performances. In a context of increasing pressure of globalization, _ICA_ surveys can be seen as an instrument for identifying key obstacles to firms’ productivity and competitiveness. They can be used as a support to policy reforms for an increased economic growth.

Drawing on the World Bank firm-surveys, this paper analyzes the relationship between investment climate and firm-level productivity for a large number of developing countries (22 among which 5 MENA economies) and eight manufacturing industries. We first propose different measures of firms’ productive performances, such as Labor Productivity ( _LP_ ), Total Factor Productivity ( _TFP_ ), and Technical Efficiency ( _TE_ ) using a production frontier approach. These indicators are compared to each others as well as across countries, in order to position MENA manufacturing amongst a wide range of firms from other regions. We reveal that enterprises in MENA perform in average poorly, compared to other countries of the sample. The exception is _Morocco_ , whose various measures of firms’ productive performance always rank close to the one of the most productive firms in the sample. An originality of our approach has also been to generate a few composite indicators of investment climate using Principal Component Analysis ( _PCA_ ), which summarizes well the key dimensions of the investment climate. This has allowed as well tackling the problem of multicolinearity when explaining firm productive performances with a wide range of correlated _IC_ variables. We define four dimensions of the investment climate: the Quality of Infrastructure ( _Infra_ ), the Business-Government Relations ( _Gov_ ), the Human Capacity ( _H_ ), and the Financing Constraints ( _Fin_ ). We use, as well, city or region-sector averages to reduce the endogeneity problem underlying the investment climate ( _IC_ ) variables. The analysis finally shows that investment climate matters for firms’ productive performances. This has been done by estimating an efficiency function explaining firm-level productivity for each of our 8 manufacturing industries.

The paper is organized as follows. The second section introduces different concepts of firmlevel productivity and discusses the advantages and limits of the different measures. Section three presents the investment climate ( _ICA_ ) surveys and summarizes their main limitations. The fourth section presents and compares across countries our different estimations of firms’ productive performances by industry. The fifth section introduces the investment climate indicators used in the empirical analysis, and calculates our four broad _IC_ indicators. The sixth section highlights MENA investment climate deficiencies. In the seventh section, we examine whether the various dimensions of the investment climate constraints firms productive performances. The last section concludes

# **2- Measures of Firm-Level Productivity: Methodological Aspects**

Our first challenge has been to measure firms’ productive performance in a relevant way. We propose different approaches and measures. We first consider a non parametric model of productivity, which consists in calculating productive performances without estimating a production function. Non parametric measure of productivity constitutes a simple and already meaningful way of assessing for example Productivity of Labor ( _LP_ ) and Total Factor Productivity ( _TFP_ ). Another way has been to calculate firms’ productive performance from a parametric production frontier. This more sophisticated methodology allows to identify the most efficient firms of the sample and to compare MENA firms’ performances to them.

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