_Management_ . Dismissing a manager on performance ground is generally less frequent in the CIS7 than elsewhere in transitional economies but this is not true in Azerbaijan and Kyrgyzstan where this explains about 40% of all management changes. Poaching instead is most frequent in Georgia and Uzbekistan and to a lesser extent in Armenia and these countries resemble in this respect to non-CIS countries.

_Workers skills_ . When asked about the desired level of workers’ skills, enterprises in the CIS-7 seem to be overly optimistic about the level as compared with other transitional economies. On average, the percentage of enterprises who think that the level of skilled workers is too high is about 24% in the CIS-7 as compared to 7% in other CIS countries and 15% in non CIS countries. Vice-versa, the share of enterprises that think that the desired level of skilled workers is too low in the CIS-7 is 13% as compared to 29% in other CIS countries and 19% in non CIS countries. The situation varies also a great deal across the CIS-7 with Armenian enterprises being the most satisfied with the level of skilled labor and firms in Uzbekistan being the least satisfied.

This brief overview has highlighted a number of potential and significant obstacles to growth that seem to be particularly acute in the CIS-7. These are poor infrastructures, limited sources of finance, high interest rates, governance and corruption. Other factors discussed are either little relevant for the CIS-7 or are not a feature that can be attributed to these countries as a group. We now turn to multivariate analysis to verify the robustness of these findings.

# **Multivariate analysis**

The BEEPS allows for a cross-section multivariate analysis of the potential factors that could hamper or induce growth in output and employment. In the interpretation of results, it should be kept in mind that the BEEPS asks the opinions of enterprises. Answers are evidently subjective perceptions of explanatory variables rather than objectively measured variables. For example, enterprises are asked if taxes are a major or minor obstacle to growth and we use answers to this question as explanatory variables in our regressions but these answers may be unrelated to the actual tax rate in each country. Therefore, the BEEPS allows only to study 'perceived' explanatory factors in output and employment growth.

We distinguish between CIS-7 enterprises and other transitional economies and between enterprises that have reported growth in sales or employment during the previous three years ('ups'), those that have experienced negative performances in sales and employment ('downs') and those that approximately maintained the same level in these two variables ('stables'). Explanatory and control variables constructed are grouped into areas and listed in table A.1 in the annex. We attempt to address the following three questions:

1. What are those critical factors that divide successful enterprises ('ups') from unsuccessful ones ('downs')?

2. Do size and ownership matter in explaining enterprises’ sales and employment growth? 3. Are CIS-7 countries different from other transitional economies in their perception of barriers to sales and employment growth?

_Model._ We use a probit and a multinomial logit model to address the first two questions. In the probit model, the dependent variable is a binary variable where we code 1 the 'ups' and 0 the 'downs'. We run this model with and without control variables for size and ownership and for the CIS-7 and other transitional economies separately. We repeat the regressions for sales and employment (tables A.2 and A.3 in the annex). In the multinomial model we use three categories for the dependent variable - 'ups', 'down' and 'stables' - using 'stables' as the reference category. We 22