Economic Development: Sarajevo

My summer stay in Sarajevo, through the William and Mary’s Bosnia Project, has finally come.  The sights, people and history have been nearly overwhelming these first few days.  I’m happy to confirm that all I’ve heard from those who have been here before me is true.  My stay here presents a unique opportunity to further my research through in-person interviews with key business, NGO, and government workers which I intend to fully take advantage of. At the present time I have finished my background reading and some early econometric work with data I have so far collected. Through the help of local William and Mary alumni I am lining up interviews for the coming weeks.  I have also meet numerous local businessmen who have been more then happy to share their experiences dealing with bureaucratic hurdles.

I hope to travel to as many of BiH’s cities as possible during my stay to add a deeper understanding to my analysis of economic development.  An example being that I could not comprehend the level of physical capital destroyed in the war until seeing the aftermath nearly 17 years after.  As of now I will be travelling to Mostar in the coming week, and possibly Banja Luka in the proceeding days. I look forward to my upcoming interviews as I always come out with valuable insight and with new ideas on how to further investigate my topic.

As far as result, so far I have stayed away from drawing conclusions due to the ongoing nature of my work.  I have formulated a causal mechanism for government institutors effecting rates of economic growth in post-conflict BiH.  There are three channels that institutional strength works through (1) The strength of government institutions effects the ability for new businesses to open and prosper through the quality of tax codes, bureaucratic obstacles, and the prevalence of bribery.  (2) It effects the rate of FDI by altering the willingness for external investors to partake in business adventures.  While some recent economic studies have argued that FDI is not a key motivator for growth, I will argue that in the case of BiH they play an important role due to the relatively small economy and early on, the need to wean itself from international aid. (3) It effects the effect and long-run level of international aid.  The efficiency of use of international aid money is effected by how much of the money sees use in projects and how well targeted the projects are. The initial result will determine willingness to continue funding projects (if seen as lost cause  or quagmire funding will be diverted away)

I look forward to continuing my research and hope to be able to make a meaningful contribution with my findings. Thank you for reading my post.

-Sean Norris