International Advice and Institutional (Mis)configuration

Abstract

International aid and assistance to the Western Balkans, which began more than two decades ago after the disintegration of sfr Yugoslavia, has been severely criticised on various grounds by academics, politicians, and domestic elites. One of the main points of criticism has been heavy foreign interference into domestic affairs, which deprives local policy-makers of ‘policy ownership.’ This paper uses four paradigmatic examples of reform in Serbia – in the areas of labor market, income taxation, pensions system, and privatization – to show that, despite the widely accepted view of the dominant role of international actors in the creation of the reform agenda, there was significant room for local policy-makers in Serbia to exercise full ownership over the ongoing reforms. What policy-makers really needed was expertise, a clear vision of the desired reforms, the determination to defend their agenda, and technical skills to implement it. The significantly different outcomes of the four areas of reform analyzed in this paper, despite involving virtually the same actors of international intervention, seem to illustrate well our hypothesis that the failure of some important sectoral reforms in Serbia during the post-2000 period was the result of the policy-makers’ own weaknesses, rather than the result of external conditionality.

The Agency of Recipient Countries in Transnational Policy-Related Knowledge Transfer

“…Bache and Taylor (2003, p. 284) speak of "hidden transcripts" through which "there is outward agreement and cooperation that disguises strategies of non-compliance and obstruction" (p. 298). Thus, despite the widely accepted view of IOs as the dominant players in the creation of reform agendas, there is substantial scope for domestic policy-makers to affect the outcome of the reform process by deploying sophisticated resistance strategies that limit or modify the processes of learning and transfer (Arandarenko & Uvalic, 2014;Bache & Taylor, 2003).…”

Welfare State and Social Enterprise in Transition: Evidence from Serbia

“…After a series of discussions, the Minister refused to accept the establishment of the second pillar and instead decided to engage in carefully tailoring the reform of the PAYG system, in order to secure its longer-term sustainability. The World Bank advisors were consoled with an agreement to develop a voluntary pension insurance, that is, the third pillar (Arandarenko and Uvalic 2014).…”

“…Pensioners formed a political party-Party of United Pensioners of Serbia (PUPS) that was part of the ruling coalition during the last three governments. In 2008, their leader became a Minister of Labour and Social Affairs and the government conceded two extraordinary pension increases that have had a prolonged influence on the government budget (Arandarenko and Uvalic 2014). PUPS influence postponed the introduction of the necessary additional reforms such as the increase in the retirement age and early retirement actuarial penalization aimed at promoting a longer working life.…”

“…With the first law enacted in 2001, the intention was to liberalize hiring procedures and wage determination and to allow for more flexibility in the modality of employment. The law was framed with close supervision and support from the International Monetary Fund and the World Bank, where the latter in particular insisted on the promotion of labour market flexibility as a universal cure for labour market inefficiencies (Arandarenko and Uvalic 2014).…”

“…Considering the extremely unfavourable situation in the Serbian labour market throughout the whole discussed period, with high unemployment rate, a very low employment rate and a widespread informal economy, it is clear that the reforms implemented in the area of labour legislation were highly inadequate and incomplete (Arandarenko and Uvalic 2014).…”