Economy Of Bosnia And Herzegovina

The economy of Bosnia and Herzegovina is classified as a developing, upper-middle income economy, reflecting a moderate level of income and economic development relative to global standards. This classification indicates that while the country has made significant progress in improving living standards and expanding economic activities, it still faces challenges typical of developing economies, such as structural reforms, unemployment, and regional disparities. The upper-middle income status is based on gross national income (GNI) per capita thresholds established by international financial institutions, which place Bosnia and Herzegovina above lower-middle income countries but below high-income economies. This economic categorization underscores the transitional nature of Bosnia and Herzegovina’s economy as it continues to evolve from its socialist past toward a more market-oriented system. Bosnia and Herzegovina declared independence from the Socialist Federal Republic of Yugoslavia on 1 March 1992, a pivotal moment that marked a profound political and economic transition for the country. The declaration of independence came amid the disintegration of Yugoslavia, which had been a multi-ethnic federation under socialist rule since the end of World War II. This transition was accompanied by significant upheaval, including the outbreak of the Bosnian War from 1992 to 1995, which severely disrupted economic activities and infrastructure. The post-war period required extensive reconstruction and reform efforts to stabilize the economy, establish new institutions, and integrate into international markets. The shift from a centrally planned socialist economy to a market-based system involved privatization of state-owned enterprises, development of a private sector, and establishment of legal frameworks conducive to foreign investment and trade. Bosnia and Herzegovina’s primary trading partners include Germany, Italy, Austria, Turkey, and neighboring countries in Southeast Europe, illustrating the country’s integration into both regional and international economic networks. Trade with Germany, Italy, and Austria reflects strong economic ties with key European Union members, which serve as major destinations for Bosnian exports and sources of imports. These relationships are facilitated by geographic proximity, historical connections, and the presence of Bosnian diaspora communities in these countries, which also contribute to remittances and investment flows. Turkey represents an important partner due to historical, cultural, and economic links, as well as growing bilateral trade and investment. Additionally, trade with neighboring countries in Southeast Europe, such as Croatia, Serbia, and Montenegro, highlights Bosnia and Herzegovina’s role within the regional economic framework, which is characterized by efforts to promote economic cooperation and integration through initiatives like the Central European Free Trade Agreement (CEFTA). This network of trading relationships supports Bosnia and Herzegovina’s export-driven sectors, including manufacturing, metal processing, textiles, and agriculture, and is crucial for sustaining economic growth and development.

Bosnia and Herzegovina is classified as an upper middle-income country that has achieved significant economic progress since the mid-1990s, following the devastation wrought by the Bosnian War. The nation has been actively engaged in efforts to revitalize its economy, transitioning from a war-torn state to a developing market economy. As an EU candidate country, Bosnia and Herzegovina has pursued a new growth model aimed at overcoming the stagnation experienced during the early 2000s and the adverse effects of the 2008 global financial crisis. This strategy involves structural reforms and increased integration with European markets, seeking to stimulate sustainable economic expansion and improve competitiveness. The country’s economy is relatively small and open, with the services sector serving as the predominant driver of economic activity. In 2016, services accounted for approximately 55% of the gross domestic product (GDP), reflecting a shift away from traditional industrial bases toward tertiary industries such as trade, finance, and telecommunications. The industrial sector, moderately developed, contributed about 23% of GDP, encompassing manufacturing, mining, and energy production. Manufacturing alone accounted for around 12% of GDP, highlighting the ongoing importance of production industries despite the economy’s gradual service orientation. Agriculture remains a limited component of the economy, constituting roughly 6% of GDP, although it continues to employ a significant portion of the rural population. The national currency, the konvertibilna marka (convertible mark or BAM), was introduced in 1998 as part of post-war stabilization efforts. It is pegged to the euro at a fixed exchange rate, a policy that has fostered increased confidence in the currency and the banking sector. This currency board arrangement has contributed to low inflation rates and monetary stability, which are critical for attracting foreign investment and maintaining economic order. The Central Bank of Bosnia and Herzegovina, established in late 1997, has played a pivotal role in maintaining this regime, overseeing monetary policy and foreign exchange reserves. The introduction of the BAM followed debt negotiations with international creditors, including the London Club in December 1997 and the Paris Club in October 1998, which helped restructure the country’s external obligations. Privatization efforts in Bosnia and Herzegovina have proceeded slowly, hampered by political fragmentation and reluctance among local entities to support national-level institutions. This hesitancy has impeded the creation of a cohesive economic policy framework and delayed the transformation of state-owned enterprises into efficient private firms. Banking reform, however, accelerated notably in 2001, marking a turning point in the financial sector’s development. Since then, foreign banks, primarily from Western Europe, have come to control the majority of the banking sector, bringing with them improved management practices, capital, and integration with international financial markets. This foreign dominance has enhanced the sector’s stability but also exposed it to external economic fluctuations. Despite these advances, Bosnia and Herzegovina faces two major economic challenges: a sizable current account deficit and a persistently high unemployment rate. The current account deficit reflects an imbalance between imports and exports, with the country relying heavily on imported goods and capital. In 2017, the current account deficit stood at 4.7% of GDP, a slight improvement from 5.3% in 2015, largely due to a reduction in the trade deficit, which nevertheless remained substantial at 17.4% of GDP. High unemployment, particularly among youth and in certain regions, continues to undermine economic stability and social cohesion, posing a significant obstacle to inclusive growth. The international community has played a crucial role in Bosnia and Herzegovina’s post-war recovery, providing substantial reconstruction assistance and humanitarian aid. This support has been instrumental in rebuilding infrastructure, stabilizing institutions, and fostering economic development. However, the country must prepare for a future in which aid flows are expected to decline, necessitating greater self-reliance and the development of sustainable economic policies. The United States Embassy in Sarajevo contributes to this process by producing the annual Country Commercial Guide, which offers comprehensive analysis of Bosnia and Herzegovina’s economic, political, and market environment, thereby informing potential investors and policymakers. Economist Branko Milanović has noted that Bosnia and Herzegovina performed the best in transitioning from socialism to capitalism among the former Yugoslav republics. Between 1985 and 2021, the country achieved an average annual GDP per capita growth rate of 1.6%, surpassing Slovenia’s 1.4%, Croatia’s 1%, Serbia (excluding Kosovo) at 0.9%, and North Macedonia’s 0.5%. This relative success reflects the country’s ability to navigate the complex post-socialist transformation despite the severe disruptions caused by the war and political fragmentation. During the era of the Socialist Federal Republic of Yugoslavia (SFRY), Bosnia and Herzegovina was a key mineral processing hub, supplying mineral commodities to other republics in exchange for consumer goods. The 1970s witnessed large public capital investments aimed at industrial expansion, although productivity remained low due to limited managerial capacity and inefficiencies inherent in the socialist system. Under the leadership of Džemal Bijedić and Josip Broz Tito, metal-product industries were actively promoted, leading to the establishment of significant metal processing plants that formed the backbone of the republic’s industrial base. A common practice during this period involved merging small firms into larger conglomerates to achieve economies of scale and improve coordination. This process resulted in the emergence of four major conglomerates that dominated the Bosnian economy: Energoinvest in the energy sector; Unis, which specialized in automotive and defense industries and partnered with Volkswagen in the early 1970s; Šipad, focused on wood processing; and RMK Zenica, a steel industry giant that was later acquired by ArcelorMittal. These conglomerates became emblematic of the republic’s industrial capabilities and contributed significantly to employment and export revenues. The construction and defense industries also held considerable importance, although they were characterized by inefficiency and oversupply. The defense industry was particularly developed in the southern districts and around Mostar, which was also a metallurgical center hosting the Aluminij Mostar plant. Machinery production was concentrated in the northern regions, especially around Banja Luka, while Tuzla was renowned for its chemical industry. The automotive industry, which developed from the 1950s onward, produced vehicle components as well as passenger and commercial vehicles, with manufacturing plants located in Sarajevo, Mostar, and Banja Luka. Despite its significance for employment, agriculture was underdeveloped during the socialist period, constrained by limited modernization and investment. Large conglomerates such as Agrokomerc, located near the north-west border with Croatia, represented some of the few sizable agricultural enterprises. Nonetheless, the sector failed to achieve productivity levels comparable to industry and services. Tito’s promotion of metal industries and the electro-energetic sector led to the establishment of numerous large industrial firms, some of which collaborated with global brands such as Coca-Cola, Pepsi, Marlboro, Volkswagen, and SKF. Major companies including Energoinvest, UNIS, Hidrogradnja, Vranica, RMK Zenica, TAS Sarajevo, FAMOS Sarajevo, and BNT Novi Travnik reported annual incomes in the billions of U.S. dollars during this period, underscoring the scale of industrial activity. The construction sector also contributed significantly to income generation, and unemployment was very low prior to the outbreak of war. The workforce in socialist Bosnia and Herzegovina was highly skilled, comprising educated managers, engineers, and scientific experts who utilized Western technologies in large-scale industrial operations. This human capital represented a valuable asset that would later be disrupted by the conflict and post-war challenges. Yugoslav Premier Ante Marković had initiated preparations for privatization across the economy, finance, and industry sectors in the late 1980s and early 1990s. However, these efforts were abruptly halted by the outbreak of the Bosnian War, which caused extensive material damages estimated at over €200 billion. Between 1990 and 1995, GDP excluding services plummeted by 90%, reflecting the catastrophic impact of the conflict on industrial production and infrastructure. In the post-war period, most major companies have since been privatized, although the economy remains fragile and heavily reliant on consumption. This dependence on domestic demand, combined with vulnerability to external shocks, has limited the country’s economic resilience. The global economic crisis precipitated recessions in 2009 and 2012, with GDP contracting by 3% and 0.8% respectively. Additionally, severe floods in 2014 caused damages approximating 15% of GDP, further straining the economy. Since 2015, Bosnia and Herzegovina has experienced annual GDP growth exceeding 3%, signaling a gradual recovery and stabilization. Nevertheless, structural challenges persist. In 2017, the country recorded a current account deficit of 4.7% of GDP, down from 5.3% in 2015, largely driven by a reduction in the trade deficit, which remained large at 17.4% of GDP. These figures highlight ongoing imbalances in external trade and the need for export diversification. The Central Bank of Bosnia and Herzegovina, established in late 1997, played a central role in post-war economic stabilization. Following debt negotiations with the London Club in December 1997 and the Paris Club in October 1998, the country introduced the convertible mark in mid-1998. By 1999, the currency gained wider acceptance, and the Central Bank increased its reserve holdings significantly. The currency board regime, which pegs the BAM to the euro, has been instrumental in maintaining low inflation rates across the country, contributing to macroeconomic stability. Post-war output recovered rapidly between 1996 and 1999, with high growth rates from a low base, reflecting reconstruction efforts and the resumption of economic activity. However, growth slowed between 2000 and 2002 due to structural weaknesses and political uncertainties. The country continues to receive significant international reconstruction and humanitarian aid, with programs such as the Support for East European Democracy (SEED) initiative contributing 20–25% of economic growth during certain periods. Economic growth has been uneven across the country’s two main entities. The Federation of Bosnia and Herzegovina has consistently outpaced the Republika Srpska (RS) in terms of GDP growth. In 1996, for example, GDP growth was 62% in the Federation compared to 25% in RS, with the Federation maintaining stronger growth in subsequent years. This disparity reflects differences in economic structures, governance, and investment climates between the two entities. Progress in economic reform has been slow, particularly in banking reform and privatization. Many privatized companies have faced significant difficulties, including reductions in salaries, non-payment to workers, and in some cases, the destruction of factories by new owners. These challenges have hindered the development of a robust private sector and contributed to persistent unemployment and social discontent. The combination of political fragmentation, institutional weaknesses, and external vulnerabilities continues to shape the complex economic landscape of Bosnia and Herzegovina.

