University of Glasgow

Bosnia and Herzegovina: Toward Economic Recovery by Wei DingReview by: Derek R. HallEurope-Asia Studies, Vol. 49, No. 4 (Jun., 1997), pp. 718-719Published by: Taylor & Francis, Ltd.Stable URL: http://www.jstor.org/stable/153726 .

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REVIEWS REVIEWS

coordinate their policies and boost development aid, and that government provide guarantees for pipeline funding-are reasonable if a bit tepid. She does not advocate one option over another, instead discussing the pros and cons of each. Moreover, she largely plays down the financial aspects of pipeline development, focusing instead upon the geopolitical angle. Reznikova, in the Rumer volume, suggests that routes through Russia are the most cost- efficient and that this will be a major factor in deciding which route(s) will be taken; Forsythe is silent on this matter. Moreover, it is very debatable whether Western governments would be willing to pursue such an activist policy that would risk antagonising a potentially intransigent Russia, should it choose to flex its muscles in the region.

One weakness of the work is that it ignores how the emerging oil and gas industries might affect the Central Asian states themselves. In part, I think, this can be explained by her reliance upon Western news reports. However, one could argue, as Zhukov does in the other volume, that concentration on an export-oriented extractive industry will produce a dual economy, one in which the lucky few benefit and the bulk of the population see marginal benefits. Moreover, judging from the Russian oil industry, the potential for corruption is very great, and this could have significant political consequences, especially considering the fragility of local political institutions. Other economic studies have also suggested that oil deposits can be a mixed economic blessing, as one can see in cases like Nigeria, Mexico and Indonesia. Central Asian states will have to do more than simply export; they must find a means to develop productive industries and invest their earnings prudently. These challenges of internal development, as the Rumer volume details, could, in the long run, prove to be as daunting as resolving the dilemmas of 'pipeline politics'.

Koc University PAUL J. KUBICEK

Wei Ding et al., Bosnia and Herzegovina: Toward Economic Recovery. Washington, DC: The World Bank, 1996, xxxi + 68 pp., ?8.95.

THIS WORLD BANK COUNTRY STUDY was prepared in February/March 1996 as one of two

background documents for the second international donors meeting held in April 1996. It presents an analysis of the economic policies and institutional challenges facing the peacemak- ers and the international community in helping to forge the future development of Bosnia- Herzegovina. (The companion volume is Bosnia and Herzegovina: the priority reconstruction and recovery program-the challenges ahead).

The report is divided into five sections: Background and recent developments; Toward reconstruction and recovery; Building a viable structure for economic management; Toward setting up a market economy; and Medium-term prospects and financing requirements. Apart from one paragraph in the report's executive summary, there is no concluding section. Perhaps this is not totally inappropriate given the nature of the task.

The report notes that there are three major challenges to be faced. The first is the implementation of the reconstruction and recovery programme necessitated by war damage. This will generate employment and stimulate some economic revival. Second, new structures of governance and institutions for economic management need to be developed. These are required not least to implement the blueprint laid out in the Dayton-Paris agreement. Third, the transition to a market economy needs to be managed. It is argued that experience from other countries similarly afflicted by war suggests that economic recovery can proceed quickly if a number of preconditions are satisfied: a stable macroeconomic environment conducive to growth and job creation; a transparent and market-friendly legal and regulatory framework; and, sufficient international assistance.

coordinate their policies and boost development aid, and that government provide guarantees for pipeline funding-are reasonable if a bit tepid. She does not advocate one option over another, instead discussing the pros and cons of each. Moreover, she largely plays down the financial aspects of pipeline development, focusing instead upon the geopolitical angle. Reznikova, in the Rumer volume, suggests that routes through Russia are the most cost- efficient and that this will be a major factor in deciding which route(s) will be taken; Forsythe is silent on this matter. Moreover, it is very debatable whether Western governments would be willing to pursue such an activist policy that would risk antagonising a potentially intransigent Russia, should it choose to flex its muscles in the region.

