COMPETITIVENESS, ECONOMIC GROWTH AND DEVELOPMENT OF BOSNIA AND HERZEGOVINA

Abstract

Bosnia and Herzegovina (B&H) is a relatively small and poor country which faces numerous issues such as consequences of war, poverty, emigration of qualified people and, especially, useless and barren political conflicts. The country is in a very difficult economic situation. It is enough to say that in 2015, B&H had EUR 3200 per capita GDP, and that Greece, which is in the focus of Europe and world because of its economic crisis, had EUR 16,000 per capita GDP. Bosnia and Herzegovina was ranked low on the current Global Competitiveness Report 2015-2016. It was 111th out of a total of 140 countries. At this moment, Bosnia and Herzegovina is mainly a loser in the process of globalization with an excess labor force that is fighting for survival. Data on the structure of exports confirm that the inclusion of BiH in the international division of labor is based on the extraction of limited natural resources and production based on cheap labor. This paper analyze most important elements for the development of the economy in B&H, a private sector, scientific and technological institutions (universities, faculties, institutes, etc.), educational and government institutions for economic development. The challenge ahead of Bosnia and Herzegovina in the next 5-10 years to build the conditions for transition from the current economic model characterized by the use of natural resources and low-educated labor, to use the new drivers of development and export competitiveness - new technologies and knowledge. The special focus is on the change from the environment where a majority of population lacks skills and knowledge to create competitive products and services for domestic, regional, European and global markets to the environment in which most people possess them. Basically, authors analyze possibilities of transition from the present-day economic model characterized by use of a semiskilled labour force and manufacture of products with low added value to the knowledge-based development model. In simple words, from ignorance to knowledge.