The economic trajectory of Bosnia and Herzegovina from the late 1990s through the mid-2020s is characterized by significant fluctuations in key macroeconomic indicators such as gross domestic product (GDP), GDP per capita, unemployment rates, national debt, and growth rates. These indicators collectively illustrate the country’s gradual recovery from the devastation of the 1990s conflict, periods of economic expansion, the impact of global recessions, and the more recent challenges posed by the COVID-19 pandemic, followed by a phase of recovery and projected steady growth. In 1996, the immediate post-war period, Bosnia and Herzegovina’s economy was still in the early stages of reconstruction. The GDP measured in purchasing power parity (PPP) terms stood at approximately 11.394 billion US dollars, reflecting the overall economic output adjusted for cost of living and inflation differences. The GDP per capita, a measure of average economic output per person, was relatively low at 3,027 US dollars (PPP), indicative of the widespread economic hardship faced by the population. In nominal terms, which account for current market exchange rates without adjustment for purchasing power, the GDP was 3.584 billion US dollars, with a nominal GDP per capita of 952 US dollars, underscoring the limited domestic economic activity and low income levels prevailing at the time. By 1997, the economy showed signs of rapid recovery and growth. The GDP increased substantially to approximately 14.239 billion US dollars (PPP), representing a significant rise in economic output. Correspondingly, the GDP per capita rose to 3,811 US dollars (PPP), signaling improvements in average living standards. Nominal GDP figures also reflected this growth, with the GDP increasing to 4.578 billion US dollars and the nominal GDP per capita reaching 1,225 US dollars. The economy experienced a remarkable GDP growth rate of 22.9% during this year, a reflection of the initial rebound from the war’s aftermath and the reactivation of economic activities. The upward trend continued into 1998, with GDP reaching approximately 16.389 billion US dollars (PPP), and GDP per capita increasing to 4,391 US dollars (PPP). Nominal GDP rose to 5.281 billion US dollars, with nominal GDP per capita at 1,415 US dollars. Although specific unemployment rate data for 1998 is not available, the general economic expansion suggested improvements in employment conditions compared to the immediate post-war years. In 1999, Bosnia and Herzegovina’s GDP further expanded to approximately 18.406 billion US dollars (PPP), with GDP per capita reaching 4,917 US dollars (PPP). Nominal GDP was recorded at 5.766 billion US dollars, while nominal GDP per capita stood at 1,540 US dollars. Despite the absence of detailed unemployment figures for this year, the steady growth in GDP indicated ongoing economic stabilization and development. Entering the new millennium, the year 2000 saw the GDP rise to about 19.659 billion US dollars (PPP), with GDP per capita increasing to 5,241 US dollars (PPP). However, nominal GDP slightly decreased to 5.554 billion US dollars, and nominal GDP per capita was 1,480 US dollars, reflecting some volatility in exchange rates or price levels. The real GDP growth rate was recorded at 4.4%, indicating moderate economic expansion. Unemployment remained high at 31.1%, reflecting structural challenges in the labor market, while national debt stood at 34.6% of GDP, highlighting fiscal constraints faced by the government. Between 2001 and 2003, the economy continued its gradual growth. By 2002, GDP reached approximately 21.954 billion US dollars (PPP), and by 2003, it had increased further to 23.251 billion US dollars (PPP). These gains were accompanied by corresponding rises in GDP per capita and nominal GDP values, reflecting steady economic development. Throughout this period, the unemployment rate remained persistently high at around 31.1%, indicating ongoing difficulties in labor market absorption and structural unemployment. From 2004 to 2006, Bosnia and Herzegovina experienced a more pronounced economic expansion. GDP rose from approximately 25.369 billion US dollars (PPP) in 2004 to 29.714 billion US dollars (PPP) by 2006. GDP per capita increased from 6,741 US dollars (PPP) to 7,885 US dollars (PPP), marking improvements in average income levels. Despite these gains, unemployment remained stable at 31.1%, suggesting that economic growth had yet to translate into significant job creation. On the fiscal front, national debt showed a declining trend, decreasing from 25.5% of GDP in 2004 to 21.2% in 2006, indicating improved government fiscal management and possibly increased revenues. In 2007, the upward trajectory continued with GDP reaching approximately 32.342 billion US dollars (PPP) and GDP per capita rising to 8,597 US dollars (PPP). Unemployment saw a slight increase to 32.4%, reflecting ongoing labor market challenges. Meanwhile, national debt continued its downward trend, falling to 18.7% of GDP, further strengthening the country’s fiscal position. The economic data for 2008 reflected continued growth, with GDP at about 34.806 billion US dollars (PPP) and GDP per capita at 9,271 US dollars (PPP). However, unemployment increased to 34%, indicating that despite economic expansion, joblessness remained a significant issue. National debt rose sharply to 30.9%, possibly due to increased government borrowing or fiscal pressures preceding the global financial crisis. The global recession of 2009 had a noticeable impact on Bosnia and Herzegovina’s economy. GDP slightly declined to approximately 34.743 billion US dollars (PPP), while GDP per capita remained relatively stable at 9,299 US dollars (PPP). The country experienced a negative GDP growth rate of −0.8%, marking the first contraction in the post-war recovery period. Unemployment worsened, rising to 35%, reflecting the recession’s adverse effects on the labor market. Additionally, national debt increased to 35%, indicating heightened fiscal pressures during the economic downturn. In 2010, signs of recovery emerged as GDP increased modestly to 35.431 billion US dollars (PPP), with GDP per capita reaching 9,565 US dollars (PPP). The GDP growth rate was a modest 0.8%, signaling a slow but positive rebound. Unemployment decreased slightly to 34%, suggesting some improvement in employment conditions. However, national debt rose further to 40.8%, reflecting ongoing fiscal challenges and possibly increased government spending to stimulate the economy. Between 2011 and 2013, Bosnia and Herzegovina’s economy demonstrated steady growth. GDP reached approximately 36.495 billion US dollars (PPP) in 2011, 37.104 billion in 2012, and 38.975 billion in 2013. These increases were accompanied by corresponding rises in GDP per capita and nominal GDP, indicating gradual improvements in economic output and living standards. Unemployment showed a slight decline, decreasing from 31% in 2012 to 31% in 2013, suggesting a stabilization in the labor market. National debt remained relatively stable around 42.2%, reflecting persistent fiscal constraints. During 2014 and 2015, GDP continued to increase, reaching about 39.732 billion US dollars (PPP) in 2014 and 41.195 billion in 2015. GDP per capita rose from 11,410 to 12,013 US dollars (PPP), indicating ongoing improvements in average income. Unemployment fluctuated between 32% and 35%, highlighting continued challenges in reducing joblessness. National debt showed a slight decrease from 45.9% to 45.5%, suggesting marginal fiscal consolidation efforts. From 2016 onward, economic growth accelerated more noticeably. GDP increased to approximately 44.253 billion US dollars (PPP) in 2016, 46.394 billion in 2017, and 50.333 billion in 2018. GDP per capita rose correspondingly, reflecting enhanced economic performance and living standards. Unemployment rates improved significantly, decreasing from 25.4% in 2016 to 19.4% in 2018, indicating better labor market conditions and job creation. National debt also declined from 44.1% to 34.3%, reflecting stronger fiscal management and reduced borrowing. In 2019, Bosnia and Herzegovina’s GDP reached approximately 54.960 billion US dollars (PPP), with GDP per capita at 15,625 US dollars (PPP). Unemployment further decreased to 15.7%, marking a substantial improvement in employment levels. National debt stood at 32.5%, continuing the trend of fiscal consolidation. The outbreak of the COVID-19 pandemic in 2020 had a profound impact on the country’s economy. GDP declined to about 54.012 billion US dollars (PPP), with GDP per capita falling to 15,231 US dollars (PPP). The economy contracted sharply, registering a negative GDP growth rate of −6.5%, reflecting the widespread disruptions caused by the pandemic. Unemployment rose to 19%, as economic activity slowed and businesses faced challenges. National debt increased to 36.5%, likely due to increased government spending to mitigate the pandemic’s effects and support the economy. Post-pandemic recovery became evident from 2021 onward. GDP rebounded to approximately 60.180 billion US dollars (PPP), with GDP per capita increasing to 16,584 US dollars (PPP). The GDP growth rate recovered to 5%, signaling a strong economic rebound. Unemployment decreased to 17.5%, reflecting renewed job creation and economic stabilization. National debt was reduced to 34.5%, indicating improved fiscal conditions as the economy recovered. By 2022, GDP further increased to approximately 67.190 billion US dollars (PPP), with GDP per capita rising to 18,517 US dollars (PPP). The GDP growth rate moderated to 3.2%, consistent with a more stabilized expansion phase. Unemployment fell to 15.7%, continuing the trend of improving labor market conditions. National debt decreased further to 29.7%, reflecting ongoing fiscal consolidation. In 2023, Bosnia and Herzegovina’s GDP reached approximately 70.780 billion US dollars (PPP), with GDP per capita at 19,633 US dollars (PPP). The economy grew at a rate of 4%, indicating sustained expansion. Unemployment declined to 13.1%, marking continued progress in reducing joblessness. National debt stood at 28.6%, maintaining the downward trajectory in fiscal liabilities. Projections for 2024 indicated that GDP would reach approximately 74.280 billion US dollars (PPP), with GDP per capita increasing to 20,622 US dollars (PPP). The anticipated GDP growth rate was 3%, suggesting steady economic expansion. Unemployment was estimated to fall further to 11.7%, reflecting expectations of continued improvements in the labor market. National debt was forecasted to decrease slightly to 28.1%, consistent with ongoing fiscal discipline. The forecast for 2025 projected GDP to rise to approximately 77.897 billion US dollars (PPP), with GDP per capita reaching 22,610 US dollars (PPP). The GDP growth rate was expected to remain steady at 3%, indicating sustained economic momentum. Unemployment was anticipated to remain stable at 11.7%, reflecting a more robust labor market. National debt was forecasted to decline further to 25.4%, underscoring continued efforts toward fiscal sustainability and economic stability.

During 2006, Bosnia and Herzegovina’s export sector played a crucial role in shaping the country’s economic landscape, contributing significantly to its overall economic profile. Although specific export values for that year are not explicitly detailed in the available data, it is understood that exports formed an essential component of the nation’s trade balance and economic activity. The export structure was characterized by a mixture of raw materials, manufactured goods, and agricultural products, reflecting the diverse industrial and natural resource base of the country. This export activity was instrumental in supporting domestic industries and generating foreign currency earnings, which were vital for post-war economic recovery and growth. Foreign direct investment (FDI) in Bosnia and Herzegovina exhibited fluctuating trends over the period from 1999 to 2011, reflecting the broader economic and political challenges faced by the country during its post-conflict reconstruction phase. Annual FDI inflows varied considerably, influenced by factors such as regional stability, regulatory reforms, and global economic conditions. Despite these fluctuations, the country managed to attract a steady stream of foreign capital, which was critical for revitalizing key sectors such as manufacturing, energy, and financial services. This period was marked by gradual improvements in the investment climate, including efforts to enhance legal frameworks and reduce bureaucratic obstacles, which contributed to the varying levels of foreign investment. By 2022, foreign direct investment in Bosnia and Herzegovina experienced a notable resurgence, with inflows reaching €730 million. This figure represented a significant increase compared to previous years and signaled renewed investor confidence in the country’s economic prospects. The upturn in FDI was driven by several factors, including improved political stability, ongoing structural reforms, and the country’s strategic position in the Western Balkans, which offers access to regional markets. Additionally, sectors such as information technology, manufacturing, and renewable energy attracted considerable foreign interest, reflecting global trends toward digitalization and sustainable development. The 2022 FDI inflow underscored Bosnia and Herzegovina’s potential as an emerging destination for foreign capital within Southeast Europe. From 1994 to 2011, Bosnia and Herzegovina attracted a total of €6.4 billion in foreign investment, a substantial amount that played a pivotal role in the country’s post-war economic reconstruction and development. This cumulative investment helped to rebuild infrastructure, modernize industrial capacities, and stimulate private sector growth. The inflows were instrumental in creating employment opportunities and fostering technological transfer, which contributed to enhancing productivity and competitiveness. The period also saw the gradual integration of Bosnia and Herzegovina into regional and global economic networks, facilitated by the presence of foreign investors who brought capital, expertise, and access to international markets. The leading countries investing in Bosnia and Herzegovina between 1994 and 2007 were predominantly European nations, reflecting historical, cultural, and economic ties. Germany, Austria, Croatia, Slovenia, and Italy emerged as the most significant sources of foreign capital during this period. These countries invested heavily in sectors such as manufacturing, banking, telecommunications, and energy. Their investments were often motivated by geographic proximity, established business relationships, and the strategic importance of Bosnia and Herzegovina as a gateway to the Western Balkans. The presence of these investors contributed to the transfer of managerial know-how and technological expertise, which supported the modernization of the domestic economy. Foreign investments in Bosnia and Herzegovina from 1994 to 2007 were distributed across various economic sectors, highlighting the diverse opportunities available to investors. The manufacturing sector attracted a considerable share of investment, focusing on industries such as metal processing, automotive parts, and textiles. The banking and financial services sector also received substantial foreign capital, reflecting efforts to stabilize and modernize the financial system. Telecommunications emerged as another key area of investment, driven by the need to improve infrastructure and expand access to communication technologies. Additionally, the energy sector attracted foreign interest, particularly in hydropower and other renewable energy projects, which were seen as vital for ensuring long-term energy security and sustainability. An estimated 25.5% of Bosnia and Herzegovina’s gross domestic product (GDP) is attributed to the grey economy, indicating a substantial informal economic sector within the country. This sizeable informal economy encompasses a range of activities that operate outside formal regulatory frameworks, including unregistered businesses, undeclared employment, and informal trade. The prevalence of the grey economy reflects several structural challenges, such as high unemployment rates, regulatory complexity, and limited institutional capacity for enforcement. While the informal sector provides livelihoods for a significant portion of the population, it also poses challenges for fiscal policy, as it reduces tax revenues and complicates economic planning. Efforts to formalize the grey economy have been ongoing, focusing on improving the business environment, enhancing tax compliance, and strengthening regulatory institutions.

