The Country Economic Memorandum takes stock of economic developments in Bosnia and Herzegovina since the end of the war, with a particular focus on the most recent period. It also discusses potential sources of high and sustained growth that BH could exploit, as European Union integration process advances. Finally, the report formulates policy recommendations that would help maximize the potential of BH economy to achieve higher economic growth, generate more jobs and boost living standards. In doing so, the report focuses on four priority policy areas: macroeconomic management, international trade policy, business environment and enterprise reform, as well as labor market policies. The latter includes an assessment of BH's education policies.
The report documents that ten years after the end of the war, BH still suffers from the legacy of a conflict that destroyed a significant part of the country's physical productive capacity, depleted human resources and shattered institutions and social capital. Post-conflict reconstruction has been tremendously successful, assisted by generous flows of international assistance. However, the analysis shows that BH lags on many of the structural reforms that have accompanied economic transition in the region. Yet the report also confirms that BH can indeed catch up with the more advanced economies in central and eastern Europe provided the authorities seize the moment to enact bolder and more comprehensive reforms that unlock the economy's creative potential. Opportunities for growth are numerous and the authorities have in several instances demonstrated the political will and persistence to engage in difficult reforms.
The Country Economic Memorandum also indicates that the current administrative structure makes the task of catching up more complex and more urgent. The CEM report shows that these arrangements carry a significant cost. The level of complexity underlying the administrative arrangements throughout the country brings direct fiscal costs. It also results in less tangible but equally important economic costs because major reforms have to be sanctioned by a mandatory consensus among BH's constituent peoples: This implies that in order to be competitive
Contacts: Srecko Latal ++387-33-440-293, Slatal@worldbank.org