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Bosnia and Herzegovina--Post-Conflict Reconstruction and the Transition to a Market Economy: An OED Evaluation of World Bank Support
By Laurie Effron and F. Stephen O'Brien
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After the 1995 peace agreement for Bosnia and Herzegovina, the World Bank played a leading role in the international effort to support post-conflict reconstruction. During the period 1996–2003, the Bank committed millions of dollars to rebuilding infrastructure and, in addition, supported the transformation from socialism to a market economy. Bosnia and Herzegovina assesses the Bank’s assistance to Bosnia and Herzegovina during reconstruction (1996-2003), in terms of its objectives, scope, and outcomes. The authors contend that the reconstruction effort was highly successful with improved access to schools and health clinics; financial sector reforms were implemented and micro-finance was very successful; and economic management has improved, although tax evasion and corruption remain serious problems. Yet despite these many successful outcomes, results have been less satisfactory in private sector development and Bank support to privatization has not turned out well. The authors argue that, going forward, the Bank should concentrate on public sector management and private sector development issues, including a better approach to privatization: more attention to hard budget constraints on State-owned enterprises (SOEs) and to finalizing an acceptable bankruptcy law, reforming commercial courts, resolving the ownership and debt status of strategic enterprises, and helping to strengthen the role of the privatization agencies. The prospect of entering into a Stabilization and Association Pact with the EU, and possible future EU membership, provide strong incentives for the country to implement reforms which have stalled in the past.
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