In 2017, Bosnia and Herzegovina experienced a significant expansion in its export sector, with exports increasing by 17% compared to the previous year, reaching a total value of €5.65 billion. This growth in exports contributed to an overall increase in the volume of foreign trade, which amounted to €14.97 billion, representing a 14% rise over the previous year. Imports of goods also saw a substantial increase, rising by 12% to total €9.32 billion. The improvement in trade dynamics was further reflected in the coverage of imports by exports, which increased by 3 percentage points from the prior year, reaching 61%, indicating a narrowing trade deficit and enhanced export capacity. The composition of Bosnia and Herzegovina’s exports in 2017 was characterized by a focus on manufactured and processed goods. Key export items included car seats, which underscored the country’s developing automotive supply chain, as well as electricity, processed wood products, aluminium, and furniture. These exports highlighted the country’s industrial diversification and its ability to supply both raw materials and finished goods to international markets. On the import side, the country primarily brought in crude oil, automobiles, motor oil, coal, and briquettes, reflecting its energy needs and the demand for transportation equipment and fuel necessary to support domestic consumption and industrial activity. Despite positive trade developments, the unemployment rate in Bosnia and Herzegovina remained relatively high in 2017, standing at 20.5%. This figure underscored ongoing challenges in the labor market, including structural unemployment and the need for job creation. However, projections from the Vienna Institute for International Economic Studies offered a cautiously optimistic outlook, forecasting a gradual decline in unemployment rates over the subsequent years: 19.4% in 2018, 18.8% in 2019, and 18.3% in 2020. These projections suggested that economic growth and foreign investment could contribute to improved employment conditions in the near future. Fiscal management in 2017 showed progress as well, with Bosnia and Herzegovina’s public debt decreasing by €389.97 million, which equated to a reduction of over 6% compared to the debt level at the end of 2016. By 31 December 2017, the total public debt stood at €5.92 billion, representing 35.6% of the country’s gross domestic product (GDP). This reduction in public debt as a share of GDP indicated efforts to improve fiscal sustainability and manage public finances prudently amid economic expansion. The business environment in Bosnia and Herzegovina also reflected growth, with 32,292 companies registered by the end of 2017. These enterprises collectively generated revenues amounting to €33.572 billion during the year, demonstrating the scale and activity of the private sector. Foreign direct investment (FDI) played a notable role in the economy, with inflows totaling €397.35 million in 2017, equivalent to 2.5% of GDP. This level of FDI indicated increasing international confidence in the country’s economic potential and investment climate. Bosnia and Herzegovina’s success in attracting foreign investment was further illustrated by its global ranking in job creation. In 2017, the country ranked third worldwide in terms of the number of new jobs created by foreign investment relative to its population size. This achievement highlighted the significant impact of foreign enterprises on employment and economic development, contributing to the gradual reduction of unemployment and the diversification of the labor market. Tourism also experienced robust growth in 2017, with total tourist arrivals reaching 1,307,319, marking a 13.7% increase compared to the previous year. This surge in visitor numbers was accompanied by a rise in tourist overnight stays, which totaled 2,677,125, reflecting a 12.3% increase year-on-year. The majority of tourists, approximately 71.5%, were from foreign countries, underscoring Bosnia and Herzegovina’s growing appeal as an international travel destination. The expansion of the tourism sector contributed positively to the country’s service economy and provided additional employment opportunities in related industries.

In 2018, Bosnia and Herzegovina experienced notable growth in its trade activities, with the export of goods reaching a value of 11.9 billion convertible marks (KM), equivalent to approximately €6.07 billion. This figure represented a significant increase of 7.43% compared to the export values recorded in the same period of the previous year, 2017. The upward trend in exports reflected improvements in various sectors of the economy, including manufacturing and raw materials, which contributed to the country’s enhanced trade performance. Concurrently, imports into Bosnia and Herzegovina also rose, totaling 19.27 billion KM (€9.83 billion) during 2018, marking a 5.47% increase from the previous year. This growth in imports indicated a rising domestic demand for foreign goods and services, which, while contributing to the trade deficit, also suggested expanding consumer markets and industrial inputs necessary for economic development. The real estate market in Bosnia and Herzegovina demonstrated moderate growth during the first half of 2018, as evidenced by the average price of new apartments sold. The average price per square meter was recorded at 1,639 KM (€886.31), which constituted a 3.5% increase compared to the prices in the previous year. This rise in housing prices was indicative of increased demand for residential properties, possibly driven by urbanization trends, improved economic conditions, and greater consumer confidence. The real estate sector’s growth also reflected broader economic dynamics, including the availability of financing options and investment interest in the housing market. Public debt levels in Bosnia and Herzegovina as of June 30, 2018, stood at approximately €6.04 billion. The composition of this debt revealed a predominance of external liabilities, which accounted for 70.56% of the total public debt, while internal debt constituted the remaining 29.4%. This distribution underscored the country’s reliance on foreign borrowing to finance its budgetary needs and development projects, a common practice among emerging economies seeking to balance fiscal requirements with limited domestic capital markets. The public debt’s share relative to the gross domestic product (GDP) was 34.92% in 2018, situating Bosnia and Herzegovina within a moderate debt burden range, which policymakers monitored closely to maintain fiscal sustainability and economic stability. Tourism in Bosnia and Herzegovina experienced robust growth in 2018, with the country welcoming a total of 1,465,412 tourists, representing a 12.1% increase over the previous year. This surge in visitor numbers was accompanied by a corresponding rise in overnight stays, which reached 3,040,190 in hotels across the country, marking a 13.5% increase. The tourism sector’s expansion was driven by the country’s rich cultural heritage, natural landscapes, and improved infrastructure, which together enhanced its attractiveness as a travel destination. Notably, a significant majority of tourists, accounting for 71.2%, originated from foreign countries, highlighting Bosnia and Herzegovina’s growing international appeal and its integration into global tourism circuits. The financial landscape of Bosnia and Herzegovina in 2018 was also characterized by considerable activity in mergers and acquisitions (M&A), with the total value of such transactions amounting to €404.6 million. This level of M&A activity indicated a dynamic business environment where companies sought strategic partnerships, expansions, and consolidations to strengthen their market positions. The volume and value of these transactions reflected investor confidence and the ongoing restructuring processes within various sectors of the economy, including manufacturing, services, and finance. Technological adoption among enterprises in Bosnia and Herzegovina was notably high in 2018, according to a survey conducted by the Bosnia and Herzegovina Statistics Agency. The survey revealed that 99.5% of enterprises utilized computers in their business operations, demonstrating widespread integration of digital tools in daily activities. Furthermore, 99.3% of these enterprises had internet connections, underscoring the critical role of connectivity in modern business processes, communication, and access to information. This high level of technological penetration reflected the country’s efforts to modernize its economy and align with global digital trends, thereby enhancing productivity and competitiveness. Foreign direct investment (FDI) inflows into Bosnia and Herzegovina were substantial in 2018, totaling €400.64 million, equivalent to 783.4 million KM. This amount represented approximately 2.3% of the country’s GDP, indicating a significant contribution of FDI to the national economy. The inflows were directed towards various sectors, including manufacturing, services, and infrastructure, providing capital for expansion, technology transfer, and job creation. The level of foreign investment highlighted Bosnia and Herzegovina’s attractiveness to international investors, driven by its strategic location, skilled labor force, and ongoing reforms aimed at improving the business climate. The Central Bank of Bosnia and Herzegovina reported a profit of 8,430,875 KM (€4,306,347) in 2018, reflecting the institution’s stable financial performance during the year. This profit was indicative of effective monetary policy management and operational efficiency within the central banking system. The Central Bank’s positive financial results contributed to maintaining confidence in the country’s monetary framework, supporting currency stability, and facilitating economic growth. The bank’s role remained pivotal in overseeing the banking sector, regulating financial institutions, and ensuring the overall soundness of the financial system in Bosnia and Herzegovina.

In 2019, the World Bank estimated that Bosnia and Herzegovina’s economy experienced a growth rate of 2.8%, reflecting a modest yet steady expansion in economic activity. This growth was indicative of gradual improvements in various sectors despite ongoing structural challenges. The country’s performance was further contextualized by its standing on the Index of Economic Freedom for that year, where Bosnia and Herzegovina was ranked 83rd globally with an overall score of 61.9. This ranking demonstrated a notable advancement from its 91st place position in 2018, signaling some progress in the implementation of policies conducive to economic freedom, such as regulatory efficiency, rule of law, and open markets. Despite this upward movement, the economic freedom score of 61.9 placed Bosnia and Herzegovina below the average for the broader regional grouping, which includes neighboring countries in Southeast Europe. Nevertheless, the score remained above the global average, categorizing the country as having a “moderately free” economy. This classification suggests that while Bosnia and Herzegovina had made strides in improving its business environment and reducing barriers to trade and investment, significant obstacles persisted, including bureaucratic inefficiencies, corruption, and a complex political structure that could hinder further economic liberalization. The banking sector in Bosnia and Herzegovina demonstrated considerable strength as of 31 January 2019, with total deposits in domestic banks reaching 21.9 billion convertible marks (KM), equivalent to approximately €11.20 billion. This figure represented 61.15% of the country’s nominal gross domestic product (GDP), underscoring the banking system’s substantial role in the national economy and its capacity to mobilize domestic savings. The high level of deposits relative to GDP also indicated a degree of financial stability and public confidence in the banking institutions, which is crucial for supporting credit expansion and investment. In the real estate market, data from the second quarter of 2019 revealed that the average price of newly sold apartments stood at 1,606 KM per square meter, which equated to about €821.47. This pricing reflected the ongoing demand for residential properties in urban centers, driven by factors such as population growth, urbanization, and increasing disposable incomes in certain segments of the population. The apartment price levels also highlighted regional disparities within the country, with higher prices typically observed in major cities like Sarajevo and Banja Luka, where economic activity and employment opportunities are concentrated. Trade dynamics in the first half of 2019 showed a slight contraction in exports, which totaled 5.829 billion KM (€2.98 billion), representing a 0.1% decrease compared to the same period in 2018. This marginal decline suggested challenges in maintaining export growth, potentially due to external factors such as fluctuating demand in key markets or competition from other regional exporters. Conversely, imports rose by 4.5% during the same period, reaching 9.779 billion KM (€5.00 billion). The increase in imports indicated a growing domestic demand for goods and services, possibly fueled by consumer spending and investment activities, but also contributed to a widening trade deficit, which remained a persistent issue for the country’s external balance. Tourism emerged as a bright spot in Bosnia and Herzegovina’s economy during 2019, with tourist arrivals totaling 906,788 in the first seven months of the year. This figure marked an 11.7% increase over the previous year’s corresponding period, reflecting the country’s growing appeal as a travel destination. The rise in tourist numbers was attributed to factors such as improved infrastructure, increased international marketing efforts, and the country’s rich cultural heritage and natural attractions. Tourism’s expansion contributed positively to employment and income generation, particularly in regions with significant historical sites and natural beauty. Foreign direct investment (FDI) inflows into Bosnia and Herzegovina during the first six months of 2019 amounted to 650.1 million KM (€332.34 million). This level of investment signaled a moderate degree of confidence among international investors in the country’s economic prospects. FDI was directed toward various sectors, including manufacturing, energy, and services, reflecting ongoing efforts to diversify the economy and integrate more fully into regional and global value chains. However, challenges such as political uncertainty, regulatory complexity, and infrastructure deficits continued to temper the pace and scale of foreign investment.

