Publication: Bosnia and Herzegovina Country Economic Memorandum, January 2024
Loading...
Other Files
290 downloads
Date
2024-02-13
ISSN
Published
2024-02-13
Author(s)
Editor(s)
Abstract
Bosnia and Herzegovina (BiH) have made significant development progress since the last Country Economic Memorandum (CEM) in 2005, most notably in obtaining EU candidate status in 2022. Despite persistent political tensions, the country has enjoyed nearly three decades of peace. The infrastructure, severely damaged during the 1990s, has been rebuilt, with ongoing investments in improving road and rail connectivity. The policymaking process involves elected officials navigating a complex, politically fragmented landscape, characterized by national quotas, ensuring representation for Bosnia’s, Croats, and Serbs. The representation of individuals who do not identify with any of these three national groups has not been resolved yet. These factors make BiH unique in Europe, rooted in the Dayton Agreement of 1995, which brought an end to a devastating war that claimed approximately 100,000 lives and displaced over half of the population. Now, almost two decades after the last Economic Memorandum, BiH features as an EU candidate country. Macroeconomic policies have tended to favor short-term objectives at the expense of long-term growth, with a focus on fostering consumption rather than investment. Current budget spending, particularly on public wages, pensions, and social benefits has constrained capital expenditure over the past 10-15 years. Consequently, public capital expenditures in both entities are limited, with only half the size in comparison to their Western Balkan peers. Furthermore, there is a discernable lack of coordination across the entities within sectors such as transport infrastructure, particularly railways and roads that contribute to important intermediate input distortions, as well as digital and energy infrastructure. Moreover, while sharing the same priorities as reflected in the socio-economic reform package, the speed of reform implementation differs across entities. Foreign direct investment inflows, meanwhile, remain insufficient, and significantly below regional peers. Thus, a shift towards structural and fiscal reforms with medium- to long-term benefits, such as a more efficient social transfer system using social cards, as well as higher and more coordinated capital expenditures across the entities could pave the way for higher productivity and thus a more competitive economy.
Link to Data Set
Citation
“World Bank. 2024. Bosnia and Herzegovina Country Economic Memorandum, January 2024. © World Bank. http://hdl.handle.net/10986/41059 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication Bosnia and Herzegovina : Country Economic Memorandum(Washington, DC, 2005-05)This Country Economic Memorandum (CEM) takes stock of economic developments in Bosnia and Herzegovina (BH) since the end of the 1995 war, and, discusses potential sources of high, sustained growth that BH could exploit, as European Union integration advances. The report formulates policy recommendations that would help maximize the potential of the country's economy to achieve higher real GDP growth, and increased job generation. In doing so, the CEM focuses on four priority policy areas: macroeconomic management, international trade policy, business environment and enterprise reform, and, labor market policies. The report conveys the need to significantly build human capital, strengthen the institutional framework, particularly focusing on social sectors, and, develop infrastructure. Despite the country's recent macroeconomic stability, there are still uneven structural policies, and a largely unfinished agenda. The single most important macroeconomic imbalance is the persistent current account deficit. The analysis presented in this report suggests that it is the result of low domestic savings rates, rather than high investment. The rate of investment is not above the average for transition economies, whereas the share of domestic savings that can finance it is particularly low. The need for higher domestic savings raises the question of the adequacy of BH's current fiscal policy stance to serve economic growth. In the area of trade, the recent sluggish performance can hardly be attributed to a policy stance that has pursued liberalization and integration. The real constraints to a more dynamic export performance lie in the business environment and investment climate. The challenges of broad-based enterprise reforms essentially center around two main issues a) removal of structural barriers to the creation, and functioning of competitive markets; and, b) establishment of rules, procedures and related institutions that create incentives to facilitate business transactions. Challenges in the labor market are numerous: unemployment is high and rising, and, jobs being created are scarce, mainly in the informal sector. The report provides several recommendations, among which some suggest the need for changes in privatization regulations, of increased labor market flexibility, of fundamental changes in corporate ownership rules, as well as in the rules for privatization of investment funds, and most importantly, for adequate sequencing of reforms and improved governance.Publication Djibouti Country Economic Memorandum, January 