Template-Type: ReDIF-Article 1.0

Author-Name: Laura Kromjak
Author-Workplace-Name: Tomori Pal College
Author-Email: kromjak.laura@tpfk.hu


Title: Bosnia and Herzegovina's Economic Prospects and Historical Background

Abstract: The essay discusses the socio-political challenges for the economy of Bosnia and Herzegovina
and its foreign trade in goods and services, including the Hungarian relation. The study uses
descriptive tools and secondary data. Wedged in between Croatia and Serbia, Bosnia and
Herzegovina's economy is inextricably linked to the dramatic events of the past and the still
unresolved social and political conflicts. Within Yugoslavia, Bosnia and Herzegovina was a
member state with significant export potential, but the war and ethnicisation have
devastated the economy. The state administration of the Dayton system is expensive, and the
foundations for capital flows, privatisation and European convergence are developing slowly.
Capital flows, the Instrument for Pre-accession Assistance (IPA) and international aid play an
important role in balancing the foreign exchange balance. A significant item reducing the
negative current account balance is the amount of remittances, which is six times higher than
FDI. Remittances have become the largest source of external financing, increasing
dependency and exacerbating the vulnerability of the economy.

Classification-JEL: F14, F21, F24, F34
Keywords: Bosnia and Herzegovina, trade balance, foreign exchange remittance, direct capital investment, EU integration process
Pages: 148-169
Volume: 20
Issue: 2
Year: 2021
File-URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-20-2-e1-kromjak.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:20:y:2021:i:2:p:148-169