In 2020, the economy of Bosnia and Herzegovina experienced a significant contraction, shrinking by approximately 4.7%. This downturn was largely attributable to the widespread impacts of the COVID-19 pandemic, which disrupted economic activities across various sectors. The pandemic led to reduced domestic consumption, interruptions in supply chains, and a decline in both domestic and international demand, all of which contributed to the overall economic decline. In response to these challenges, the government of Bosnia and Herzegovina implemented increased expenditures aimed at mitigating the negative effects of the pandemic on the economy. These fiscal measures included support packages for businesses, social welfare programs to assist vulnerable populations, and investments in healthcare infrastructure to manage the public health crisis. The rise in government spending, while necessary to cushion the economic blow, also placed additional strain on public finances during this period of contraction. Following the economic downturn in 2020, Bosnia and Herzegovina’s economy began to recover in 2021, reflecting a broader global trend of economic rebound as pandemic-related restrictions eased and economic activities resumed. This recovery was characterized by a gradual increase in industrial production, revitalization of the service sector, and a rebound in export activities, all contributing to renewed economic growth. The recovery phase also benefited from ongoing government support measures and the adaptation of businesses to new operating conditions, including the adoption of digital technologies and remote working arrangements. The positive momentum in 2021 helped to restore confidence among investors and consumers, which was crucial for sustaining the economic upswing. Throughout the period from 2020 to 2022, employment rates in Bosnia and Herzegovina demonstrated an upward trend, signaling improvements in the labor market despite the initial shock caused by the pandemic. This increase in employment was supported by the gradual reopening of businesses and the revival of economic sectors that had been severely affected in 2020. Additionally, government initiatives aimed at stimulating job creation and supporting workforce reintegration played a role in enhancing employment opportunities. The labor market’s resilience during this period was also reflected in the stabilization of unemployment rates after the spike experienced in 2020. However, while overall employment figures improved, certain demographic groups continued to face significant challenges. One of the most persistent issues during this period was the high rate of youth unemployment, which remained a critical concern in 2022. Despite the general growth in employment, the unemployment rate among young people exceeded 33%, indicating that a substantial portion of the youth population struggled to find stable employment. This high level of youth unemployment underscored ongoing structural problems in the labor market, such as a mismatch between the skills possessed by young job seekers and the demands of employers, limited access to vocational training, and insufficient opportunities for work experience and internships. The situation was further compounded by the economic uncertainties brought about by the pandemic, which disproportionately affected entry-level positions and sectors that typically employ younger workers. Addressing youth unemployment remained a priority for policymakers, as it posed long-term risks to social cohesion and economic development in Bosnia and Herzegovina.

As of 30 November 2023, Bosnia and Herzegovina had a total of 1.3 million registered motor vehicles, reflecting the country’s growing reliance on automotive transportation for both personal and commercial purposes. This figure includes a diverse range of vehicles such as passenger cars, trucks, motorcycles, and buses, which collectively serve the mobility needs of the population across urban and rural areas. The steady increase in vehicle registrations over recent years can be attributed to economic recovery trends and improvements in disposable incomes, enabling more households to afford private vehicles. Additionally, the expansion of road infrastructure and cross-border trade within the region has further stimulated demand for commercial vehicles, supporting logistics and distribution networks. The vehicle registration data also highlights the challenges faced by Bosnia and Herzegovina in terms of traffic management, environmental impact, and road safety, prompting ongoing governmental efforts to modernize transportation policies and promote sustainable mobility solutions. Overall, the total number of registered motor vehicles serves as an important indicator of the country’s economic development and the evolving dynamics of its transportation sector in 2023.

The ARIA shopping and business center in Sarajevo functions not only as a commercial hub but also as the headquarters of Al Jazeera Balkans, a prominent regional news network. This dual role underscores the center’s significance in both economic and media landscapes within the city. Sarajevo’s industrial sector is diverse, encompassing the production of tobacco products, furniture manufacturing, hosiery, automobile assembly, and communication equipment. These industries reflect a blend of traditional craftsmanship and modern manufacturing techniques, contributing substantially to the local economy and employment. Several major companies are headquartered in Sarajevo, highlighting the city’s role as an economic powerhouse in Bosnia and Herzegovina. BH Telecom stands as a leading telecommunications provider, while Bosnalijek, a pharmaceutical company, plays a crucial role in the healthcare and pharmaceutical sectors. Energopetrol, a petroleum company, is integral to the country’s energy infrastructure. The airline FlyBosnia represents the city’s growing aviation industry. Additionally, the Sarajevo Tobacco Factory and Sarajevska Pivara (Sarajevo Brewery) are historic enterprises that have long contributed to the city’s industrial and cultural heritage. Tourism constitutes a vital component of Sarajevo’s economy, with the city earning international recognition for its appeal. In 2006, the travel guide publisher Lonely Planet included Sarajevo among the top 50 “Best Cities in the World,” a testament to its cultural richness, historical significance, and natural beauty. The city’s sports tourism is particularly notable due to its legacy from the 1984 Winter Olympics, which left behind extensive sporting infrastructure. Skiing facilities on the nearby mountains of Bjelašnica, Igman, Jahorina, Trebević, and Treskavica continue to attract winter sports enthusiasts, providing year-round opportunities for recreation and competition. Sarajevo’s appeal to tourists is further enhanced by its 600-year history, which reflects a unique confluence of Western and Eastern influences. The city’s architecture, cultural traditions, and historical sites bear the marks of both the Ottoman and Austria-Hungarian empires, offering visitors a rich tapestry of heritage to explore. Historically, Sarajevo served as an important trading hub during these imperial periods, drawing merchants, travelers, and settlers from across the region. This longstanding role as a crossroads of commerce and culture has shaped the city’s identity and economic development over the centuries. In contemporary times, Sarajevo has emerged as one of the fastest developing cities in the Western Balkans. This rapid growth is visible in its modern skyline, punctuated by notable constructions such as the Bosmal City Center, ARIA Centar, and the Avaz Twist Tower. The Avaz Twist Tower, in particular, stands out as one of the tallest skyscrapers in the Balkans, symbolizing the city’s aspirations and economic vitality. Between 2006 and 2011, a new highway connecting Sarajevo and Kakanj was completed, significantly improving transportation infrastructure. This development has facilitated economic growth by enhancing connectivity and reducing travel times between key urban centers. The service sector in Sarajevo has experienced rapid expansion, driven by factors such as population growth, increased tourism, and rising airport traffic. This growth has attracted new business investments, further diversifying the city’s economic base. Sarajevo boasts one of the most advanced commercial infrastructures in Southeast Europe, exemplified by the Sarajevo City Center. Completed in 2014, this shopping complex ranks among the largest in the region, offering a wide array of retail, dining, and entertainment options. Complementing this is the Airport Center Sarajevo, which is planned to be directly connected to the new airport terminal. This center will provide a broad selection of brands, products, and services, enhancing the city’s commercial appeal to both residents and visitors. Historically, Sarajevo’s economic performance has been strong relative to its regional peers. In 1981, the city’s GDP per capita was recorded at 133% of the Yugoslav average, reflecting its status as a prosperous urban center within the former federation. More recently, in 2011, Sarajevo’s GDP was estimated at 16.76 billion US dollars, accounting for 37% of Bosnia and Herzegovina’s total GDP according to data from the Central Bank of Bosnia and Herzegovina. This concentration of economic activity underscores Sarajevo’s role as the country’s primary economic engine, driving development and growth across multiple sectors.

The construction of Brodomerkur, the largest trade center in Herzegovina, marked a significant milestone in the economic development of Mostar. This expansive commercial complex was designed to serve as a central hub for trade and commerce, facilitating both local business activities and regional economic integration. By providing modern retail spaces, office facilities, and logistical support, Brodomerkur attracted a variety of enterprises and investors, thereby enhancing the city’s commercial infrastructure. Its establishment not only created numerous employment opportunities but also contributed to the diversification and modernization of Mostar’s economy, positioning the city as a key player in Herzegovina’s trade sector. Mostar’s economy has traditionally been multifaceted, with several key sectors underpinning its financial stability and growth. Tourism stands out as a predominant pillar, capitalizing on the city’s rich cultural heritage, historic architecture, and scenic landscapes that draw visitors from across the globe. Alongside tourism, the aluminium and metal industries have played a crucial role in shaping the industrial landscape of Mostar. These sectors have benefited from the region’s natural resources and skilled workforce, fostering a robust manufacturing base. Banking services have also become increasingly important, reflecting the city’s role as a financial hub, while the telecommunication sector has expanded rapidly in recent decades, driven by technological advancements and growing demand for digital connectivity. Together, these industries form a diversified economic foundation that supports Mostar’s continued development. Mostar hosts some of the largest corporations in Bosnia and Herzegovina, underscoring its economic significance within the national context. These companies span various industries, including manufacturing, finance, and services, and their presence in the city highlights Mostar’s capacity to attract and sustain major business operations. The concentration of such corporations not only boosts local employment but also stimulates ancillary sectors such as logistics, retail, and professional services. This corporate presence has helped Mostar maintain a competitive edge in the country’s economic landscape, fostering innovation and investment that contribute to regional prosperity. In terms of financial services, Mostar ranks as the second-largest financial center in Bosnia and Herzegovina, trailing only the capital, Sarajevo. This status is reinforced by the fact that two of the three largest banks in the country have their headquarters in Mostar. These financial institutions play a pivotal role in the national banking system, offering a wide range of services including retail banking, corporate finance, and investment management. Their operations facilitate capital flow, credit availability, and economic growth not only within Mostar but across the entire country. The prominence of these banks also reflects the city’s strategic importance as a financial hub, attracting both domestic and international investors. Bosnia and Herzegovina’s national infrastructure is supported by three major corporations responsible for electric, postal, and telecommunication services, all of which have a significant presence in Mostar. These entities form the backbone of essential public utilities and communication networks, ensuring the delivery of critical services to residents and businesses alike. Alongside these national corporations, the banking sector and the aluminium factory constitute a substantial portion of Mostar’s overall economic activity. The synergy between these sectors creates a dynamic economic environment, where industrial production, financial services, and infrastructure development mutually reinforce each other, driving sustained growth and modernization within the city. Among the industrial enterprises in Mostar, Aluminij stands out as one of the most influential companies, not only within the city but also across the region and the country. Established as a key player in the aluminium production industry, Aluminij has contributed significantly to the local economy by providing employment, fostering technological innovation, and generating substantial export revenues. Its operations have positioned Mostar as a critical node in the global aluminium supply chain, attracting partnerships and investments that have further enhanced the company’s capabilities. Aluminij’s impact extends beyond economics, as it also plays a role in community development and regional industrial policy. Aluminij’s manufacturing capacity is reflected in its impressive annual export value, which exceeds €150 million. This substantial figure underscores the company’s role as a major exporter and a vital contributor to Bosnia and Herzegovina’s trade balance. The high export volume indicates a strong production output and a competitive position in international markets, where Aluminij’s products are in demand for various industrial applications. The company’s export performance not only generates significant foreign exchange earnings but also supports a wide network of suppliers, distributors, and service providers, amplifying its economic footprint within Mostar and beyond. The company’s international partnerships further highlight its global integration and strategic importance. Aluminij collaborates with renowned corporations from various countries, including Venture Coke Company L.L.C., a joint venture between Venco and Conoco from the United States, which supplies essential raw materials for aluminium production. Swiss-based Glencore International AG is another key partner, providing expertise and market access in commodity trading. German firms such as Debis International Trading GmbH, Daimler-Chrysler, and VAW Aluminium Technologie GmbH contribute technological know-how, industrial equipment, and automotive industry connections. Norwegian Hydro ASA brings additional aluminium industry expertise, while Italian automotive giant Fiat and Croatian company TLM-Šibenik represent important regional collaborators. These partnerships enable Aluminij to maintain high production standards, innovate continuously, and expand its market reach, reinforcing Mostar’s position in the global industrial network. The economic benefits of Aluminij’s operations extend directly to the Mostar area, which receives approximately €40 million annually in income derived from the company’s activities. This income supports local government budgets, infrastructure projects, and social programs, contributing to the overall quality of life in the region. The financial inflows generated by Aluminij also stimulate secondary economic activities, including retail, construction, and services, creating a multiplier effect that enhances economic resilience. By anchoring the local economy, Aluminij plays a vital role in sustaining Mostar’s economic vitality and supporting its long-term development goals.