One weakness of the work is that it ignores how the emerging oil and gas industries might affect the Central Asian states themselves. In part, I think, this can be explained by her reliance upon Western news reports. However, one could argue, as Zhukov does in the other volume, that concentration on an export-oriented extractive industry will produce a dual economy, one in which the lucky few benefit and the bulk of the population see marginal benefits. Moreover, judging from the Russian oil industry, the potential for corruption is very great, and this could have significant political consequences, especially considering the fragility of local political institutions. Other economic studies have also suggested that oil deposits can be a mixed economic blessing, as one can see in cases like Nigeria, Mexico and Indonesia. Central Asian states will have to do more than simply export; they must find a means to develop productive industries and invest their earnings prudently. These challenges of internal development, as the Rumer volume details, could, in the long run, prove to be as daunting as resolving the dilemmas of 'pipeline politics'.

Koc University PAUL J. KUBICEK

Wei Ding et al., Bosnia and Herzegovina: Toward Economic Recovery. Washington, DC: The World Bank, 1996, xxxi + 68 pp., ?8.95.

THIS WORLD BANK COUNTRY STUDY was prepared in February/March 1996 as one of two

background documents for the second international donors meeting held in April 1996. It presents an analysis of the economic policies and institutional challenges facing the peacemak- ers and the international community in helping to forge the future development of Bosnia- Herzegovina. (The companion volume is Bosnia and Herzegovina: the priority reconstruction and recovery program-the challenges ahead).

The report is divided into five sections: Background and recent developments; Toward reconstruction and recovery; Building a viable structure for economic management; Toward setting up a market economy; and Medium-term prospects and financing requirements. Apart from one paragraph in the report's executive summary, there is no concluding section. Perhaps this is not totally inappropriate given the nature of the task.

The report notes that there are three major challenges to be faced. The first is the implementation of the reconstruction and recovery programme necessitated by war damage. This will generate employment and stimulate some economic revival. Second, new structures of governance and institutions for economic management need to be developed. These are required not least to implement the blueprint laid out in the Dayton-Paris agreement. Third, the transition to a market economy needs to be managed. It is argued that experience from other countries similarly afflicted by war suggests that economic recovery can proceed quickly if a number of preconditions are satisfied: a stable macroeconomic environment conducive to growth and job creation; a transparent and market-friendly legal and regulatory framework; and, sufficient international assistance.

718 718

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REVIEWS REVIEWS

Enhanced by four boxes and six tables, the text is clearly written and organised in a straightforward manner. For those familiar with the emphasis of World Bank advocacy, this report presents no surprises.

The Scottish Agricultural College DEREK R. HALL

Dmitri Steinberg, The Soviet Economy 1970-1990. A Statistical Analysis. San Francisco: International Trade Press, 1990, x + 350 pp., $115.00.

THOUGH THIS BOOK is already several years old, it should be of great interest to all scholars who study the Soviet economy in retrospect, or, perhaps more important still, to all experts new in the field of Russian studies who have to be aware of the peculiarities and biases inherited from the old system. The author has a specific approach to the statistical problems of the former USSR. The data released by the Soviet agencies have been challenged by many Western experts, who have provided alternative estimates (a sample of those is quoted on p. 5). Of all the Western institutions, the one which devoted the greatest amount of resources to reconstruct- ing the Soviet statistics was the CIA. While the CIA contended that the Soviet economy was much more militarised than official Soviet figures would admit, and grew at a pace significantly lower, by the end of the 1980s a number of Soviet economists began challenging the CIA estimates, claiming that the CIA figures were still too optimistic, overstated the rate of growth and understated the share of military expenditure in the Soviet GNP.

Dmitri Steinberg used the new figures released by the Soviet statistical agency Goskomstat in 1990 to reconstruct the Soviet macroeconomic data for 1970-90 and to provide an alternative estimate of the structure and growth of the Soviet economy. His basic conclusions are the following: the Soviet civilian economic growth was smaller than assessed by the CIA, by 0.5-0.6% a year; Soviet military economic growth was higher by 0.3-0.4% a year; the size of the Soviet economy was on average around one-third of the US economy, while it was claimed to be 50% according to CIA estimates.

What is interesting in Steinberg's study is not so much the outcomes as the methodology. Unlike the CIA, which reconstructed Soviet GNP in dollars using the GNP framework and was thus unable to account for large segments of the Soviet economy, Steinberg is starting from the national accounting framework used by the Soviet statisticians, the 'national economic balance' (NEB). In the first two chapters, the CIA and the Soviet national accounting methods are explained. Chapters 3 and 4 detail the core of the author's method: first he integrates Soviet material (physical) and financial data using Soviet national accounting data; second, he converts the integrated Soviet national accounts into a GNP format. The last chapter is devoted to conclusions. Impressive statistical material is appended, though the author admits that this presentation is incomplete and suggests that interested readers contact him for more detail (though he does not indicate how and where as no mention of affiliation is given other than the address of the publisher).

