Bosna-Hersek’teki Güncel Makroekonomik Gelişmeler [Current Macroeconomic Developments in Bosnia and Herzegovina]

Abstract

Bosnia and Herzegovina (B&H) is a small, open economy. The country belongs to the geopolitical region of the Western Balkans and has been going through the transition process for the past three decades. The transition process, which started in Europe with the fall of the Berlin Wall in 1989, implies that a country transforms from a centrally planned to a market economy. A market economy is characterized by liberalized prices and trade and an enforceable legal system, including the protection of property rights. During socialism, prices were artificially determined, trade and investment were restricted, unemployment was practically non-existent, and all decisions were made by the central government, which indicates that efficient institutions did not exist. The transition process ends once a country joins the European Union (EU).

Bosnia and Herzegovina, together with Croatia, Kosovo, Montenegro, North Macedonia, Serbia, and Slovenia, formed the Socialist Federal Republic of Yugoslavia (SFR Yugoslavia), a country known for its unique system of market socialism, which was more flexible than socialism in the Union of Soviet Socialist Republics (USSR) or Central and Eastern European (CEE) countries. Private property practically did not exist, as it was not considered compatible with the socialist economic system and its expansion was restricted by law (Uvalić, 2018). Most of the economy was state-owned. The state decided what and how much each company would produce and the inputs were provided by the state. If the quota could not be fulfilled, then the quality of the products had to be sacrificed, which did not create any problems since there was no competition among the enterprises (Berend, 2016). The manufacturers did not sell their products in the market; that was done by specialized companies. After the Second World War, Yugoslavia pursued rapid industrialization, where the priority was given to heavy over light industry (Uvalić, 2018). Therefore, transition economies lie between developed and developing countries; they are industrialized, but the technology is obsolete. Bosnia and Herzegovina, together with other former Yugoslav republics, produces less sophisticated goods, which is one of the reasons why the countries are not as competitive as they should be.

SFR Yugoslavia ceased to exist in its original form in 1991. Bosnia and Herzegovina declared its independence on 1 March 1992. The break-up of SFR Yugoslavia was followed by several wars – in Slovenia (1991), Croatia (1991-1995), B&H (1992-1995), and Kosovo (1998-1999). The wars delayed the transition to a market economy. CEE countries that had a more strict form of socialism went through the transition process in fifteen years. Among former Yugoslav republics, Slovenia joined the EU in 2004, followed by Croatia in 2013. In the 1990s, B&H and other Western Balkan countries faced structural problems; hyperinflation, slow economic growth, high public deficits, and depreciating exchange rates (Estrin and Uvalić, 2016).