2024 - Djibouti Beyond the Ports and Bases(Washington, DC: World Bank, 2024-02-12)Over the past two decades, Djibouti’s economy has demonstrated remarkable growth, reaching the status of lower middle-income country. However, this remarkable performance was achieved despite the enduring presence of persistent structural challenges, notably the high cost of electricity and telecommunications, and a fragile business environment. In this context, economic growth has predominantly relied on debt-financed public investment and private investments with limited linkages to the broader economy or job creation. Furthermore, the positive impacts of economic growth have not been evenly distributed across all sections of society, raising concerns about inclusive development. Moreover, Djibouti is increasingly vulnerable to climate change. As Djibouti embarks on its second phase of development, it is crucial to ensure that the benefits of growth are felt by all segments of society, particularly women and youth. Addressing these issues is crucial to foster a more conducive environment for businesses and stimulate economic growth. Recognizing these challenges, the Government of Djibouti has recalibrated its development strategy through the “Djibouti 2035 Vision” and the National Development Plan (NDP) for 2020-2024. By effectively addressing these priorities Djibouti can pave the way to a transformative path toward a more dynamic, inclusive, and poverty-reducing future.Publication Bosnia and Herzegovina : Country Financial Accountability Assessment(Washington, DC, 2003-06-10)This Country Financial Accountability Assessment (CFAA) was prepared on the basis of the findings of a World Bank mission to Bosnia and Herzegovina in 2001, and reflects developments through early 2002. The CFAA was a constituent element of the Public Expenditure and Institutional Review (PEIR) published in June 2002 on the basis of work carried out in 2001-2002, and the key findings of the CFAA on the public expenditure policy and institutional framework form a significant part of the PEIR section dealing with financial management in the government sector. While some of the diagnosis presented in this CFAA may have been overtaken by events since early 2002, most of its recommendations remain valid and the report provides a sound analytical framework for ongoing reforms in the field of public expenditure management. The country is in transition not only to a market and a post-war economy, but also to a peculiar (and still fragile) conception of statehood. Public administration in BiH combines pre-war, wartime and post-war institutions, often exercising overlapping administrative authority. The administrative organs operating within a complex governmental structure, the international strategy focus is on building the institutional base of BiH's democracy and fiscal management, using international influence to protect key institutions during their vulnerable early phase, and bring them to a point where they can sustain themselves after international support is withdrawn. At the same time, the way to Europe being the creation of a single free economic space in BIH, harmonization and creation of common institutions are crucial. Statehood needs to be reinforced and specific areas need to be strengthened in the two Entities in view of the requirements for EU accession. The CFAA recommends support of the shift of key institutions and processes from the Entities to the State as advocated by the IC. Such a shift would empower State institutions with stable and predictable budgetary resources and ensure harmonized fiscal management and oversight. At the same time, to mitigate concerns about over-centralization, effective governance should be promoted at the cantonal and municipal levels, where financial accountability is also weak.Publication Serbia - Country Economic Memorandum : The Road to Prosperity - Productivity and Exports, Volume 2. Main Report(World Bank, 2011-12-06)This report looks beyond the current global financial crisis to the restoration of dynamic long-run growth in Serbia. The answer in this report is that Serbia will need to fundamentally alter its growth model to compete effectively in world markets. The past model relying on excessive inflows of capital and credit that, in part, fuelled a consumption boom has run its course in all European countries. Serbia must shift to a greater export orientation so that it can attain the major gains in productivity and competitiveness necessary to propel economic growth to a much higher trajectory. This cannot happen without an explicit export strategy, and a set of concomitant structural reforms, driven by commitment and coordination at the highest political level. This report tries to pinpoint policy actions that would be most effective in raising the rate of productivity growth of Serbia s enterprises so that better export performance and sustained growth could be achieved. The report has three parts. Part I reviews Serbia s macroeconomic situation and its progress on structural reforms. Part II starts with a review of the current status of Serbia s exports and trade policy and regional trade arrangements. It then uses product space (PS) analysis to examine areas where Serbia has a revealed or potential comparative advantage. The report then moves on to two such areas, metal