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Home > Economy of Bosnia and Herzegovina

1 Overview

The centrally planned economy has resulted in some legacies in the economy. Industry is greatly overstaffed, reflecting the rigidity of the planned economy. Under Josip Broz Tito, military industries were pushed in the republic; Bosnia hosted a large share of Yugoslavia's defence plants.

With an uneasy peace in place, output recovered in 1996-98 at high percentage rates on a low base; but output growth slowed appreciably in 1999, and GDP remains far below the 1990 level.

Bosnia has been facing a dual challenge: not only must the nation recover from the war, but it also must make the transition from socialism to capitalism.

Economic data are of limited use because, although both entities issue figures, national-level statistics are not available. Moreover, official data do not capture the large share of activity that occurs on the black market. Grey market is a notable source of income for Bosnian traders.

A Central Bank of Bosnia and Herzegovina was established in late 1997, successful debt negotiations were held with the London Club in December 1997 and with the Paris Club in October 1998, and a new currency, the Convertible Mark, was introduced in mid-1998. In 1999, the Convertible Mark gained wider acceptance, and the Central Bank dramatically increased its reserve holdings.

Due to Bosnia's strict currency board regime, inflation has remained low in the FederationFederacija Bosne i Hercegovine ( In detail) ( In detail) Official languages Bosnian, Croatian, Serbian Capital Sarajevo Area Total % water26,110 km²n/a Population Total ( 2002) Density2,318,97288/km² Ethnic groups( 2002) Bosniaks: 72,9% Croats: 21,8% Serb and RSRepublika Srpska ( In detail) ( In detail) Official languages Serbian, Croatian, Bosniak Capital''de jure Sarajevo, de facto Banja Luka Area Total % water24,811 km²n/a Population Total ( 2001) Density1,490,99360/km² Ethnic groups( 1996) Serbs: 90% Bosniak.

The country receives substantial amounts of reconstruction assistance and humanitarian aidHumanitarian aid is assistance given to people in distress by individuals, organisations, or governments to relieve suffering. The term often carries an international connotation, but this is not always the case. Many full time, professional humanitarian from the international community. Support for Eastern European Democracy (SEED) assistance accounts for 20%-25% of economic growthEconomic growth is the increase in the value of goods and services produced by an economy. It is conventionally measured as the percent rate of increase in real Gross Domestic Product, or GDP''. Growth is usually calculated in real terms in order to net o in Bosnia.

However, growth has been uneven throughout the post-war period, with the Federation outpacing the RS. According to World Bank estimates, GDP growth was 62% in the Federation and 25% in the RS in 1996, 35% in the Federation and flat in the RS in 1997, and continued growth in the Federation in 1998. This is mainly due to the disparity in economic assistance to the Federation as opposed to the RS. Growth in the RS should see dramatic increases following recent upsurges in donor investment.

This kind of economic growth would not have been possible without both international assistance and the establishment of economic institutions and reforms.

Movement has been slow, but considerable progress has been made in economic reform since peace was re-established in the republic. Implementation of privatizationPrivatization (sometimes: denationalization privatisation or — especially in India — disinvestment is the economic process of transferring property, from public ownership to private ownership. An opposite process is nationalization. In theory, privatizati, however, faltered in both areas. Banking reform is also lagging.

Bosnia has been preparing for an era of declining international assistance. Bosnia's most immediate task remains economic revitalization to create jobs and incomeIncome generally defined, is the money that is received as a result of the normal business activities of an individual or a business. For example, most individuals' income is the money they receive from their regular paychecks. In business and accounting,. In order to do this fully, the environment must be conducive to a private sectorThe private sector of a nation's economy consists of those entities which are not controlled by the state i. a variety of entities such as private firms and companies, corporations, private banks, non-governmental organizations, etc. See also public secto, market-led economy.

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Topics: Economy Of Bosnia And Herzegovina 2001 Growth 2003 Economic...

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