence and direction of causality between these two variables has not yet been investigated. We construct an index of SPI for non-overlaping five-years periods...

One of the most enduring debates in economics is whether financial development causes economic growth or whether it is a consequence of increased economic activity. Little research into this question, however has used a true causality framework. This paper fills this lacuna by using...

What are the determinants of firm entry and exit in Brazil? How do entry and exit rates affect productivity? This paper tries to answer these questions using panel data for about 104 Brazilian manufacturing sectors (3-digit level) for the period 1996 to 2002. Our results show that the share of...

Measurement issues are one of the most important reasons for the highly contrasting findings in the literature on the effects of structural reforms on growth. This paper puts forward improved measures of economic liberalization across countries and over time, focusing on the unique experience of...

What are the factors that explain reversals in the implementation of structural reforms? Our main hypothesis is that reversals in different reforms are driven by different factors. This paper presents novel evidence showing that (a) FDI inflows reduce the likelihood of privatization reversals,...