Balkan’s (Political) Economy: Learning from the Past

Energoinvest, a state-owned enterprise established in Sarajevo in the 1950s, was one of the largest Yugoslav exporters for years (during the 1970s and 1980s), accounting for 5% of the total exports of the Yugoslav economy, or 35% of the total exports of Bosnia and Herzegovina. According to the same source, the company exported complex engineering products, knowledge and technology. It exported complete power plants to many countries around the world, built thermal power plants in India and Indonesia, power plants and facilities in a number of African countries, equipped oil pipelines and power plants in Iraq and the Soviet Union, competing with world-leading companies in related sectors. In addition to offices in many countries worldwide, Energoinvest had formed joint ventures in Mexico, Libya and Pakistan, amongst other countries. Interestingly, Energoinvest, like many other large and high-tech companies in the former Yugoslavia, including the electronics company Ei Nis[AQ1] established in 1948 (once an electronics hub, employing 28,000 workers including thousands of engineers, who developed and produced TV and radio receivers, computers, telephones and household appliances), existed in a communist/socialist state. Indeed, like in other post-communist/post-socialist countries, state-owned enterprises (SOEs) were an integral part of the Yugoslav economic structure, thus providing a greater level of economic independence as measured by the value of economic transactions between countries. Most SOEs vanished due to failed or controversial privatization by a new generation of opportunistic ‘entrepreneurs’. For instance, in 2016 Ei Nis had only one employee, remaining assets and infrastructure having been sold or rented to small firms or entrepreneurs. A long-lasting and promising transition of the ex-Yugoslavian states' economies saved almost none of those global firms. An ultimate aim was to liberalize markets in developing countries by reducing state intervention in the economy. Orthodox Keynesian economics with a high level of social welfare and employment protection has been replaced by a neoliberal policy model that assumed comprehensive structural adjustments. Structural adjustment programmes by individual states centred on a number of key fundamentals: liberalization of domestic markets and trade, monetary policy, labour market deregulation, reduction in the size and scope of the state, fiscal restraint through broadening the taxation base and reducing state spending and social support. In this process, new-breed politicians blindly followed the Washington Consensus principles that were supposed to help developing countries to speed up structural reforms in order to get financial ‘support’ from international financial institutions such as International Monetary Fund (IMF) and World Bank (WB). One