Prijedor ranks as the sixth largest city in Bosnia and Herzegovina, distinguished by its economic prosperity and a multifaceted economy encompassing industrial, service, and educational sectors. The city’s economic landscape is characterized by a diverse industrial base, complemented by a vibrant service sector and a growing educational infrastructure that supports workforce development and innovation. Its economic vitality is reflected in the presence of numerous enterprises and institutions that contribute to both local employment and the broader regional economy. Strategically situated near several major European capitals—namely Zagreb, Belgrade, Budapest, and Vienna—Prijedor benefits from its advantageous geographical position, which has established it as a significant industrial and commercial hub at the national level. This proximity to important urban centers facilitates trade, investment, and logistical connections, enabling Prijedor to serve as a critical node in regional supply chains and economic networks. The city’s location enhances its accessibility to markets across Central and Southeastern Europe, fostering opportunities for export-oriented industries and attracting foreign direct investment. The financial sector in Prijedor is notably well-developed, hosting eleven international banks that operate within its jurisdiction. This robust banking presence provides a wide range of financial services to businesses and individuals, supporting economic activities through credit provision, investment facilitation, and financial management. In addition to these banks, the city is home to five microcredit organizations that play a crucial role in financing small and medium-sized enterprises (SMEs), thereby stimulating entrepreneurship and local economic growth. Complementing these financial institutions is a development foundation that focuses on fostering sustainable economic development and supporting innovative projects, further enhancing the city’s financial ecosystem. Prijedor’s strategic position is complemented by a favorable climate, both of which contribute significantly to its substantial economic potential and prospects for expansion within Bosnia and Herzegovina. The city’s climate supports agricultural productivity, while its location ensures ease of access to transportation corridors and markets. These factors collectively create a conducive environment for industrial diversification and service sector growth. The combination of geographical advantages and climatic conditions positions Prijedor as a promising center for future economic development and investment. The surrounding region of Prijedor is endowed with fertile agricultural land and abundant local raw mineral resources, which, together with a growing population of highly educated individuals, enable the city to produce a wide range of sophisticated industrial products as well as outputs in the food and service industries. The availability of raw materials such as minerals supports heavy industry and manufacturing, while the agricultural sector benefits from arable land suitable for diverse crops and livestock. The presence of a skilled workforce, nurtured by local educational institutions, facilitates the production of high-quality goods and services, enhancing the city’s competitive advantage in both domestic and export markets. A key industrial presence in Prijedor is the Bosnian branch of the ArcelorMittal Steel Company, formerly known as RMK Zenica. This facility employs approximately 3,000 workers, making it one of the city’s largest employers and a cornerstone of its industrial sector. ArcelorMittal, headquartered in Luxembourg, is a global steel corporation with a workforce exceeding 320,000 employees across more than 60 countries. The company’s operations in Prijedor contribute significantly to the local economy through job creation, technology transfer, and integration into global steel production networks. The facility’s output plays a vital role in supplying steel products for both domestic consumption and export. Other notable industrial enterprises in Prijedor include Ferrox a.d., which specializes in the production of iron oxides-pigments used in the chemical industry. Ferrox a.d. is recognized for its role in supplying essential raw materials for various industrial applications, contributing to the chemical manufacturing sector’s development. Additionally, BosnaMontaza AD. stands out as a leading steel manufacturer in the region, producing a diverse array of products such as steel constructions, pipelines, reservoirs, technological equipment, cranes, and energy plants. The company’s broad product portfolio and advanced manufacturing capabilities underscore Prijedor’s importance as a center for heavy industry and engineering. The food industry in Prijedor is exemplified by the presence of the Croatian company Kraš, which operates one of its largest production facilities in the city. This facility focuses on manufacturing confectionery products under well-known brands such as MIRA and Kraš. The operation not only provides employment opportunities but also contributes to the diversification of the local economy by integrating food production with regional and international markets. The presence of such a major food producer highlights Prijedor’s capacity to support large-scale manufacturing in the consumer goods sector. In the realm of traditional beverages, the brand “Prijedorčanka” holds prominence as a leading producer of Rakija, a popular alcoholic beverage in Bosnia and Herzegovina. The brand’s reputation is built on the quality and cultural significance of its products, which are widely consumed both locally and nationally. The production of Rakija under the Prijedorčanka label contributes to the preservation of local heritage and supports the agricultural sector through the use of locally sourced fruits and ingredients. Prijedor also hosts a significant enterprise engaged in the production of cellulose and paper, primarily for export markets. This industry leverages the region’s natural resources and manufacturing capabilities to produce high-quality paper products, contributing to the city’s export portfolio and industrial diversification. The cellulose and paper production facility exemplifies the integration of resource-based industries with global trade networks, enhancing Prijedor’s economic resilience. In 2022, the services sector emerged as the most extensive in Bosnia and Herzegovina, with a total of 39,707 registered companies nationwide. Within this context, retail trade accounted for 12,060 companies, while wholesale trade comprised 11,970 companies, indicating a robust commercial environment. Prijedor’s service sector reflects these national trends, with a growing number of enterprises engaged in various service activities. The expansion of services supports the city’s economic diversification and provides essential support to both industrial and consumer markets. The agricultural sector in Prijedor encompasses a wide range of activities, including fruit growing, gardening, crop farming, mill and bakery industries, stock farming, processing industries, and a milk industry. This diversity reflects the region’s rich agricultural heritage and the adaptability of its farming practices. Fruit growing and gardening benefit from favorable climatic conditions, while crop farming utilizes fertile soils to produce staple and specialty crops. The presence of mill and bakery industries indicates vertical integration within the agricultural value chain, adding value to raw agricultural products. Stock farming and milk production contribute to the supply of animal products for local consumption and processing. Lake Saničani, located in close proximity to Prijedor, is recognized as one of the largest commercial fish-farming lakes in southern Europe. The lake’s extensive aquaculture operations play a significant role in the local economy by providing fish products for regional markets and supporting related industries. The scale and productivity of Lake Saničani highlight the importance of aquaculture as a complementary sector to traditional agriculture and industry in the Prijedor area. The municipality of Prijedor encompasses an area of 8,340.6 hectares, of which 5,845 hectares are privately owned while 2,495.6 hectares remain under state ownership. This division of land ownership reflects the post-socialist transition in land tenure and the balance between private enterprise and public management. The availability of substantial private agricultural land supports individual and commercial farming activities, while state-owned land may be utilized for public purposes, infrastructure, or managed agricultural enterprises. Within the municipality, agricultural land use includes 340.26 hectares dedicated to plowed fields and gardens, 23.86 hectares allocated to orchards, and 5 hectares planted with vineyards, amounting to a total of 402.06 hectares of cultivated soil. This cultivated area demonstrates the focus on both arable farming and horticulture, with orchards and vineyards contributing to the diversification of agricultural production. The relatively modest vineyard area suggests potential for growth in viticulture, while the extent of plowed fields and gardens supports staple crop and vegetable production. The service sector in Prijedor is undergoing rapid growth, as evidenced by the development of hotels, retail stores, roads, educational facilities, and shopping centers. This expansion reflects increasing demand for commercial and social infrastructure, driven by rising population needs and economic activity. The growth of hospitality services, retail outlets, and improved transportation infrastructure enhances the city’s attractiveness to investors, tourists, and residents alike. Educational institutions are also expanding, supporting workforce development and innovation. Collectively, these developments position Prijedor as an emerging commercial hub within Bosnia and Herzegovina, capable of supporting sustained economic growth and diversification.

Although Banja Luka was spared the direct physical destruction that afflicted many other parts of Bosnia and Herzegovina during the Bosnian War in the early 1990s, the city’s economy nevertheless suffered significant setbacks throughout the conflict. The war’s broader destabilizing effects, including disrupted trade routes, economic sanctions, and the breakdown of regional cooperation, created an environment in which economic activity was severely constrained. Despite the absence of direct combat damage, Banja Luka’s industries and businesses faced challenges such as reduced investment, limited access to international markets, and a general atmosphere of uncertainty that hindered economic growth. As a result, the city’s economy stagnated during this tumultuous period, unable to keep pace with the rapid changes occurring elsewhere in the global economy. For approximately four years during and immediately following the war, Banja Luka lagged behind global technological advancements, which further contributed to economic stagnation. While other regions were beginning to integrate new technologies into manufacturing, communications, and services, Banja Luka’s industrial and commercial sectors remained largely static. This technological lag was compounded by the isolation imposed by the conflict and the subsequent political fragmentation of Bosnia and Herzegovina, which limited the city’s access to foreign investment and technological transfer. The cumulative effect was a period during which economic modernization stalled, and the city’s economic performance fell behind that of both regional and international peers. In the years following the war and the Dayton Agreement, the financial services sector in Banja Luka gradually gained increasing importance and prominence within the city’s economy. This shift reflected broader trends in post-conflict economic restructuring, where services, particularly financial services, became key drivers of growth and development. The emergence of a more robust financial sector was facilitated by the establishment of new financial institutions, regulatory frameworks, and market infrastructure designed to attract investment and promote economic stability. As a result, financial services began to play a central role in supporting other sectors of the economy, facilitating capital formation, and integrating Banja Luka more closely into regional and global financial networks. A landmark development in the city’s financial infrastructure was the establishment of the Banja Luka Stock Exchange in 2002. This institution represented a significant step toward creating a formalized capital market in Republika Srpska and Bosnia and Herzegovina as a whole. The stock exchange was designed to provide a transparent and regulated platform for the trading of securities, thereby encouraging investment and enabling companies to raise capital more efficiently. Its creation was part of a broader post-war effort to rebuild and modernize the country’s financial system, aligning it with international standards and practices. The Banja Luka Stock Exchange quickly became a focal point for financial activity in the region, signaling a new era of economic development and market-oriented reforms. Since its inception, the Banja Luka Stock Exchange has experienced substantial growth, marked by increases in the number of listed companies, trading volume, and investor participation. The expansion of the exchange reflected growing confidence among both domestic and international investors in the city’s financial markets and economic prospects. Over time, the exchange broadened its range of listed securities, attracting companies from various sectors and thereby enhancing market liquidity and depth. This growth also facilitated greater price discovery and transparency, contributing to the overall stability and attractiveness of the financial market in Banja Luka. The increasing activity on the exchange underscored the city’s evolving role as a regional financial hub. Among the notable companies listed on the Banja Luka Stock Exchange are Telekom Srpske, Rafinerija ulja Modriča, Banjalučka Pivara, and Vitaminka, all of which are traded regularly. Telekom Srpske, a major telecommunications provider, represents a key player in the region’s communications infrastructure. Rafinerija ulja Modriča, an oil refinery, is significant for its role in the energy sector and industrial production. Banjalučka Pivara, a prominent brewery, contributes to the food and beverage industry, while Vitaminka, a leading producer of confectionery products, is an important name in the consumer goods market. The regular trading of these companies’ shares on the stock exchange highlights their importance to the local economy and their appeal to investors seeking exposure to diverse sectors within Republika Srpska. The investor base of the Banja Luka Stock Exchange has expanded significantly beyond the immediate region to include investment funds and institutional investors from a broad array of countries. While initial participation was primarily from neighboring countries such as Slovenia, Croatia, and Serbia, over time the exchange attracted investment from the European Union, Norway, the United States, Japan, and China. This diversification of investors reflects growing international recognition of the exchange’s potential and the economic opportunities in Banja Luka and Republika Srpska more broadly. The presence of foreign investment funds has helped to increase market liquidity, introduce new investment practices, and enhance the overall credibility of the financial market. It also signifies the city’s increasing integration into the global financial system. Several key financial regulatory bodies are headquartered in Banja Luka, underscoring the city’s central role in the governance and oversight of financial activities within Republika Srpska and Bosnia and Herzegovina. Among these institutions is the Indirect Taxation Authority of Bosnia and Herzegovina, which is responsible for administering value-added tax (VAT), customs duties, and excise taxes across the entire country. The presence of this authority in Banja Luka highlights the city’s administrative importance in national fiscal matters. Additionally, the Republika Srpska Securities Commission, tasked with regulating and supervising the securities market within the entity, is based in the city. This commission ensures compliance with securities laws, protects investors, and promotes market transparency. The RS Banking Agency, also headquartered in Banja Luka, oversees the banking sector, ensuring financial stability, soundness, and adherence to regulatory standards among banks operating in Republika Srpska. Banja Luka also hosts several major financial institutions, including some of Bosnia and Herzegovina’s largest banks, the Deposit Insurance Agency, and the Value-added Tax (VAT) Authority. The concentration of these entities within the city has contributed to the development of a comprehensive financial ecosystem that supports economic activity across multiple sectors. The Deposit Insurance Agency plays a critical role in maintaining depositor confidence by guaranteeing bank deposits up to a certain limit, thereby enhancing the stability of the banking system. The VAT Authority manages the collection and administration of VAT, a key source of government revenue, which is essential for public finance and economic policy. Together, these institutions provide a robust framework for financial intermediation, regulation, and fiscal management, reinforcing Banja Luka’s status as a financial center. The aggregation of financial institutions, regulatory agencies, and market infrastructure has firmly established Banja Luka as a major financial centre within Bosnia and Herzegovina. This status reflects the city’s evolution from a war-affected economy to a dynamic hub of financial services and capital markets. The presence of a well-regulated stock exchange, key regulatory bodies, and significant banking institutions has attracted investment and facilitated economic growth. Banja Luka’s financial sector plays a pivotal role in supporting the broader economy, enabling the mobilization of capital, fostering entrepreneurship, and integrating the region into international financial networks. This development has helped to diversify the city’s economic base and enhance its regional significance. In 1981, prior to the disintegration of Yugoslavia, Banja Luka’s economic standing was relatively strong, with its gross domestic product (GDP) per capita reaching 97% of the Yugoslav average. This figure indicates that the city’s economy was nearly on par with the overall economic performance of the Yugoslav federation at the time, reflecting a relatively high level of industrialization, productivity, and living standards. The city’s economic structure during this period was characterized by a mix of manufacturing, services, and agriculture, supported by well-developed infrastructure and a skilled workforce. This historical economic position provides important context for understanding the challenges and opportunities faced by Banja Luka in the post-war period, as the city sought to rebuild and modernize its economy within a new political and economic framework.

