Production Function of Firms in Transition

The main stakeholders in the productivity and profitability of the firm are the employees, the owners and the government.Disputable is how to measure productivity in the sense of variables used as proxies and the methodology used for estimation. The purpose of this book is to provide evidence on production function and productivity for companies in Albania and Macedonia.We use BEEPS data and estimate with OLS and MLE for models describing productivity and a Cobb-Douglass production function for a sample data in Albania and Macedonia.We can divide studies on productivity into three strands: Studies exploring the definition of productivity, studies measuring factors that may influence productivity and comparative studies on productivity.We suggest that definition of inputs and outputs as well as the methodology we apply are crucial for interpretation and policy recommendation.The nature of the firm, the structure of the market and financing are possible determinants of innovation.Another finding is that having internet broadband increases the probability to have an R&D investment.Last we find that companies in our sample data operate with increasing returns to scale.