Economic Development Assignment: Bosnia and Herzegovina

Illustration 1. Map of Bosnia and Herzegovina

Source: https://www.cia.gov/library/publications/the-world-factbook/geos/bk.html

a.                  Introduction

Bosnia and Herzegovina faces the dual problem of rebuilding a war-torn country and introducing liberal market reforms to its economy. One legacy of the previous era is strong metal industry; under former republic premier Džemal Bijedić,and Yugoslav president Tito, military industries were promoted in the republic, resulting in the development of a large share of Yugoslavia's defense plants. Although agriculture is almost all in private hands, the republic traditionally is an exporter of food. Industry was very strong, a holdover from the Mixed economic structure of Yugoslavia. Yugoslav President Josip Broz Tito had pushed the development of metal industries, and electro-energetic sector, in the republic with the result that Bosnia and Herzegovina were a host of large numbers of industrial firms. Some of them were worked with World brand names, companies like Coca Cola, Pepsi, Marlboro, Volkswagen, SKF. Big Companies like Energoinvest, UNIS, Hidrogradnja, Vranica, RMK Zenica, TAS Vogošća, FAMOS Sarajevo, BNT Novi Travnik, have yearly income in billions of USD$ in that time. Building sector companies bringing large amounts of income in USD$. Unemployment in that time is very low. Work force is highly skilled, with highly professional, educated managers, ingenius, science experts, which use western world's newest technologies in large scale areas. Before the war, yugoslav premier Ante Marković, made some preparations for privatization, in economy, finance, and industry sectors, but war ceased development in these actions. (Source: Economy of Bosnia and Herzegovina, en.wikipedia.org/wiki/Economy_of_Bosnia_and_Herzegovina)

b.                  A brief description of the economy.  This should include Penn World Tables series on:

On Per capita GDP and growth rates of GDP 

Table 2. Per capita GDP and growth rates of GDP

GDP	S32.08 (PPP, 2012 est.) $18,15 billion (2012 est.)
GDP growth	6,5% (Jan-Oct 2013 est.)
GDP per capita	$9,980 (PPP 2012 est.)

Year	GDP real growth rate	GDP (PPP) per capita
1997	29.9%	2,817
1998	28.9%	3,782
1999	9.5%	4,121
2000	5.2%	4,364
2001	3.6%	4,603
2002	5.0%	4,871
2003	3.5%	5,110
2004	6.3%	5,497
2005	4.3%	5,942
2006	6.2%	6,466
2007	6.5%	7,031
2008	5.4%	7,550
2009	-3.4%	7,361
2010	0.5%	7,428
2011	0.92%	8,063
2012	-0.70%	8,100
2013 (Official res)	6.5%	8,300

(Source: Economy of Bosnia and Herzegovina, en.wikipedia.org/wiki/Economy_of_Bosnia_and_Herzegovina)

The table showed a fluctuation of GDP real growth rate of Bosnia but increasing in amount of GDP per capita from Year 1997 – 2013

On Real GDP per capita (Constant Prices:  Chain series)  

      Table 3. Real GDP per capita (Constant Prices: Chain series) (I$ in 2000 Constant Prices)

Year	Real GDP per capita
1990	1,633
1991	1,439
1992	1,074
1993	846
1994	991
1995	1,655
1996	2,208
1997	2,795
1998	2,958
1999	3,059
2000	3,037
2001	3,365
2002	3,490
2003	3,491

Source: Penn World Table Series, http://datacentre.chass.utoronto.ca/cgi-bin/pwt62/retrievePWT62.cgi

On Growth rate of Real GDP per capita (Constant Prices: Chain series)

Table 4. Growth rate of Real GDP per capita (Constant Prices: Chain series) (% in 2000 Constant Prices)

Year	Real GDP per capita
1991	-11.89
1992	-25.34
1993	-21.24
1994	17.18
1995	66.97
1996	33.40
1997	26.58
1998	5.82
1999	3.43
2000	-0.74
2001	10.80
2002	3.73
2003	0.01

                The growth rate of Real GDP per capita showed in Table 4 reflects the unstable economy of Bosnia.

On a brief description of the structure of the economy in terms of sector (e.g., services, manufacturing, and agriculture) shares of output.

Bosnia has a transitional economy with limited market reforms.

The economy relies heavily on the export of metals, energy, textiles and furniture as well as on remittances and foreign aid.

Agriculture - products: wheat, corn, fruits, vegetables; livestock

Industries: Steel, coal, iron ore, lead, zinc, manganese, bauxite, aluminum, motor vehicle assembly, textiles, tobacco products, wooden furniture, ammunition, domestic appliances, oil refining. (Source: CIA The World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/bk.html)

Foreign investments by sector for (1994–2007)

•              37.7% Manufacturing

•              21% Banking

•              4.9% Services

•              9.6% Trade

•              0.30% Transport

•              1% Tourism

(Source: Economy of Bosnia and Herzegovina, en.wikipedia.org/wiki/Economy_of_Bosnia_and_

Herzegovina)

On a brief description of the country’s demography. This should include Penn World Tables series on Population ('000s in General Variables) and the World Bank’s World Development Indicators

Table 5. Penn World Tables series on Population ('000s in General Variables)

Year	Population
1990	4,423
1991	4,449
1992	4,427
1993	4,152
1994	3,703
1995	3,355
1996	3,247
1997	3,334
1998	3,502
1999	3,689
2000	3,835
2001	3,922
2002	3,964
2003	3,989
2004	3,980

Source: Penn World Table Series, http://datacentre.chass.utoronto.ca/cgi-bin/pwt62/retrievePWT62.cgi

Unlike some countries who have an increasing trend of the number of population, Bosnia showed decrease as effect of their war.

Population: 3,871,643 (July 2014 est.), population growth rates - -0.11% (2014 est.)

Population below poverty line: 18.6% (2007)

Literacy: definition: age 15 and over can read and write - total population: 98%male: 99.5%,

female: 96.7% (2011 est.).

Unemployment: 44,6% (July 2012) by valid international sources

(Source: CIA The World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/bk.html)

c.                   Generalizations and Conclusions

“Peace advances the economic development of society by fostering conditions that are conducive to business and investment. At the same time, business can play a decisive role in building and strengthening peace through job and wealth creation.” (Economic Impact of Peace & Conflict, http://economicsandpeace.org/about-us/faq)

               

                The question now is how to economically develop a war-torn economy? How then will it be managed? I think, in this case, we will have to address first the needs of the people by applying Maslow’s hierarchy of needs especially security since people is the key to development.

Sources

CIA The World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/bk.html (I have chosen this source because most of the recent statistics of a country pointed to this page as their source of data)

Economic Impact of Peace & Conflict, http://economicsandpeace.org/about-us/faq (I encountered this source when I wanted to learn the relation of peace and economic development since the main problem of Bosnia is armed conflict)

Economy of Bosnia and Herzegovina, en.wikipedia.org/wiki/Economy_of_Bosnia_and_Herzegovina (I loved this source because it capsulized what I wanted to know about Bosnia)

Penn World Table Series, http://datacentre.chass.utoronto.ca/cgi-bin/pwt62/retrievePWT62.cgi (My source of statistics on population and GDP)