Bosnia and Herzegovina has historically exhibited a relatively high level of energy consumption compared to the average within the European Union. This pattern has been influenced in part by the presence of artificially low energy prices, which have persisted over time and consequently diminished the incentives for both consumers and industrial sectors to adopt energy-saving technologies or implement efficiency measures. The artificially suppressed cost of energy has led to a consumption behavior that does not reflect the true economic or environmental costs associated with energy use, thereby perpetuating inefficiencies and a higher overall demand. This dynamic has complicated efforts to transition toward more sustainable energy practices and has maintained the country’s dependence on traditional, carbon-intensive energy sources. A significant characteristic of Bosnia and Herzegovina’s energy sector is its heavy reliance on lignite coal for electricity generation. Lignite, a low-grade form of coal with relatively high moisture content and lower calorific value, has historically been abundant and economically accessible within the country’s borders. This reliance places Bosnia and Herzegovina among the few nations worldwide that, as of 2021, were still actively planning to expand their coal energy capacity. The decision to continue investing in lignite coal infrastructure contrasts with broader European trends, where many countries have sought to reduce coal dependency due to environmental concerns and commitments to reduce greenhouse gas emissions. The persistence of coal expansion plans reflects a combination of domestic resource availability, existing infrastructure, and economic considerations tied to energy security and employment in coal mining regions. In terms of electricity production, Bosnia and Herzegovina had a total installed capacity of 41.86 billion kilowatt-hours (kWh) in 2020, sourced from a mix of energy types. This capacity distribution included coal-fired thermal power plants, hydroelectric facilities, and a smaller but growing contribution from renewable energy sources such as wind and solar power. The dominance of coal-fired generation was evident, with lignite coal plants accounting for the majority of the production capacity, while hydropower contributed a substantial share due to the country’s mountainous terrain and river systems. The diversification of energy sources, although limited, provided some degree of flexibility and resilience in the national grid, supporting both baseload and peak demand requirements. Electricity consumption in Bosnia and Herzegovina during 2020 totaled approximately 11.66 billion kWh, while the country’s electricity production reached 16.96 billion kWh. This production surplus of over 5 billion kWh indicated that the nation generated more electricity than it consumed domestically. Such a surplus enabled Bosnia and Herzegovina to engage in cross-border electricity trade, balancing imports and exports to optimize supply and demand. The ability to produce beyond domestic needs was partly attributable to the operational capacity of existing power plants and the availability of hydropower during favorable water flow conditions, which can vary seasonally but contribute significantly to the overall electricity mix. Despite the production surplus, Bosnia and Herzegovina imported 3.27 billion kWh of electricity in 2020. These imports were often necessary to meet regional or temporal demand fluctuations, cover shortfalls in specific areas, or ensure grid stability during maintenance periods or unexpected outages. Conversely, the country exported a larger volume of electricity, totaling 7.32 billion kWh in the same year. This net export position underscored Bosnia and Herzegovina’s role as an electricity supplier within the regional energy market, contributing to the interconnected European grid system. The export capacity was particularly important for generating foreign exchange revenue and maintaining positive trade balances in the energy sector, while also reflecting the operational efficiency of the country’s power generation infrastructure. Natural gas consumption in Bosnia and Herzegovina was recorded at 0.218 billion cubic meters in 2020. Notably, the entirety of this natural gas demand was met through imports, as the country did not report any domestic production of natural gas. This reliance on imported natural gas highlighted a vulnerability in terms of energy security, as it subjected the country to external market fluctuations and geopolitical risks associated with supply routes and international contracts. The relatively modest volume of natural gas consumption compared to coal and hydropower reflected the limited role of gas-fired power plants and industrial usage within the national energy mix. Nonetheless, natural gas remained an important component for certain industrial processes, heating, and potentially as a transition fuel in efforts to reduce carbon emissions. The environmental impact of Bosnia and Herzegovina’s energy sector was significant, with carbon dioxide (CO₂) emissions from energy production and consumption reaching 20.95 million tons in 2020. These emissions were predominantly linked to the combustion of lignite coal in thermal power plants, which is characterized by high carbon intensity due to the fuel’s low energy density and high pollutant content. The substantial CO₂ output underscored the challenges faced by the country in aligning its energy policies with international climate commitments, such as those under the Paris Agreement. Efforts to reduce emissions have been complicated by the economic reliance on coal, the need for affordable energy, and the infrastructural investments required to transition toward cleaner energy sources. The environmental footprint of the energy sector remains a critical consideration for Bosnia and Herzegovina’s sustainable development and integration into broader European energy and climate frameworks.

The development of wind energy in Bosnia and Herzegovina began relatively recently, with the construction of the country’s first wind farm in 2018. This marked a significant milestone in the diversification of the nation’s renewable energy sector, as prior to this, wind power had not been harnessed on a commercial scale. The establishment of this initial wind farm demonstrated both the technical feasibility and the growing interest in utilizing the country’s wind resources, setting a precedent for further investments and development in this area. The project not only contributed to the generation of clean energy but also served as a catalyst for policy discussions and strategic planning related to renewable energy expansion. In alignment with the country’s broader energy strategy, the national 2030 energy plan outlines ambitious targets for renewable power capacity, particularly emphasizing solar and wind energy. The plan aims to develop 1.5 gigawatts (GW) of solar power capacity by 2030, reflecting a substantial commitment to solar energy as a key component of the future energy mix. This target represents a significant increase from previous levels of solar capacity and indicates the government’s recognition of solar power’s potential to contribute to energy security, reduce greenhouse gas emissions, and foster economic growth through new technology sectors. The emphasis on solar energy development includes not only utility-scale photovoltaic installations but also the promotion of decentralized solar systems, which can enhance energy access and resilience across various regions. Complementing the solar power goals, the 2030 energy plan also sets a target of adding 0.5 GW (500 megawatts) of wind power capacity within the same timeframe. This objective underscores a strategic focus on expanding wind energy infrastructure as a means to diversify the renewable energy portfolio and reduce dependence on fossil fuels. The planned increase in wind capacity aims to build upon the initial progress made since the first wind farm’s commissioning in 2018, encouraging further investments in wind projects, improving grid integration, and fostering technological innovation. The integration of wind power is expected to play a crucial role in meeting the country’s renewable energy targets, supporting grid stability, and contributing to climate change mitigation efforts. Hydropower has historically been the dominant source of renewable electricity generation in Bosnia and Herzegovina, with substantial installed capacity that forms the backbone of the country’s energy system. As of 2021, the nation possessed approximately 2,076 megawatts (MW) of installed hydropower capacity from plants larger than 10 MW. This significant capacity highlights the extensive utilization of the country’s abundant river resources and mountainous terrain, which provide favorable conditions for large-scale hydroelectric power generation. The reliance on hydropower has contributed to a relatively low carbon intensity in the electricity sector, although it also presents challenges related to water resource management, seasonal variability, and environmental impacts. In addition to large hydropower plants, Bosnia and Herzegovina also maintained about 180 MW of small hydropower units, which form an important part of the renewable energy portfolio. These smaller-scale installations, typically defined as plants with capacities below 10 MW, contribute to local energy supply, often serving remote or rural areas where grid connectivity may be limited. Small hydropower units offer advantages such as lower environmental impact compared to large dams, faster construction times, and the ability to support decentralized energy systems. Their presence complements the larger hydropower infrastructure and aligns with broader goals of sustainable energy development by promoting diverse and resilient renewable energy sources. Together, the expansion of wind and solar power capacities, alongside the substantial existing hydropower infrastructure, reflects Bosnia and Herzegovina’s evolving energy landscape. The country’s strategic plans for 2030 emphasize a balanced approach to renewable energy development, aiming to harness a variety of natural resources while addressing environmental, economic, and social considerations. This multifaceted renewable energy strategy is designed to enhance energy security, reduce greenhouse gas emissions, and support sustainable economic growth within the context of regional and global energy transitions.

In 2021, the electricity sector in Bosnia and Herzegovina was heavily reliant on lignite coal as its primary energy source, with production concentrated in five major lignite coal-fired power plants. These facilities collectively possessed an installed capacity reaching up to 2,065 megawatts (MW), making them the backbone of the country’s electricity generation infrastructure. The dominance of lignite coal power plants reflected the abundant domestic lignite reserves and the historical development of the energy sector, which prioritized coal-fired generation due to its relative affordability and resource availability. This reliance on lignite coal, however, also presented challenges related to environmental sustainability and compliance with evolving European energy and climate policies. Among these power plants, the Tuzla Thermal Power Plant held a significant position, with multiple operational units contributing substantially to the national grid. Unit 4 of the Tuzla plant, which had been a critical component of the plant’s capacity, was originally scheduled for closure in 2022 as part of Bosnia and Herzegovina’s efforts to reduce coal dependency and align with international environmental commitments. Despite this planned shutdown, the government opted to extend the operational life of Unit 4, recognizing the plant’s importance in ensuring energy security and managing electricity demand fluctuations. This decision highlighted the tension between environmental objectives and the practical considerations of maintaining a stable electricity supply in the face of limited alternative energy sources. Similarly, the Kakanj Power Station was subject to regulatory mandates stemming from Bosnia and Herzegovina’s obligations under the 2006 Energy Community Treaty, which aimed to harmonize the country’s energy policies with those of the European Union. In accordance with this treaty, Unit 5 of the Kakanj Power Station was scheduled for closure in 2022 to reduce emissions and phase out older, less efficient coal-fired units. The treaty imposed strict deadlines and environmental standards on coal power plants, compelling Bosnia and Herzegovina to undertake reforms and modernizations within its energy sector. The planned shutdown of Unit 5 was part of a broader strategy to transition towards cleaner energy sources and improve air quality, although it also raised concerns about potential impacts on electricity supply and local employment. Looking beyond the immediate timelines, Bosnia and Herzegovina formulated a national energy plan targeting the year 2030, which outlined a strategic vision for the future of its energy sector. This plan included provisions for the gradual closure of several coal power stations, reflecting a commitment to decarbonization and alignment with European climate goals. In addition to closures, the plan proposed the conversion of certain coal-fired power plants to biomass energy sources, thereby leveraging existing infrastructure while reducing greenhouse gas emissions. This approach aimed to balance the need for energy transition with economic and social considerations, particularly in regions heavily dependent on coal mining and coal power generation. The national 2030 energy plan thus represented a roadmap for transforming the fossil fuel-dependent electricity sector into a more sustainable and diversified energy system. Integral to the operation of these coal power plants were numerous coal mines distributed across Bosnia and Herzegovina, which supplied the lignite necessary for electricity generation. These mines included the Breza coal mine, Gacko coal mine, Kakanj coal mine, Kamengrad coal mine, Kongora coal mine, Stanari coal mine, Tušnica coal mine, Ugljevik coal mine, and Zenica coal mine. Each of these mining operations played a vital role in supporting the country’s energy infrastructure by providing a steady supply of lignite, often located in close proximity to the associated power plants to minimize transportation costs and logistical complexities. The coal mining sector not only contributed to energy production but also served as a significant source of employment and economic activity in the respective regions. However, the environmental impact of lignite mining and combustion, including land degradation, air pollution, and carbon emissions, posed ongoing challenges that Bosnia and Herzegovina needed to address within its broader energy transition framework.