Actually the approach reminds me of the work conducted in the 1970s in the USSR by economists who tried to integrate real and financial data so as to construct a 'unified balance' of the Soviet economy. Steinberg quotes these attempts and the two major schools proposing such a production-financial integration, headed respectively by V. Belkin of the Institute of Economics and by B. Isaev of the Central Institute of Mathematical Economics (TsEMI) (p. 39). Unfortunately, at that time researchers had to use hypothetical data to feed their models as the new, more complete data that were to be available later (especially the 1988 accounts used by Steinberg) were not then at their disposal. Also, one has to add that in the 1970s this kind of research was not politically favoured (as I was told in the early 1980s by Isaev).

Enhanced by four boxes and six tables, the text is clearly written and organised in a straightforward manner. For those familiar with the emphasis of World Bank advocacy, this report presents no surprises.

The Scottish Agricultural College DEREK R. HALL

Dmitri Steinberg, The Soviet Economy 1970-1990. A Statistical Analysis. San Francisco: International Trade Press, 1990, x + 350 pp., $115.00.

THOUGH THIS BOOK is already several years old, it should be of great interest to all scholars who study the Soviet economy in retrospect, or, perhaps more important still, to all experts new in the field of Russian studies who have to be aware of the peculiarities and biases inherited from the old system. The author has a specific approach to the statistical problems of the former USSR. The data released by the Soviet agencies have been challenged by many Western experts, who have provided alternative estimates (a sample of those is quoted on p. 5). Of all the Western institutions, the one which devoted the greatest amount of resources to reconstruct- ing the Soviet statistics was the CIA. While the CIA contended that the Soviet economy was much more militarised than official Soviet figures would admit, and grew at a pace significantly lower, by the end of the 1980s a number of Soviet economists began challenging the CIA estimates, claiming that the CIA figures were still too optimistic, overstated the rate of growth and understated the share of military expenditure in the Soviet GNP.

Dmitri Steinberg used the new figures released by the Soviet statistical agency Goskomstat in 1990 to reconstruct the Soviet macroeconomic data for 1970-90 and to provide an alternative estimate of the structure and growth of the Soviet economy. His basic conclusions are the following: the Soviet civilian economic growth was smaller than assessed by the CIA, by 0.5-0.6% a year; Soviet military economic growth was higher by 0.3-0.4% a year; the size of the Soviet economy was on average around one-third of the US economy, while it was claimed to be 50% according to CIA estimates.

What is interesting in Steinberg's study is not so much the outcomes as the methodology. Unlike the CIA, which reconstructed Soviet GNP in dollars using the GNP framework and was thus unable to account for large segments of the Soviet economy, Steinberg is starting from the national accounting framework used by the Soviet statisticians, the 'national economic balance' (NEB). In the first two chapters, the CIA and the Soviet national accounting methods are explained. Chapters 3 and 4 detail the core of the author's method: first he integrates Soviet material (physical) and financial data using Soviet national accounting data; second, he converts the integrated Soviet national accounts into a GNP format. The last chapter is devoted to conclusions. Impressive statistical material is appended, though the author admits that this presentation is incomplete and suggests that interested readers contact him for more detail (though he does not indicate how and where as no mention of affiliation is given other than the address of the publisher).

Actually the approach reminds me of the work conducted in the 1970s in the USSR by economists who tried to integrate real and financial data so as to construct a 'unified balance' of the Soviet economy. Steinberg quotes these attempts and the two major schools proposing such a production-financial integration, headed respectively by V. Belkin of the Institute of Economics and by B. Isaev of the Central Institute of Mathematical Economics (TsEMI) (p. 39). Unfortunately, at that time researchers had to use hypothetical data to feed their models as the new, more complete data that were to be available later (especially the 1988 accounts used by Steinberg) were not then at their disposal. Also, one has to add that in the 1970s this kind of research was not politically favoured (as I was told in the early 1980s by Isaev).

719 719

This content downloaded from 195.34.79.101 on Wed, 25 Jun 2014 09:14:46 AMAll use subject to JSTOR Terms and Conditions