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We empirically analyze the relationship between ethnic tensions, institutional and economic performance in Bosnia and Herzegovina (BiH), including a qualitative analysis of this issue for BiH and Macedonia. The research is conducted by a mixed methods approach, in which questionnaire surveys of the household and business sectors in BiH are supplemented by semi-structured interviews. We find that the most important factors affecting both individual economic performance and individual ethnic tolerance in BiH are employment status, education and age; they both singly and in combination move...