Stari Most in Mostar stands as a prominent symbol of Bosnia and Herzegovina’s rich cultural and historical heritage, having been officially recognized as a UNESCO World Heritage Site. This iconic Ottoman-era bridge, originally constructed in the 16th century, not only represents a remarkable feat of engineering but also embodies the multicultural history of the region. Its destruction during the Bosnian War in the 1990s and subsequent meticulous reconstruction in 2004 further underscored its significance as a symbol of reconciliation and resilience. The bridge attracts numerous visitors annually, drawn by its architectural beauty and the traditional diving competitions held from its arch into the Neretva River below, which have become a celebrated tourist attraction. The tourism sector in Bosnia and Herzegovina has experienced a steady recovery since the post-war period, gradually becoming a vital contributor to the country’s overall economic growth. This resurgence has been driven by a diverse array of activities that cater to both winter and summer tourists. During the winter months, the country’s mountainous terrain, particularly in regions such as Jahorina and Bjelašnica, offers well-developed skiing facilities that attract enthusiasts from across Europe and beyond. In contrast, the summer season sees an influx of visitors seeking countryside tourism, exploring the country’s natural landscapes, historical towns, and cultural sites. This diversification has allowed the tourism industry to generate consistent revenue streams throughout the year, supporting local businesses and employment. Between 1995 and 2000, Bosnia and Herzegovina emerged as one of the top performers in tourism development within the region, achieving an impressive average annual growth rate of 24% in tourist arrivals. This rapid expansion reflected the country’s successful efforts to rebuild its tourism infrastructure and promote its unique cultural and natural assets in the aftermath of conflict. The growth was also facilitated by increasing international interest in the Balkans as a travel destination, alongside improvements in regional stability and accessibility. This period laid the foundation for the country’s continued development as a notable tourism hub in Southeastern Europe. The year 2007 marked a period of solid growth for the European tourism sector, with the region experiencing a 7% increase in tourist arrivals. This growth was predominantly driven by strong performances in Southern and Mediterranean Europe, where countries capitalized on their favorable climates and established tourism industries. Bosnia and Herzegovina distinguished itself during this period by registering a remarkable 20% growth rate in tourist arrivals, significantly outpacing the average European increase. This surge was indicative of the country’s rising profile as a destination of choice, benefiting from enhanced marketing efforts, improved infrastructure, and the growing appeal of its natural and cultural attractions. In 2012, Bosnia and Herzegovina hosted a total of 747,827 tourists, marking a 9% increase compared to the previous year. This upward trend was accompanied by a corresponding rise in overnight stays, which reached 1,645,521—a 9.4% increase from 2011 figures. These statistics underscored the growing popularity of the country among both domestic and international travelers. Of the total tourists recorded in 2012, 58.6% were foreign visitors, highlighting the significant influx of international tourists and the country’s expanding reach in global tourism markets. This growth in foreign tourism contributed to increased foreign exchange earnings and stimulated sectors such as hospitality, transportation, and retail. The World Tourism Organization projected Bosnia and Herzegovina to achieve the third highest tourism growth rate globally between 1995 and 2020. This forecast was based on the country’s consistent performance in attracting tourists and its potential for further development in various tourism niches. Factors contributing to this optimistic outlook included the country’s diverse natural landscapes, rich cultural heritage, and improving political and economic stability. The projection also reflected expectations that Bosnia and Herzegovina would continue to capitalize on emerging trends in experiential and adventure tourism, as well as the growing interest in post-conflict destinations. The diaspora population of Bosnia and Herzegovina plays a significant role in the country’s tourism dynamics, particularly during the summer months when many expatriates return to visit family and reconnect with their homeland. These return visits provide a substantial boost to the local economy, especially in sectors such as retail and food service. The spending patterns of the diaspora during their stays contribute to increased demand for goods, dining, and accommodation services, thereby supporting small businesses and generating employment opportunities. This cyclical influx of diaspora tourists also fosters cultural exchange and helps maintain strong transnational ties. By 2017, Bosnia and Herzegovina had further solidified its position as an emerging tourism destination, welcoming 1,307,319 tourists—a 13.7% increase from the previous year. The number of overnight hotel stays also rose significantly, reaching 2,677,125, which represented a 12.3% increase compared to 2016. These figures reflected sustained growth in both the volume of visitors and the length of their stays, indicating enhanced visitor satisfaction and improved tourism infrastructure. The expansion of accommodation options, along with increased promotional activities and the development of new tourist products, contributed to this positive trend. In the same year, foreign tourists constituted 71.5% of all visitors to Bosnia and Herzegovina, underscoring the country’s growing appeal to international travelers. This majority share of foreign visitors highlighted the success of efforts to position the country as a competitive destination in the global tourism market. The diverse origins of these tourists, ranging from neighboring countries in the Balkans to Western Europe and beyond, reflected Bosnia and Herzegovina’s increasing accessibility and attractiveness. The prominence of international tourism also brought about greater cultural exchange and economic benefits, further integrating the country into the broader European tourism landscape.

Business regulations in Bosnia and Herzegovina exhibit a level of strictness comparable to those found in most Central European countries. Despite this regulatory framework, numerous persistent problems continue to impede the country’s economic development. These challenges reflect a complex interplay between legal standards and practical implementation, where formal regulations coexist with operational inefficiencies and systemic obstacles. The regulatory environment, while ostensibly rigorous, often fails to translate into a stable and predictable business climate, thereby limiting the potential for sustained economic growth. One of the most pressing economic challenges faced by Bosnia and Herzegovina is its persistently high post-war unemployment rate, which stood at 16.85%. This elevated level of unemployment has remained a significant barrier to economic progress, constraining domestic consumption and limiting the availability of skilled labor. The legacy of the 1990s conflict continues to cast a long shadow over the labor market, contributing to structural unemployment and underemployment. High unemployment rates have also exacerbated social tensions and hindered efforts to foster a dynamic and inclusive economy. The business environment in Bosnia and Herzegovina is further complicated by a cumbersome bureaucracy characterized by complex procedures and frequent misconduct by public officers, particularly during audits and the enforcement of regulations. This environment has generated a sense of volatility and insecurity among businesses, which often face unpredictable administrative hurdles and inconsistent application of rules. Such challenges undermine investor confidence and create an atmosphere where compliance becomes both costly and uncertain. The frequent irregularities and lack of transparency in administrative processes have contributed to a perception of arbitrariness that discourages both domestic entrepreneurship and foreign investment. Bureaucratic inefficiencies are widely regarded as a major obstacle to attracting foreign investment, especially in the country’s industrial and manufacturing sectors. These sectors, which hold significant potential for economic expansion and job creation, require a stable and transparent regulatory environment to thrive. However, the convoluted administrative landscape, marked by delays and discretionary enforcement, has deterred many potential investors. The inability to streamline business processes and provide clear, consistent guidelines has limited the inflow of foreign capital that could otherwise stimulate industrial modernization and diversification. Despite these challenges, the workforce in Bosnia and Herzegovina remains relatively inexpensive by regional standards. As of June 2022, the average net salary was approximately €580, while the average gross salary stood at €891. This cost advantage presents an opportunity for businesses, particularly in labor-intensive industries, to leverage competitive wage levels. The affordability of labor, combined with a pool of skilled workers, could serve as a foundation for economic revitalization if other structural impediments are addressed. The country’s workforce is notably well-skilled, especially in sectors that were prominent before the war. Many workers possess technical expertise and professional experience rooted in the industrial and manufacturing base that once formed the backbone of the economy. This legacy of skilled labor offers a comparative advantage that could be harnessed to support economic recovery and growth. However, the persistence of outdated technologies and production methods has limited the full utilization of these skills in a modern economic context. Several factors have hindered the effective deployment of the skilled workforce. Slow technological obsolescence has left many enterprises operating with outdated equipment and processes, reducing productivity and competitiveness. Additionally, a significant exodus of workers, particularly among the younger and more educated demographic, has depleted the labor pool. High unemployment rates have also contributed to prolonged periods during which individuals remain outside the labor market, eroding skills and diminishing employability. These dynamics collectively undermine economic efficiency and the country’s ability to adapt to evolving market demands. Given the existing economic and labor market conditions, there is a pronounced need for foreign-owned businesses to invest in industrial sectors where Bosnia and Herzegovina could maintain a competitive edge. Strategic foreign investment could catalyze modernization efforts, introduce new technologies, and create employment opportunities. Such investments would be instrumental in transforming the industrial landscape and fostering sustainable economic growth. However, attracting this investment requires addressing the systemic issues that currently deter potential investors, including bureaucratic inefficiencies and regulatory unpredictability. The country’s lack of a robust e-governance infrastructure and effective mechanisms for enforcing administrative accountability further complicates efforts to improve the business climate. The absence of comprehensive digital platforms for government services impedes transparency and efficiency, prolonging administrative procedures and increasing opportunities for corruption. Without reliable systems to monitor and enforce accountability, public institutions struggle to deliver consistent and fair services to businesses. The development of e-governance is widely recognized as essential for streamlining interactions between the private sector and government agencies, reducing administrative burdens, and enhancing investor confidence. Company registration in Bosnia and Herzegovina typically requires between three to five weeks to complete. However, in certain sectors, obtaining all necessary permits can take several months due to administrative inefficiencies and procedural complexities. This protracted timeline reflects the fragmented and often redundant nature of regulatory requirements, which impose significant delays on business startups and expansions. Lengthy registration and permitting processes not only increase costs but also discourage entrepreneurial activity and foreign investment, as businesses seek more predictable and efficient environments. Many administrative procedures related to business operations remain convoluted and time-consuming, further complicating business development and investment. The multiplicity of agencies involved, overlapping jurisdictions, and inconsistent application of rules create a labyrinthine system that is difficult to navigate. These procedural challenges increase operational risks and reduce the attractiveness of Bosnia and Herzegovina as a destination for both domestic and international investors. The complexity of administrative processes often necessitates reliance on intermediaries, adding to the cost and inefficiency of doing business. Political corruption continues to pose a significant challenge, exacerbating inefficiencies within the administrative system and undermining the effective allocation of tax revenues. Corruption manifests in various forms, including bribery, favoritism, and nepotism, which distort market mechanisms and erode public trust. The prevalence of corrupt practices hampers efforts to implement reforms and weakens institutional capacity. It also diverts resources away from productive investments and public services, thereby impeding economic development and social equity. The large and inefficient administrative apparatus in Bosnia and Herzegovina hampers the proper expenditure of tax money, affecting the provision of public services and economic support. The bureaucratic overhead consumes a disproportionate share of public resources, limiting the government’s ability to invest in infrastructure, education, and social programs that are vital for economic revitalization. Inefficiencies in public administration contribute to fiscal imbalances and reduce the overall effectiveness of government interventions aimed at stimulating growth and employment. Bosnia and Herzegovina is preparing for a future characterized by declining international assistance, which has historically played a significant role in supporting its post-conflict recovery. This anticipated reduction in external aid has elevated economic revitalization to a top national priority, as the country seeks to generate sustainable jobs and income domestically. The shift toward self-reliance necessitates structural reforms and the creation of a more conducive environment for private sector development. Without substantial improvements in the business climate and labor market conditions, the country risks stagnation and increased socio-economic vulnerabilities. Following the riots of 2014, both governmental administrations in Bosnia and Herzegovina initiated a series of reforms aimed at addressing the country’s economic challenges. These reforms targeted various aspects of the business environment, including regulatory simplification, anti-corruption measures, and efforts to improve public administration. However, progress has been slow and fragile, as noted by both local populations and economic analysts. Persistent political fragmentation, institutional inertia, and resistance to change have limited the effectiveness of reform initiatives. Consequently, despite some positive developments, the overall business climate remains challenging, and the country continues to face significant obstacles to achieving robust economic growth.

