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The Contribution of the Microfinance Model to Bosnia's Post-War Reconstruction and Development: How to Destroy an Economy and Society Without Really Trying

ÖFSE Working Papere No. 36

39 Pages Posted: 27 Jan 2014  

Milford Bateman

Juraj Dobrila University of Pula (UNIPU)

Dean Sinković

Juraj Dobrila University of Pula (UNIPU)

Marinko Skare

Juraj Dobrila University of Pula

Date Written: December 10, 2012

Abstract

Academic analyses and impact evaluation studies produced by the international development community almost all conclude that the microfinance model has made an important net contribution to the economic and social recovery of post-war Bosnia and Herzegovina (hereafter Bosnia). However, as we now are finding is also the case in many other countries, these far-reaching claims are almost entirely based upon often deliberately flawed impact evaluation methodologies and inappropriate success criteria. This article provides an alternative assessment of the available evidence accumulated to date which, in our opinion, actually shows that the microfinance model has made a distinctly negative contribution to Bosnia’s reconstruction and development effort. We argue, centrally, that the microfinance model has assisted the Bosnian economy to move to an unsustainable institutional development trajectory marked by the deindustrialisation, informalisation and infantilisation of the enterprise sector. More widely, we argue that the microfinance model in Bosnia has led to a sub-prime-style episode in Bosnia’s post-war history, one that has materially benefitted a tiny elite working within and around the microfinance sector whilst simultaneously destroying many of the most important pillars of the Bosnian economy and society. We find that the best possible explanatory framework for what has transpired in postwar Bosnia is contained in the ‘control fraud’ concept developed by William Black.

Keywords: microfinance, neoliberalism, Bosnia, deindustrialization, informal sector, control fraud

Suggested Citation

Bateman, Milford and Sinković, Dean and Skare, Marinko, The Contribution of the Microfinance Model to Bosnia's Post-War Reconstruction and Development: How to Destroy an Economy and Society Without Really Trying (December 10, 2012). ÖFSE Working Papere No. 36. Available at SSRN: https://ssrn.com/abstract=2385186 or http://dx.doi.org/10.2139/ssrn.2385186

Milford Bateman (Contact Author)

Juraj Dobrila University of Pula (UNIPU) ( email )

Zagrebačka 30
Pula, 52100
Croatia

Dean Sinković

Juraj Dobrila University of Pula (UNIPU) ( email )

Zagrebačka 30
Pula, 52100
Croatia

Marinko Skare

Juraj Dobrila University of Pula ( email )

Preradoviceva 1/1
Pula, Istarska Zupanija 52100
Croatia
385 52 377000 (Phone)
385 52 216 416 (Fax)

HOME PAGE: http://www.efpu.hr

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