INSTITUTIONAL QUALITY, GROSS DOMESTIC PRODUCT AND ENTREPRENEURIAL ACTIVITY: AN EMPIRICAL ANALYSIS FOR BOSNIA AND HERZEGOVINA
INSTITUTIONAL QUALITY, GROSS DOMESTIC PRODUCT AND ENTREPRENEURIAL ACTIVITY: AN EMPIRICAL ANALYSIS FOR BOSNIA AND HERZEGOVINA

Summary/Abstract: The aim of this study is to examine the relationship between institutional quality, gross domestic product per capita, and entrepreneurial activity in Bosnia and Herzegovina during the period 2009–2022. Entrepreneurial activity was measured by the number of newly established limited liability companies, while institutional quality was assessed using the World Governance Indicators (WGI): regulatory quality, government effectiveness, rule of law, control of corruption, political stability, and voice and accountability. The study employed a multiple linear regression (OLS) model with log transformation of the number of newly established limited liability companies and GDP per capita. The results of the analysis show that the overall model is statistically significant; however, the individual institutional indicators do not have a direct and measurable effect on entrepreneurial activity. It is particularly important to emphasize that the results indicate that GDP per capita has a significant and positive impact on entrepreneurial activity. These findings suggest that entrepreneurial activity in Bosnia and Herzegovina is primarily determined by economic factors (improvement of economic indicators), while institutional factors likely exert an indirect influence, partly through improvements in the macroeconomic environment.

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