The government of Bosnia and Herzegovina undertook a significant infrastructure initiative by issuing an international tender for the construction of the Pan-European Corridor Vc, a major transportation artery extending approximately 350 kilometers across the country. This corridor is planned to follow the route connecting Budapest in Hungary, Osijek in Croatia, Sarajevo in Bosnia and Herzegovina, and terminating at the Croatian port of Ploče on the Adriatic Sea. The development of this corridor represents a strategic effort to enhance regional connectivity and integrate Bosnia and Herzegovina more closely into the broader European transport network. The tender process attracted international interest, reflecting the corridor’s importance not only for Bosnia and Herzegovina but also for neighboring countries seeking improved transit routes. The highway constructed along Corridor Vc holds the distinction of being the most significant roadway within Bosnia and Herzegovina. It functions as the shortest and most efficient communication and transport route between Central Europe and the Southern Adriatic coast. This positioning makes it a vital conduit for commercial traffic, tourism, and economic exchange, facilitating faster and more reliable movement of goods and people. The corridor’s strategic importance is underscored by its role in connecting inland European markets with maritime ports, thereby enhancing Bosnia and Herzegovina’s potential as a transit country and boosting regional economic integration. Geographically, the corridor traverses the central region of Bosnia and Herzegovina in a predominantly north–south orientation. It begins at Donji Svilaj, situated near the northern border with Croatia, and extends southwards to the border of Bosnia and Herzegovina, just north of the Croatian Adriatic port of Ploče. The route closely follows the natural courses of the Bosna and Neretva rivers, utilizing the river valleys to navigate the country’s mountainous terrain. This alignment not only facilitates easier construction and maintenance but also connects several key urban and economic centers along the way. The corridor’s path through the heart of the country ensures that it serves as a backbone for internal connectivity as well as international transit. The corridor’s influence extends beyond mere transportation, encompassing significant demographic and economic dimensions. More than half of Bosnia and Herzegovina’s total population resides within the zone of influence surrounding this route, highlighting its centrality to the country’s human geography. Additionally, the corridor encompasses the majority of the nation’s economic activity, with numerous industrial, commercial, and service sectors located along or near its path. This concentration of population and economic resources amplifies the corridor’s role as a catalyst for regional development, job creation, and investment attraction. By facilitating easier access to markets and resources, Corridor Vc contributes to reducing regional disparities and promoting balanced economic growth. By August 2018, substantial progress had been made in the corridor’s development, with approximately 200 kilometers of the motorway completed. This milestone reflected years of concerted construction efforts, funding allocations, and international cooperation. The completed sections of the motorway enabled improved traffic flow and reduced travel times, enhancing safety and efficiency for both freight and passenger vehicles. Despite the progress, work continued on remaining segments to ensure full completion of the 350-kilometer stretch, with ongoing attention to engineering challenges posed by the country’s varied topography. The phased approach to construction allowed for incremental benefits to be realized while maintaining momentum toward the corridor’s full operational status. The impetus for constructing and developing infrastructure along Corridor Vc stemmed from its critical importance as a major transportation link within the region. The corridor is envisioned as a key element in the Trans-European Transport Network (TEN-T), aimed at fostering economic cohesion and connectivity across Europe. Its development supports Bosnia and Herzegovina’s aspirations to integrate more fully into European markets and to attract foreign direct investment. Moreover, the corridor enhances regional cooperation by linking multiple countries and facilitating cross-border trade and mobility. The strategic focus on infrastructure development along this route reflects a broader recognition of transport corridors as drivers of economic growth, competitiveness, and sustainable development in the Western Balkans. In addition to road infrastructure, Sarajevo International Airport has experienced significant growth, reflecting the country’s expanding connectivity and tourism potential. The airport recorded an annual passenger growth rate approaching 10%, indicative of rising demand for air travel to and from Bosnia and Herzegovina. This growth has been driven by increased business travel, diaspora connections, and tourism, as well as improved airline services and route networks. The airport’s expanding passenger base necessitated modernization and capacity enhancements to accommodate future traffic and improve service quality. Responding to this demand, plans were initiated in the fall of 2012 to extend the passenger terminal at Sarajevo International Airport. These plans included comprehensive upgrades and expansions of critical airport infrastructure, such as the taxiway and apron areas, to support increased aircraft movements and improve operational efficiency. The terminal expansion aimed to enhance passenger experience by providing additional space for check-in, security, waiting areas, and retail services. This development was part of a broader strategy to position Sarajevo International Airport as a modern regional hub capable of meeting international standards and accommodating growing passenger volumes. The terminal expansion was designed to add approximately 7,000 square meters of new space, significantly increasing the airport’s capacity and functionality. This additional area allowed for the incorporation of new facilities, including upgraded lounges, retail outlets, and passenger amenities. The expanded terminal also facilitated smoother passenger flows and reduced congestion during peak travel periods. By enhancing the physical infrastructure, the airport sought to improve its competitiveness and attractiveness to airlines and travelers alike. A notable feature of the upgraded airport is its direct connection to the Sarajevo Airport Center, a commercial retail complex integrated with the terminal. This connection provides travelers with convenient access to a variety of shops and services, enabling last-minute shopping and other retail opportunities before boarding flights. The integration of commercial retail within the airport environment reflects modern trends in airport design, where passenger experience and non-aeronautical revenue generation are prioritized. The Sarajevo Airport Center thus contributes to the airport’s economic sustainability while enhancing the overall travel experience for tourists and business travelers.

Based on data from 2021, Bosnia and Herzegovina was ranked 74th in the Human Development Index (HDI), a composite measure designed to assess overall human development levels across countries worldwide. The HDI incorporates indicators such as life expectancy, education, and per capita income to provide a comprehensive view of a nation’s social and economic development. This ranking places Bosnia and Herzegovina in the medium human development category, reflecting moderate achievements in health, education, and living standards relative to other countries. The country’s position in the HDI underscores ongoing challenges in improving quality of life and economic opportunities for its population, while also highlighting areas where progress has been made since the post-conflict recovery period. When adjusting for inequality, Bosnia and Herzegovina’s standing improves somewhat, as evidenced by its 60th place ranking in the inequality-adjusted Human Development Index (IHDI) for 2021. The IHDI accounts for disparities in human development outcomes within the population, measuring how unevenly health, education, and income are distributed. This higher placement relative to the standard HDI suggests that while overall development levels are moderate, the internal inequalities in Bosnia and Herzegovina are less severe than in many other countries. Nonetheless, the gap between the HDI and IHDI rankings indicates that disparities remain a significant concern, particularly given the country’s complex ethnic and regional divisions which continue to influence access to resources and opportunities. In terms of political governance and democratic freedoms, Bosnia and Herzegovina was positioned 97th in the Democracy Index in 2022. This index, compiled by the Economist Intelligence Unit, evaluates countries based on electoral processes, civil liberties, government functioning, political participation, and political culture. The country’s ranking reflects its status as a flawed democracy, characterized by a political system shaped by the Dayton Agreement, which created a complex and often fragmented institutional framework. Challenges such as ethnic power-sharing arrangements, political gridlock, and limited government effectiveness contribute to this middling position. The Democracy Index ranking highlights ongoing struggles to strengthen democratic institutions and promote political inclusiveness in the post-war period. Regarding international mobility and travel freedom, Bosnia and Herzegovina held the 48th position in the Henley Passport Index of 2023. This index ranks passports according to the number of destinations their holders can access without a prior visa. Citizens of Bosnia and Herzegovina enjoyed visa-free or visa-on-arrival access to numerous countries, reflecting moderate travel freedom relative to other nations. This ranking indicates that while Bosnian passport holders have considerable mobility within certain regions, particularly Europe, restrictions remain when traveling to countries with stricter visa policies. The passport’s ranking is influenced by bilateral agreements and the country’s diplomatic relations, which continue to evolve as Bosnia and Herzegovina seeks greater integration with European and global institutions. The Human Capital Index of 2020 placed Bosnia and Herzegovina at 81st, measuring the potential of its population to contribute to economic productivity through investments in education and health. This index, developed by the World Bank, considers factors such as expected years of schooling, learning-adjusted years of schooling, and healthy life expectancy. Bosnia and Herzegovina’s ranking reflects moderate levels of human capital development, with ongoing challenges in education quality and health outcomes. The legacy of conflict, economic transition, and uneven regional development have impacted the country’s ability to fully harness the potential of its workforce. Efforts to improve educational attainment and healthcare access remain critical for enhancing economic growth and competitiveness. In 2018, Bosnia and Herzegovina was ranked 88th in the Quality of Nationality Index, which evaluates the overall quality and desirability of nationalities based on factors including quality of life, economic strength, political stability, and international mobility. This index provides a holistic assessment of the benefits and privileges associated with a particular nationality. Bosnia and Herzegovina’s position reflects a nationality that offers moderate advantages in terms of living standards and economic opportunities, but is constrained by political complexities and limited global influence. The ranking also underscores the impact of the country’s geopolitical situation and ongoing domestic challenges on its citizens’ ability to fully benefit from their nationality on the international stage. The Legatum Prosperity Index of 2023 ranked Bosnia and Herzegovina 72nd, assessing overall prosperity through a multidimensional framework encompassing economic quality, business environment, governance, education, health, safety, and personal freedom. This index highlights the country’s moderate performance across these domains, with particular strengths and weaknesses shaping its overall prosperity. Bosnia and Herzegovina’s economic quality and business environment have shown gradual improvement, yet governance issues and political instability continue to hamper sustained progress. Social indicators such as education and health services have improved since the early 2000s, but disparities and inefficiencies persist. The country’s ranking in the Legatum Prosperity Index reflects the complex interplay between economic potential and structural challenges in achieving comprehensive prosperity. In the Social Progress Index of 2022, Bosnia and Herzegovina was positioned 63rd, measuring the extent to which countries provide for the social and environmental needs of their citizens. This index assesses basic human needs, foundations of wellbeing, and opportunity, offering a broad perspective on social development beyond economic metrics. Bosnia and Herzegovina’s ranking indicates moderate success in areas such as nutrition, sanitation, access to basic knowledge, and personal rights, while highlighting areas requiring further attention, including environmental sustainability and inclusiveness. The country’s post-conflict recovery and ongoing reforms have contributed to improvements in social infrastructure, but challenges remain in addressing regional disparities and ensuring equitable access to services. The Ease of Doing Business index of 2020 ranked Bosnia and Herzegovina 90th, reflecting the relative ease with which entrepreneurs can start and operate businesses within the country. This World Bank index evaluates regulatory environments across various dimensions, including starting a business, dealing with construction permits, getting electricity, registering property, and enforcing contracts. Bosnia and Herzegovina’s position suggests that while some progress has been made in simplifying business procedures and improving the regulatory framework, significant obstacles remain. These include bureaucratic inefficiencies, complex administrative requirements, and legal uncertainties that can hinder entrepreneurship and investment. Enhancing the business climate is a priority for fostering economic growth and attracting foreign direct investment. According to the Economic Complexity Index of 2021, Bosnia and Herzegovina was ranked 39th, reflecting the diversity and sophistication of its export structure and productive capabilities. This index measures the knowledge intensity embedded in a country’s exports, indicating the complexity of its economy. Bosnia and Herzegovina’s relatively high ranking demonstrates a diversified export base with a range of manufactured goods and industrial products, signaling a degree of economic resilience and potential for upgrading production. This complexity is a positive indicator for long-term economic development, as it suggests the country possesses the necessary capabilities to innovate and compete in global markets. However, challenges such as limited market access and infrastructural constraints continue to affect export performance. In the Global Competitiveness Report of 2019, Bosnia and Herzegovina held the 92nd position, assessing the competitiveness of its economy based on factors such as infrastructure, macroeconomic stability, health, education, market size, and innovation capability. This ranking reflects the country’s moderate performance in creating a conducive environment for productivity and economic growth. While Bosnia and Herzegovina benefits from a strategic geographic location and a skilled labor force, deficiencies in infrastructure quality, regulatory efficiency, and innovation ecosystems have limited its competitiveness. Political fragmentation and institutional weaknesses also contribute to challenges in achieving higher rankings. The report underscores the need for structural reforms to enhance the country’s economic potential and integration into global value chains. The Index of Economic Freedom in 2023 placed Bosnia and Herzegovina at 68th, evaluating economic policies that promote economic freedom, including trade openness, investment climate, property rights, and regulatory efficiency. This ranking indicates a moderate level of economic freedom, with strengths in trade liberalization and market openness balanced against weaknesses in governance and rule of law. Bosnia and Herzegovina has undertaken reforms aimed at improving the business environment and attracting investment, but issues such as corruption, bureaucratic obstacles, and inconsistent enforcement of property rights continue to pose challenges. The country’s economic freedom ranking reflects the ongoing transition from a centrally planned economy to a market-oriented system, with progress tempered by institutional constraints. In terms of peace and safety, Bosnia and Herzegovina was placed 61st in the Global Peace Index of 2023, which measures the level of peace within countries based on indicators such as levels of violence, conflict, incarceration rates, and militarization. This ranking indicates a relatively stable security environment compared to many other nations, though the country still faces challenges related to political tensions, ethnic divisions, and the legacy of the 1990s conflict. The presence of international peacekeeping forces and ongoing efforts to strengthen the rule of law have contributed to maintaining relative peace. Nonetheless, the index highlights the importance of continued reconciliation and institutional reforms to sustain and improve security conditions. The Corruption Perceptions Index of 2022 ranked Bosnia and Herzegovina 110th, signaling a relatively high perception of corruption within the country’s public sector. This index, compiled by Transparency International, assesses perceived levels of public sector corruption based on expert assessments and opinion surveys. Bosnia and Herzegovina’s low ranking reflects widespread concerns about corruption, including nepotism, bribery, and lack of transparency in government institutions. Corruption has been identified as a major impediment to economic development, governance reforms, and foreign investment. Efforts to combat corruption have been ongoing but face significant obstacles due to entrenched political interests and weak institutional capacity. The index underscores the critical need for stronger anti-corruption measures to improve public trust and economic prospects.