DEVELOPMENT CHALLENGES IN LOCAL COMMUNITIES IN BOSNIA AND HERZEGOVINA: FACTOR ANALYSIS AND CLUSTER ANALYSIS
DEVELOPMENT CHALLENGES IN LOCAL COMMUNITIES IN BOSNIA AND HERZEGOVINA: FACTOR ANALYSIS AND CLUSTER ANALYSIS

Summary/Abstract: Economic development in local government units (LGUs) encompasses various aspects and yields diverse outcomes contingent on economic, demographic, and labor market conditions. In nations with a decentralized governance structure like Bosnia and Herzegovina (BiH), this implies that policymakers are confronted with a plethora of potentially influential variables that must be considered when formulating economic policies. As a result, it becomes paramount to concentrate on those variables that encapsulate the maximum amount of development-related information. This study delves into numerous developmental facets of LGUs within three cantons in the Federation of BiH. This paper employs factor analysis, encompassing 36 local government units as observations and 11 distinct developmental aspects as components of the factor analysis. LGUs are categorized into clusters based on outcomes derived from cluster analysis. These twin analyses are further employed to identify regional disparities among LGUs. The outcomes of these analyses serve as a foundational framework for development interventions by the Federation of BiH into LGUs that encounter akin and comparable developmental challenges. The most pivotal developmental challenges at the local level that warrant the attention of decision-makers in the Federation of BiH are identified in the paper as follows: unemployment, an aging population, and a low vitality index.

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