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(Dis)Advantages af Decentralization Models Driven by Non-Economic Reasons: The Case of Bosnia and Herzegovina

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  • Soko Aida

    (Student School of Economics and Business, University of Sarajevo,Sarajevo, Bosnia și Herțegovina)

Abstract

This paper uses a DEA-VRS methodology for the estimation of municipal efficiency to provide empirical evidence of the impact of decentralization in BiH under the Dayton Peace Agreement (DPA) on overall municipal efficiency. In particular, the paper focuses on the analysis of the overall efficiency of 33 new municipalities established under DPA. The findings suggest that the average municipal efficiency in BiH is rather low, and only 23 or 16% of municipalities in BiH are efficient. The average efficiency achieved is around 0.71. This means that with the same level of inputs (budget revenue) outputs may be increased by almost 30%, on average. The results of DEA-VRS efficiency estimation suggest that new municipalities have lower average efficiency (0.60) in comparison to “older” municipalities (0.74). In our sample, only six percent of newly created municipalities are efficient, 12% exhibit some level of efficiency, while the remaining 82% are inefficient, with significant share (39%) of very inefficient municipalities

Suggested Citation

  • Soko Aida, 2018. "(Dis)Advantages af Decentralization Models Driven by Non-Economic Reasons: The Case of Bosnia and Herzegovina," South East European Journal of Economics and Business, Sciendo, vol. 13(1), pages 81-92, June.
    • Handle: RePEc:vrs:seejeb:v:13:y:2018:i:1:p:81-92:n:7
    DOI: 10.2478/jeb-2018-0007
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