Knowledge is basic factor of competitive economy of Bosnia and Herzegovina Cover Image

Znanje je osnovni faktor konkurentnosti ekonomije Bosne i Hercegovine
Knowledge is basic factor of competitive economy of Bosnia and Herzegovina

Author(s): Božidar Matić
Subject(s): Economy
Published by: Univerzitet u Sarajevu
Keywords: knowledge based economy; competitiveness; foreign direct investments - FDI

Summary/Abstract: BH is extremely dependent on imports, which is a characteristic of every small country. The only sound way to pay for imports is from revenue generated by exports; consequently, we can say that BH is extremely dependent on exports too. BH economy can be sustained in a stable way only by an aggressive export policy. An aggressive export is not possible without the competitiveness of goods, services and technologies. Competitiveness cannot be achieved without investment in the production and the service sector. Investment can be based on the money owned by the people of BH only to a small extent because it is not adequate to cover Bosnia’s actual investment needs (although it should not be neglected). Only direct foreign investments (Foreign Direct Investments – FDI) can serve as the basis for achieving permanent sustainability of BH economy through export. The FDI will not come to a country which is considered highly unattractive to investors. Reforms are necessary to enhance the business climate in the country, to speed up privatisation, to improve finances and social welfare. At the same time they will make the country attractive to the FDI and will, in turn, have positive effects on employment. However, they can be carried out only as a joint synchronised and coordinated project of the all levels – state, the two entities, the cantons and the municipalities. The FDI should be constrained only if the money is dirty and if the investment is unacceptable on ecological, ideological, political or religious grounds. The acceptance or the rejection of an investment project must not be based on what country it comes from. The state must determine its industrial policy and, on the basis of such a policy, provide incentives for the industrial activities oriented toward export but also toward a significant increase of the GDP, especially in agriculture. In addition to satisfying the above mentioned conditions, BH will be able to create a competitive advantage only if it acquires the property of a knowledge based society. Higher education and activities related to research and development must become state priority with the ultimate goal of reaching the standards of the European Union in the appropriate fields. Competitiveness based on the low price of labour should not be the long-term policy at any level of the Bosnian government. Further reforms of state laws need to be put in place in order to reduce the ethnic based society characteristics and enhance its secular and civil attributes on the way to the European Union.

  • Issue Year: XLVII/2006
  • Issue No: 3
  • Page Range: 15-29
  • Page Count: 15
  • Language: Bosnian