Bosnia and Herzegovina
Inclusive and sustainable economic growth in the six Western Balkan (WB6) economies depends on greater economic competitiveness. Although the gap is closing gradually, the standards of living in WB6 are well below those of the OECD and EU. Accelerating the rate of socio-economic convergence will require a holistic and growth oriented approach to policy making.
This is the fourth study of the region (formerly under the title 'Competitiveness in South East Europe') and it comprehensively assesses policy reforms in the WB6 economies across 15 policy areas key to strengthening their competitiveness. It enables WB6 economies to compare economic performance against regional peers, as well as EU-OECD good practices and standards, and to design future policies based on rich evidence and actionable policy recommendations.
The regional profile presents assessment findings across five policy clusters crucial to accelerating socio-economic convergence of the WB6 by fostering regional co-operation: business environment, skills, infrastructure and connectivity, digital transformation and greening. Economy-specific profiles complement the regional assessment, offering each WB6 economy an in-depth analysis of their policies supporting competitiveness. They also track the implementation of the previous 2021 study's recommendations and provide additional ones tailored to the economies’ evolving challenges. These recommendations aim to inform structural economic reforms and facilitate the region’s socio-economic convergence towards the standards of the EU and OECD.
Public sector remuneration systems are shaped by an intricate interaction of administrative culture, economic conditions, and political systems. This paper discusses critical considerations to bear in mind when designing, planning and implementing reforms of public service wage systems. It explores key concepts such as job evaluation, pay structures, performance-related pay, market analysis for competitive pay levels and wage bill planning. It provides guidance on the process of reforming public sector salary systems to enhance their competitiveness, equity, transparency and affordability. The paper offers insights drawn from the reform efforts of several EU Member States and SIGMA partners in the Western Balkans, Moldova and Ukraine, presenting real-life examples and updated guidelines for effective, sustainable salary system changes. The primary focus is on reforms of wage systems within central government administrations, acknowledging the complexity arising from diverse classifications of civil service and public employees, and the varying scope and structure of salary systems. This paper serves as a practical guide, presenting options along with their advantages and disadvantages to aid policymakers in aligning reforms with their national public administration context and strategies.
Supreme audit institutions (SAIs) are a critical part of public accountability systems. They ‘watch’ over governments’ use of public money and report about it publicly, helping to increase transparency. SAIs have an interest in strongly engaging with external stakeholders – including citizens – to make sure that their work is relevant, understood and used to hold governments to account.
This paper provides a compilation of European SAIs’ practices on communication, co-operation and collaboration with external partners and is intended to provide inspiration to SAIs of EU candidate countries and potential candidates to further strengthen their engagement with their non-governmental stakeholders.
Parliaments have a unique role in ensuring that adopted laws, regardless of who initiated them, are evidence-based and fit-for-purpose. For the executive branch, laws are vital instruments through which they deliver public policy. Governments therefore rely on parliaments to scrutinise and adopt legislation in a timely, well-planned and co-ordinated manner. Parliamentary scrutiny of government lawmaking and its role in ex post evaluation of law implementation helps the legislature hold the executive to account. Evidence-based lawmaking is especially critical to EU integration processes as they involve adoption of many new laws. This paper reviews how laws are planned, initiated, prepared, scrutinised and evaluated by the parliaments of six Western Balkan administrations. The report discusses the concept of lawmaking within a parliamentary system of government. It considers how parliaments and governments co-operate and co-ordinate their legislative activities throughout the lawmaking cycle, providing a comparative analysis of existing rules and procedures as well as lawmaking practices. A set of key findings and policy recommendations are provided to support the Western Balkan administrations to plan and implement future reforms.
Bosnia and Herzegovina can legally issue the following four types of rulings within the scope of the transparency framework: (i) cross-border unilateral APAs and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (ii) rulings providing for unilateral downward adjustments; (iii) permanent establishment rulings; and (iv) related party conduit rulings. It is noted that the Tax Administration in the Bosnia and Herzegovina entity of Republic of Srpska is the only authority issuing rulings in scope of the FHTP work.
