Bosnia and Herzegovina

Using an innovative methodology, the Investment Reform Index 2010 (IRI 2010) monitors investment-related policy reforms in the economies of South-East Europe and compares these to best practices in the OECD area. Based on inputs from governments, the private sector, independent experts and multilateral organisations active in the region, the IRI 2010 assesses policies and institutional settings in eight fields of policy critical to domestic and foreign investors. These are: investment policy and promotion; human capital development; trade policy and facilitation; access to finance; regulatory reform and parliamentary processes; infrastructure for investment; tax policy analysis; and SME policy. For the economies examined, the IRI 2010 provides an independent and rigorous assessment of investment-related policy settings and reform against international good practice, guidance for policy reform and development and an evidence base with which to facilitate prioritisation of donor activities supporting investment and growth.

The OECD/EBRD Enterprise Policy Performance Assessment for Bosnia and Herzegovina presents an overall assessment of the business environment for SMEs.  It assesses the conditions regarding the institutional framework, the rule of law, tax policy, financial services availability, advisory services availability, business incubators, and access to education and technology.

Private investment by Small and Medium-sized Enterprises (SMEs)1 is a key generator of economic growth and social change in OECD member country economies. In most countries, over 90% of all enterprises are SMEs. It is now widely accepted that the contribution of SMEs to new jobs, exports, innovation and regional development is vital to national development. How to benefit from and maximise this contribution is a continuous challenge for all countries. This Enterprise Policy Performance Assessment seeks to help address that question for Bosnia and Herzegovina (BiH) and highlights issues that require attention and priority action.

Educational work is a key element for both human capital formation and the promotion of peace and democratic values. It has therefore been identified as one of the priorities of the Stability Pact. The OECD was asked to be Co-ordinator for “General Education Policy and System Change” within the Education and Youth Task Force, and to carry out “Thematic Reviews of Education Policy” in the countries of the region. The main outcome of this project is a series of reports which provide both country overviews and a regional overview. These reports offer an analysis of the education system and address issues and barriers to reform and recommendations. The recommendations are designed to be of use for national policy-makers and to assist Stability Pact partner countries and institutions target regional assistance in order to achieve the goal of supporting South Eastern Europe towards European integration. These reports are part of the OECD’s ongoing co-operation with non-member economies around the world.

Les travaux dans le domaine de l’éducation, retenus comme l’une des priorités du Pacte de stabilité, sont un volet essentiel pour former le capital humain et promouvoir la paix et les valeurs démocratiques.  Il a été demandé à l’OCDE d’assurer la coordination des activités du Groupe spécial sur l’éducation et la jeunesse dans le domaine de la politique générale de l’éducation et de la transformation des systèmes éducatifs et de réaliser des examens thématiques des politiques nationales d’éducation dans les pays de cette région.  Ce projet a abouti à l’établissement de rapports sur chacun des pays et à une synthèse régionale qui offrent une analyse des systèmes éducatifs, des problèmes en jeu et des obstacles à la réforme.  Ils présentent des recommandations, utiles aux décideurs publics nationaux, qui devraient permettre aux pays et organismes partenaires du Pacte de stabilité de mieux cibler l’aide régionale afin de faciliter l’intégration européenne des pays de l’Europe du Sud-Est.  Cette étude s'inscrit dans le cadre des relations de coopération que l'OCDE entretient avec les économies non membres de diverses régions du monde.

A robust education policy framework is essential for developing human capital and meeting the labour market’s need for a skilled and productive labour force. This chapter, composed of four sub-dimensions, assesses the presence and efficacy of education strategies, legislation, programmes and institutions. The first sub-dimension, equitable education for an inclusive society, examines system governance and the quality of pre-university education starting from preschool. The second sub-dimension, teachers, looks at the selection, initial training and ongoing professional development and management of the teaching workforce. The third sub-dimension, school-to-work transition, focuses on VET governance and the relevance of the labour market to the outcomes of higher education. The fourth sub-dimension, skills for green-digital transition, explores the frameworks and initiatives for fostering green and digital skills in education curricula.

State-owned enterprises are important economic actors and can enhance economic activity and competitiveness if a level playing field with private companies is ensured. This chapter, along with three sub-dimensions, explores the importance of implementing policy, institutional and legal frameworks that contribute to competitive neutrality between private firms and state-owned enterprises. The first sub-dimension, efficiency and performance through improved governance, assesses clarity of the ownership policy and the board nomination framework, including independent and professional boards and privatisation practices. The second sub-dimension, transparency and accountability, focuses on the financial and non-financial reporting and audit practices, including anti‑corruption integrity measures and protection of minority shareholders. The third sub-dimension, ensuring a level playing field, explores the discrepancies in the legal and regulatory treatment of state-owned enterprises (SOEs) compared to private businesses and the financing conditions of SOEs.

Through the development of a modern, sustainable, efficient, interoperable and integrated transport network, a sound transport policy can promote closer co-operation with neighbouring economies and be a key driver of competitiveness for Bosnia and Herzegovina and the region. The first sub-dimension, planning and management, measures the extent to which an orderly, coherent, consistent and transparent process is in place for developing transport policy and implementing infrastructure projects. The second sub-dimension, regulation and connectivity, determines how well transport modes and networks are regulated and operated and how they are leveraged to promote regional connectivity. The third sub‑dimension, sustainability, measures progress towards resource efficiency, environmental protection, reducing health impacts and increasing safety and social inclusion.