processing and automobile production, which are subjected to value chain analysis to identify bottlenecks that need to be removed for Serbia to become a successful producer and exporter in these areas. The final part of the report looks at obstacles to more rapid and sustainable development of production and exports. It starts with the analysis of the business environment, based on a range of surveys, which is followed by four sectoral chapters that discuss the obstacles found to be most binding in the business environment: labor skills, power supply and efficiency of its use, use of land, and trade facilitation.Publication Republic of Uzbekistan : Country Economic Memorandum(Washington, DC, 2003-04-30)Uzbekistan adopted upon independence in 1991, an import substitution development strategy, intended to transform the economy from heavy dependence on agriculture and natural resources, to a modern industrial economy, helping achieve some objectives, notably energy and food self-sufficiency, having sustained growth for the past six years. However, this report argues that important goals have not been met, and there are still significant opportunity costs, and risks to the development strategy. Priority reforms should be a decisive move to liberalize prices, production, marketing and distribution, coupled with the imposition of hard budget constraints. Given the need for a robust supply response, reforms need to be sufficiently comprehensive, and deep to allow for rapid re-alignment of productive factors. The initial liberalization would be followed by further institutional reforms, and restructuring in enterprise, banking, and energy sectors. Recommendations suggest the liberalization of the foreign exchange regime in conjunction with tight fiscal, and monetary policies, in order to raise bank interest rates to positive real levels. This leads to the necessary removal of barriers to foreign trade, by eliminating non-tariff barriers, and advance payment restrictions on imports, replacing export prepayment requirements with time limits on repatriation of exports earnings by domestic enterprises. Subsequently, the VAT should be refunded on all exports, and imports duty exemptions on inputs for exports, uniformly applied. Moreover, it is suggested to enhance price and market flexibility, to reduce significantly material balances, and phase-out completely the cash, and mandatory crop plans, to ensure that farms, and firms can respond to market price signals. Overall, this would foster an active commercial behavior by enterprises, strengthen social protection, and increase transparency.
Users also downloaded
Showing related downloaded files
Publication Dominican Republic Poverty Assessment 2023(Washington, DC: World Bank, 2023-11-08)In recent decades, economic growth in the Dominican Republic (DR) has been steady. However, growth has not occurred in such a way as to make the benefits widely and evenly available. In fact, although the DR economy grew faster than that of other LAC countries before the Covid-19 pandemic, its poverty rates and social outcomes remain broadly similar to them. This report seeks to explain this conundrum, as well as to expand the knowledge base to improve the effectiveness of ongoing poverty reduction policies in the DR. The Poverty Assessment draws primarily on new analytical work conducted in the DR, structured around four background notes on: (i) trends in monetary poverty and inequality, as well as the key drivers of those changes; (ii) nonmonetary poverty and its spatial dimensions; (iii) social assistance programs and their role in mitigating poverty; and (iv) climate change and its interaction with poverty. By helping to reduce the evidence gap in each of these areas, our analysis hopes to inform government policies and the national dialogue on poverty reduction. In addition, the note integrates existing analytical work and evidence produced inside and outside the Bank, including from its operations in the country.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication Lebanon Economic Monitor, Fall 2022(Washington, DC, 2022-11)The economy continues to contract, albeit at a somewhat slower pace. Public finances improved in 2021, but only because spending collapsed faster than revenue generation. Testament to the continued atrophy of Lebanon’s economy, the Lebanese Pound continues to depreciate sharply. The sharp deterioration in the currency continues to drive surging inflation, in triple digits since July 2020, impacting the poor and vulnerable the most. An unprecedented institutional vacuum will likely further delay any agreement on crisis resolution and much needed reforms; this includes prior actions as part of the April 2022 International Monetary Fund (IMF) staff-level agreement (SLA). Divergent views among key stakeholders on how to distribute the financial losses remains the main bottleneck for reaching an agreement on a comprehensive reform agenda. Lebanon needs to urgently adopt a domestic, equitable, and comprehensive solution that is predicated on: (i) addressing upfront the balance sheet impairments, (ii) restoring liquidity, and (iii) adhering to sound global practices of bail-in solutions based on a hierarchy of creditors (starting with banks’ shareholders) that protects small depositors.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.