Subnational governments play a significant role in ensuring good public governance. The way that they are organised and function has a direct impact on the economic and social well-being of citizens and public trust in government. This report presents the system of multi-level government in the six Western Balkan economies, comparing them both with one another and in the context of broader international trends in multi-level governance. The report covers territorial and institutional organisation, competences of local governments, human resources and accountability, public financial management and vertical and horizontal co-ordination, in each case identifying key characteristics and recent trends.
Bosnia and Herzegovina can legally issue the following four types of rulings within the scope of the transparency framework: (i) cross-border unilateral APAs and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (ii) rulings providing for unilateral downward adjustments; (iii) permanent establishment rulings; and (iv) related party conduit rulings. It is noted that the Tax Administration in the Bosnia and Herzegovina entity of Republic of Srpska is the only authority issuing rulings in scope of the FHTP work.
Small and medium-sized enterprises (SMEs) are essential drivers of sustainable economic growth in the Western Balkans and Turkey, where they make up 99% of all firms, generate 65% value added and account for 75% of employment. Nevertheless, SMEs across the region continue to face obstacles such as difficulties accessing financing, low levels of digital uptake, regulatory barriers and relatively low participation in international trade. The situation has been further exacerbated by the COVID-19 pandemic: SMEs found themselves fighting for survival amidst reduced demand, lockdowns and travel restrictions, and supply chain disruptions.
This report provides an overview of the implementation of the Small Business Act for Europe during the period 2019-22. It is designed to help policy makers design, implement and monitor policies to support the recovery of SMEs from the pandemic, boost their competitiveness based on OECD and EU good practices, and further enhance the region’s economic growth and resilience.
The Western Balkans region has come a long way over the last two decades in achieving economic and social progress. Its people are the region’s greatest asset. Yet faced with a lack of opportunities many, particularly the young, decide to emigrate. To make the most of its future the region must invest in its attractiveness as a place to live, work and invest in.
This report comes as a follow-up to the earlier publication Multi-dimensional Review of the Western Balkans: Assessing Opportunities and Constraints. It builds on an extensive peer-learning process that brought together experts from across the region and beyond. The report provides suggestions and recommendations for three strategic priorities that can help create opportunities and boost the quality of life. First, better education and more competencies are the basis for raising productivity, creating jobs, encouraging civic participation and making the region an attractive destination. Second, social cohesion is the bedrock of resilient societies and requires stronger labour market policies and effective social protection that can cushion people’s hardship and provide them with new opportunities. Third, cleaner air and more sustainable energy are indispensable for boosting the region’s quality of life and economic opportunities.
Over the last two decades, Bosnia and Herzegovina (BiH) has become a middle-income country and made some progress to improve the socio-economic development and quality of life of its population (European Commission, 2021[1]). However, gross domestic product (GDP) per capita remains one of the lowest in the region, indicating the country’s ongoing struggle to raise productivity and living standards. As of 2015, around 17% of the BiH population was living below the poverty line and there are large regional disparities in terms of access to services and well-being outcomes (World Bank, 2020[2]). Similar to other countries in Europe, the COVID-19 pandemic has led to a contraction in the BiH economy, exacerbating challenges that were already present, such as raising revenue for public services and allocating resources efficiently. Recovery efforts and future growth will depend on the extent to which BiH governments can address structural challenges, including demographic shifts, high levels of unemployment, especially among youth, and the need for investment in infrastructure and human capital.
With a population of over 80 000, Brčko District represents less than 1% of the territory of Bosnia and Herzegovina (BiH), and is on average more densely populated than the rest of the country (). Nearly half of the district’s population lives in the city of Brčko, the centre of the administrative unit. The District is one of the richer regions of the country, and its economy is more closely linked to trade than that of many other regions of BiH, as Brčko District has historically taken advantage of its strategic location near the three-party border of BiH, Croatia and Serbia. Due to its unique structure of governance within Bosnia and Herzegovina, Brčko District faces particular challenges, especially when it comes to education. From the outset, the district ensured a harmonised curriculum for its population, while in some other parts of BiH, curricula is still administered differently among ethnic lines. The district’s education system, however, displays a similar structure of governance to that of other self-governing administrative units of BiH of similar size.
