This paper deals with the impact of foreign aid on economic development in transition economies, especially analysing the case study of Bosnia and Herzegovina (BiH) in the area of support to economic and entrepreneurship development. Firstly, it presents theoretical fundaments and historical development of foreign aid in general, its different modalities, and then gradually focuses on the impact and necessity of its long-term duration, sustainability and the most important issue of better targeting and more effective usage. In general and subject to different estimation techniques it has been proved that official development assistance promotes economic growth, but also facilitates development of entrepreneurship sector. This paper intends to discover whether this conclusion applies to all development countries, especially transition ones, as there has been limited evidence presented to date. In the context of post-conflict and triple transition process in BiH – economic, political and social challenges seem to be vastly demanding for underdeveloped institutional capacities. Therefore, dialog between foreign donors and domestic stakeholders revels lack of long-term dedication to priority task of job creation within small and medium enterprise (SME) sector, which is considered to be the most needed stimulant to economic development in general. The paper will critically analyse various channels through which foreign aid has been given to date in BiH. The case will then be made for a need to break from a vicious circle of limited effectiveness and lack of responsibility for that on both sides – senders and receivers. The key for better usage of foreign aid is in increased capability, accountability and transparency on both sides. Focusing on capacity development in these three areas should then lead to better targeting of foreign aid in priority sectors, such as entrepreneurship. Conclusion of the paper is that foreign aid as a form of foreign funds is of fundamental value for transitional economies, due to the fact that it has a potential to facilitate certain economic activities. The impact of robust and large amounts of foreign aid on sustained growth has been substantially limited in transitional countries, especially in BiH, however, that does not reduces its potential, if both donors and local stakeholders are to take a different approach for future better targeting and achievement of its long-term effectiveness.
Ključne reči :
Tematska oblast:
Uvodni rad:
Da
Datum:
18.05.2011.
Br. otvaranja:
777
