The economy of Bosnia and Herzegovina (BiH) in past years did not have a stable environment, but the atmosphere has further deteriorated in recent months. The greatest consequences of war rhetoric and invoking this unfortunate concept are mostly felt by the business part of our society.
Linking our country with the possibility of a worsening security situation, the outbreak of war, even on a theoretical level is especially serious in the foreign media. It has been very common in recent months, and these articles greatly create the image of our country in the eyes of potential investors.
”It is quite clear that economics and war rhetoric are concepts that can never go together, ” told Damir Becirovic, an economic analyst and the professor at the secondary education institution“International Business and Information Academy” Tuzla.
“Security and predictability are essential for the economy.Capital is known to be a timid beast and at the slightest hint of danger, it retreats. This does not only mean the absence of FDI (foreign direct investment) which has been low in the past few years, but also the ‘escape’ of domestic capital, the withdrawal of deposits, which in turn could destroy the entire financial system and lead the economy to collapse, ” he noted.
Even if we ignore the war rhetoric, chronic political instability has catastrophic consequences for the economy.
“Political instability causes uncertainty about the future, which affects the time horizon of society by reducing it. We see this clearly when it comes to BiH authorities that are short-sighted, with an increased share of current government spending in GDP and the absence of any visions of the future. All this implies a poor allocation of resources, where, for example, investing in research and development is an almost non-existent item and leads to a slowdown in the productivity growth of the economy, ” he pointed out.
”Isn’t it a fact that every day we witness the technological backwardness of our economy, but also of society as a whole, ” the interlocutor wonders.
“Without stabilizing the political situation, it is impossible to expect productivity and income growth, and no fiscal policy measures or decisions on minimum wages that were announced these days will fix this,” he concluded.