In Bosnia and Herzegovina (BiH), competent education authorities are beginning to promote the more student-centred approaches to instruction that are increasingly common across OECD countries and can support students in developing their core competences. However, teaching practice has been slow to change, largely because there is a lack of supports and incentives to encourage the adoption of these new approaches. This chapter proposes how BiH could make use of new teacher appraisal procedures and learning opportunities to help transform teaching practices by reinforcing clear expectations, establishing feedback loops that reward performance, and supporting teachers’ initial preparation and their continuous improvement.
Several competent education authorities in Bosnia and Herzegovina (BiH) have been moving away from a compliance-oriented approach to school quality assurance towards procedures that emphasise the development of learning and teaching practices. Despite these efforts, most competent education authorities covered by this review do not conduct external evaluations or self-evaluations of schools. Many also lack consistent standards or implementation protocols for evaluating school performance, which makes it difficult to form reliable judgements and determine where and how best to provide schools with support. This chapter puts forward a set of practical recommendations that aim to accelerate the development of improvement-oriented evaluation practices in BiH school systems, while making the most of limited resources and capacity
Republika Srpska (RS) is a centralised self-government entity within Bosnia and Herzegovina that contains 64 local self-government units (i.e. municipalities). With a surface area that makes up nearly half of BiH (), the entity’s socio-economic development is primarily driven by industry, agriculture and services, which respectively employ 28%, 24% and 48.5% of the entity’s population (Republika Srpska Institute of Statistics, 2021[1]). In RS, one out of two employed individuals has completed secondary education, and one out of four has completed higher education (ibid). According to the Bosnia and Herzegovina’s Foreign Investment Promotion Agency, Republika Srpska’s main strengths for attracting investments rely on its natural resources, favourable tax regulations and an increasingly qualified workforce (Emerging Europe, 2020[2]). The entity’s Ministry of Education and Culture is responsible for pre-university education policy and has a staff of around 80 people (BiH, 2021[3]). This profile examines the context and features of the evaluation and assessment system for education in RS and highlights policy recommendations that can help strengthen this system to improve teaching and learning.
Education stakeholders in Bosnia and Herzegovina have taken steps to establish some of the basic building blocks needed to monitor and evaluate education policy and guide system improvements. However, major gaps in system evaluation frameworks remain, namely the availability of comparable data on learning outcomes, which is lacking in most jurisdictions. This chapter presents possible pathways that competent education authorities and other BiH actors could take to strengthen collaboration and co-ordination in the education sector, as well as increase the use of evidence for planning and policy development.
Education systems in Bosnia and Herzegovina’s (BiH) have taken steps to introduce new competence-based curricula. However, assessment policies and practices in many of the competent education authorities covered by this review do not yet reflect the types of instructional practices that support student learning. For example, teachers often lack resources and support to implement formative assessments in their classrooms and the use of standardised assessment in the country is very limited. This chapter sets out recommendations for how education authorities can address these challenges and use student assessment as a tool for helping all young people to develop core competences.
Prior to the early 1990s, the region presently known as West Herzegovina Canton was one of the poorest areas of Bosnia and Herzegovina (BiH), while today it is one of the richest. It has an important agricultural sector, and it has embarked upon an active investment promotion strategy, focusing on the processing industry, trade and civil engineering (HERAG, 2019[1]). West Herzegovina Canton has the sixth largest population among the cantons composing Federation of Bosnia and Herzegovina (FBiH) (); its primary and secondary school cohort is also the sixth largest. Correspondingly, the canton also comes sixth in terms of the size of its network of primary and secondary schools. The canton’s Ministry of Education, Science, Culture and Sports governs education policy. The ministry has around 25 members of staff, five of which cover education. This profile examines the context and features of West Herzegovina Canton’s evaluation and assessment system for education and highlights policy recommendations that can help strengthen this system to improve teaching and learning.