August 8, 2016 Print

Bosnia and Herzegovina Parliament. Photo credit: Jennifer Boyer (license: CC BY 2.0)

An advantage of federalist government systems is that they allow their smaller jurisdictions latitude to experiment with different policies and procedures, so that best practices can arise and spread. A new index from the Center for the Advancement of Free Enterprise (CAFE), an Atlas Network partner in Bosnia and Herzegovina, compares the country’s municipal- and canton-level dependency on the political process in the consumption and allocation of resources.

The index “has the objective to present to the public in a simple manner how much the entity relies on the political process to allocate resources and goods and services,” said Edo Omercevic, co-founder and president of CAFE. “Of course, the more spending is done by government, the less is left for private sector and as a result economic freedom in the area decreases. The indicators used to evaluate the size of government are a) earnings of government employees, b) materials costs, and c) transfers and subsidies (all in relation to GDP of the area).”

Titled “Size of Government Throughout the Federation: 2016 — Annual Report” (translated from Bosnian), the index assesses constituent governments of the federation in four levels — national, entity, cantonal, and municipal — since Bosnian citizens are exposed to all four levels of government. For example, there are 79 municipalities ranked within the municipal level and 10 cantons ranked within the cantonal level.

“The big advantage of this index is that it separates the different levels of government, i.e., the size of government at level of municipality, canton, as well as entity and country level,” Omercevic continued. “Thus, if for example a region is suffering a large size of government, one can see which level of government is actually contributing how much to the end result. For example, there are regions in which the municipal level shows a high level of constraint in spending, but the canton level is the one which spends a lot. Thus, criticism should be addressed to the canton level. Specifically for this project, a website is developed which allows interested parties to get an instant access on the size of government across region and levels of government.”

The goal of the index is to demonstrate which of the country’s government jurisdictions are functioning well and which parts are bloated to the point of hindering the country at large. The example of Sarajevo is telling — three of its municipalities led the list in having the fewest restrictions on its citizens, yet the canton of Sarajevo does not follow the example of its municipalities and its more extensive regulations drag down its rankings.

“According to the latest Economic Freedom of the World report published by Fraser Institute (which we also translated into Bosnian), Bosnia and Herzegovina ranks 78th among 157 countries, standing last in the second quartile,” Omercevic said. “The weakest performance is exactly in the area of size of government, ranking 128th place. Thus, by developing the subnational index, CAFE is specifically targeting this area and pinpoints the centers responsible for the high level of government spending and redistribution.”

The index, now in its second iteration, has enjoyed widespread media coverage within Bosnia and Herzegovina.

“The project is in its second year (having produced data for 3 years of size of government and 2 annual reports),” Omercevic said. “As for now, we are satisfied with the public acceptance of the index. The most important public exposure was in the biggest printed newspaper in Bosnia and Herzegovina, AVAZ (1 full page), as well as a popular printed weekly political magazine, STAV (3 full pages).”