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Corruption in Bosnia and Herzegovina: Causes, Consequences and Cures
Linköping University, Department of Management and Engineering, Economics.
Linköping University, Department of Management and Engineering, Economics.
2010 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The state of Bosnia and Herzegovina (BiH), a developing country that once was a part of thecommunist Yugoslavia, is struggling to move from wartime to peacetime, to shift from acentrally controlled economy to a free market economy, and to stir from a socialist stylegovernment to a democracy. All of these processes lend themselves to great corruption. Theaim with this paper, thus, is to provide a frame of reference that can be used when writing andimplementing policies against corruption in BiH. This paper tries to identify the sectors inBiH that are most affected by corruption and to discuss possible causes of corruption in thecountry. The paper also discusses possible effects that corruption in BiH has on the country’seconomic growth, how corruption can be fought in the country and how a successfulreduction in corruption affects BiH’s economic growth.This work finds several flaws and weaknesses in the society of BiH. BiH faces today weakpolicies, weak institutions and weak penalty systems. There are strong regulations and noinstitutional controls. The economy is weak and leads to poverty. This paper argues that it isthrough these weaknesses in the society that corruption in BiH has arisen, and hasconsequently affected all major sectors and institutions in the country; it can be seen in thepolitical parties, the Police and other Enforcement Structures, the Judiciary, public utilities,the Health System and the Education System. Corruption has furthermore slowed down theprivatization process and is used by employers during recruitment processes to exploitcitizens in need of a job.This paper also finds that corruption in BiH brings with it its own distortions as it underminessocial capital by creating mistrust between various actors in the country, hinders bothdomestic and foreign investment, increases poverty and encourages growth of the blackmarket. All of these distortions lead to a slowdown in the economic growth.Furthermore, this paper asserts that BiH needs help from the European Union, the Office ofhigh Representative and possibly other international actors in the fight against corruption.They must help BiH to implement strategies that will give the leading politicians incentives tofight corruption. The paper stresses the lack of politicians’ will to fight corruption in BiHtoday as the biggest and most central problem in the fight against corruption. The anticorruptionprogram in this paper therefore emphasizes the importance of anti-corruptionmeasures that first and foremost deal with this problem. Only when this issue is resolved canBiH move to anti-corruption strategies on national level. The anti-corruption strategies onnational level themselves should contain effective government anti-corruption strategies.They should also promote anti-corruption education and secure free access to information.Finally, this work identifies probable positive effects on BiH’s economic growth if corruptionis successfully fought; the country will experience higher domestic and foreign investment,the mistrust will decrease and result in higher social capital, and both poverty and the blackmarketactivity will be reduced.

Place, publisher, year, edition, pages
2010. , 70 p.
National Category
URN: urn:nbn:se:liu:diva-54790ISRN: LIU-IEI-FIL-A--10/00714--SEOAI: diva2:309905
Subject / course
Master Thesis in Economics
Social and Behavioural Science, Law
Available from: 2010-04-14 Created: 2010-04-09 Last updated: 2011-07-08Bibliographically approved

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