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Solving the Issue of High Youth Unemployment in Bosnia and Herzegovina

Bosnia and Herzegovina’s youth unemployment rate is one of the highest in the world. Nearly two-thirds of Bosnians aged 15 to 24 are unemployed. The high rate significantly constrains aggregate demand and economic growth in the country. There are four factors responsible for the crisis: corruption, a lack of entrepreneurship, ethnic divisions, and lingering economic scars from the Bosnian War in 1992 – 1995. To help alleviate the issue of youth unemployment in Bosnia and Herzegovina, the State Department should lend financial support to Oxfam and the International Monetary Fund.

In 1992, the fall of the Socialist Federal Republic of Yugoslavia triggered a series of political conflicts that led to the Bosnian War. The war raged for three years, claiming more than 100,000 lives, displacing more than 2 million people, and laying waste to the economy of the region. The peace agreement that ended the war, the Dayton Peace Accords, prevented the region’s economy from rebounding and are responsible for the high rate of unemployment in Bosnia and Herzegovina. The accords preserved the region’s ethnic divisions and created a needlessly complicated system of government. Modern-day Bosnia and Herzegovina consists of two main political entities, the Republika Srpska and the Federation of Bosnia and Herzegovina. Each entity consists of very different ethnic groups, the majority of which live apart from one another.  Bosnia and Herzegovina has three presidents, 13 prime ministers, a Parliament consisting of two houses, and many small lawmaking assemblies. The complex system of government facilitates corruption, and much of the foreign aid given to the country is misused. Enterprises in the ethnically uniform regions of the country are unwilling to hire people from outside their region.  The large size of the public sector, which has been estimated to account for nearly 70% of the country’s GDP, has led to regulations and taxes that make starting a business difficult.  

Oxfam is an international NGO composed of 19 charitable organizations. Its primary mission is the elimination of poverty around the world. Unlike many other NGOs with the same mission, Oxfam does not distribute material goods. The organization seeks to address the conditions that lead to poverty in the first place. Oxfam is currently working on many projects in Bosnia and Herzegovina. The NGO’s objectives in the region are to teach Bosnians the basics of business and entrepreneurship and to help them network with people outside of their local communities. The jobs created by the newly formed enterprises will increase the prominence of the country’s private sector and help decrease the country’s high rate of youth unemployment. By working with Bosnians directly, Oxfam bypasses the issue of government corruption. By assisting Bosnians with networking outside of their local communities, Oxfam will reduce the separation among different ethnicities living in Bosnia and Herzegovina.

The International Monetary Fund (IMF) is an IGO consisting of 189 member countries. The IMF’s main objective is to promote international financial stability and monetary cooperation. The organization monitors regional, national, and global financial developments, and makes recommendations to its member countries. Bosnia and Herzegovina has an arrangement with the IMF’s Extended Fund Facility (EFF). The EFF provides financial support to federal programs in countries with balance-of-payments deficits with the goal of correcting structural issues that bring about those deficits. A balance-of-payments deficit occurs when a country imports more goods than it exports and can make an economy dependent on foreign aid and remittances. The IMF monitors how countries use the EFF’s aid and can withdraw the aid from a country that mishandles it. The EFF lends support to programs in Bosnia and Herzegovina that seek to increase the number of goods the country produces and exports. These programs will create many stable manufacturing jobs and decrease youth unemployment in the country.

By supporting Oxfam and the International Monetary Fund  (IMF) financially, the State Department will help reduce the youth unemployment rate in Bosnia and Herzegovina. The organizations can address many of the issues responsible for the high rate of unemployment.  Both organizations will create new businesses and jobs in the country. Oxfam will reduce ethnic division by helping Bosnians network outside of their local communities. The IMF can cut-off its support if the country misuses it, and aid given to Oxfam will go directly to Bosnians.