Access to finance is crucial for developing the private sector in all economies. This chapter, along with three sub-dimensions, explores the necessity for businesses to be able to access financing sources to start up, grow, diversify and ultimately contribute to overall competitiveness. The first sub-dimension, bank financing framework, assesses the regulatory framework of bank financing, including the quality of banking industry legal framework, registration and information systems and the policies making bank finance inclusive. The second sub-dimension, access to alternative financing sources, focuses on the various means that businesses can get financing, encompassing access to capital markets, private equity as well as factoring and leasing. The third sub-dimension, digital finance, delves into the effects of digital solutions on payment services and the emergence of new avenues for business finance.

An effective institutional and policy context for science, technology and innovation (STI) is essential to boost the knowledge economy. This chapter, along with three sub-dimensions, analyses the overall STI trends and performance in the region and the development of sustainable and impactful STI policies and processes. The first sub-dimension, the STI system, assesses the STI regulatory framework and strategies, including smart specialisation strategies and the institutional framework for STI policy. The second sub‑dimension, public research systems, analyses the governance of the public scientific research sector, funding approaches and human resource capacity to foster academic research excellence. The third sub-dimension, knowledge exchange and co-creation, assesses policies that support integration between scientific research and the private sector, which is critical for technology transfer, as well as policies and initiatives to promote European and regional collaboration in STI.

This chapter offers an overview of Bosnia and Herzegovina’s economic developments since the Competitiveness Outlook 2021, focusing on the economic impact of recent external shocks and economic convergence. The chapter also examines the progress made and challenges encountered in achieving the Sustainable Development Goals. It also recaps the progress made towards EU accession, including the financial and development support provided by the EU for Bosnia and Herzegovina’s accession efforts. Altogether, this sets the stage for an in-depth examination across 15 policy dimensions in the subsequent chapters, all necessary for sustaining economic competitiveness.

Sound and robust frameworks are essential for the tourism sector to drive positive economic development, enhance competitiveness, and strengthen resilience within economies, particularly those heavily reliant on tourism. This chapter assesses the comprehensiveness of the legislative structure and practices governing tourism across three sub-dimensions. The first sub-dimension, governance and enabling conditions, assesses the effectiveness of efforts aimed at strengthening strategic co-ordination and co-operation in tourism across governance, vertical co-operation, public-private dialogue, and data collection. The second sub-dimension centred on accessibility, tourism offer and human resources, examines progress and challenges in addressing the sector’s connectivity framework and infrastructure, accommodation capacity and quality, and availability of qualified workforce. The third sub-dimension, sustainable and competitive tourism, explores the impact of tourism branding and marketing strategies, natural and cultural heritage valorisation frameworks, and operations promoting sustainable development.

Effective employment policies are crucial for forging a solid economy and fostering economic development and social inclusion. This chapter aims to assess the regulatory framework and policies governing employment and the institutional capacity for implementation. The first sub-dimension focuses on inclusive labour market governance, specifically looking at the employment regulatory and policy framework, labour inspectorates, social dialogue and inclusive employment policies. The second sub-dimension, social protection and activation policies, analyses public employment services, the framework of mutual obligations, and active labour market programmes. The third sub-dimension, skills for adaptable labour markets, assesses the skills mismatches in the labour market and initiatives for developing digital and green skills. The fourth sub-dimension, expanding the skills pool, focuses on attracting highly skilled migrants and diaspora.

A healthy and sustainable environment is crucial for economic competitiveness. It supports resource efficiency, enhances resilience to climate-related risks, fosters innovation, and attracts investments while mitigating environmental degradation and associated costs. The chapter analyses the robustness and comprehensiveness of environment policies across four sub-dimensions. The first sub-dimension, climate action, assesses strategies to mitigate and adapt to climate change. The second sub-dimension, circular economy, focuses on policies promoting waste minimisation, resource efficiency, as well as sustainable production and consumption. The third sub-dimension, protection of ecosystems, explores challenges in managing freshwater, biodiversity and forestry, as well as land-use. The fourth sub-dimension, depollution, analyses policies related to air quality, water supply and sanitation, and industrial risk management, paramount for enhancing competitiveness while ensuring environmental sustainability.

Effective trade policy is vital for regional integration and alignment with the European Union. This chapter examines how the government authorities in Bosnia and Herzegovina use trade policy to ease market access and harness digitalisation for enhanced trade facilitation. The first sub-dimension, trade policy framework, assesses the government’s ability to formulate, implement and evaluate trade policy, examining the institutional formulation and co-ordination of trade policy, public-private consultations and the network of free trade agreements. The second sub-dimension, digital trade, focuses on the legal framework for digital trade policy and digital trade facilitation and logistics. The third sub-dimension, export promotion, explores the effectiveness of export promotion agencies and programmes, especially in the context of deepening regional integration.

Creating an attractive environment for investors is essential to stimulate economic activity and foster sustainable economic growth. This chapter assesses the scope and effectiveness of existing policies and strategies that enhance investment volume and quality. The first sub-dimension, investment policy framework, assesses the robustness of the legal framework for investment, the efficiency of dispute settlement mechanisms, as well as intellectual property rights enforcement and awareness-raising capacity. The second sub-dimension, investment promotion and facilitation, focuses on investment promotion agency structures, investment promotion strategies and investor incentives, all geared towards attracting foreign direct investment. The third sub-dimension, mobilising sustainable investment, explores the strategic framework for sustainable investment governance while also reflecting on the scope of financial and technical support allocated to sustainable investment.