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Promoting Resilient Economies in the Western Balkans: Tackling Corrosive Capital at Sectoral Level


What are the challenges for democracy in the Western Balkans, what are the regional priorities and which factors enable the entry of corrosive capital? The Center for the Study of Democracy and the Center for International Private Enterprise, Washington D.C. utilised the MACPI (Monitoring Anti-Corruption Policy Implementation) methodology in order to analyse the answers of these questions.

The key findings, discussed at a webinar on 4 March 2021, revealed procedural gaps in selected public institutions in Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia. Among them are lack of control mechanisms for public procurement, no or rudimentary beneficial ownership registries, lack of regulation on lobbying.

Тhe legal loopholes that enable special treatment of investors and thus distort fair competition are of particular concern. Public institutions cannot discern between constructive (aimed at market competition) and corrosive (aimed at non-market outcomes) capital and investments flowing into their countries. As a result, external actors - particularly undemocratic states - have been able to reassert their role and undermine the region’s development.

Insights from North Macedonia and Bosnia and Herzegovina pointed out the limitations in the capacity of public procurement agencies, as well as decreasing cooperation between stakeholders. Recommendations focused on: enhancement of education initiatives to prevent corruption; establishment of additional communication channels between stakeholders; tackling of media capture; encouragement of integrity and transparency inside the public organizations. 

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