Limited Possibilities of Adapting the Economy of Bosnia and Herzegovina to the External Pressures of the Economic Crisis

Authors

  • Rajko Tomaš Full professor at the Faculty of Economics, University of Banja Luka

DOI:

https://doi.org/10.7251/ACE1217009T

Abstract

The economic condition in Bosnia and Herzegovina (BiH) is dependent on the continuous in?ow of money from foreign countries. Under the impact of the economic crisis, there is a reduction in foreign donations, remittances from abroad, foreign investments and exports are made more difficult, which threatens its economic and social stability. In this paper, we investigate the in?uence of external disturbances on the balance of payments of BiH, as well as possibilities of conducting an economic policy which equalizes the real e?ective and balancing foreign exchange rates. The analysis shows that BiH is open up for an external pressure on the balance of payments since the Central Bank of BiH conducts neither an exchange rate policy nor a foreign exchange reserves policy, and the crisis of the exchange rate and the crisis of the foreign exchange reserves take turns in BiH. In order to reduce the negative e?ects of the deviation of the real e?ective and balancing foreign exchange rates, in BiH it is necessary that prices and salaries be ?exible and that structural reforms which would increase the competitiveness of domestic enterprises in the foreign market be implemented.

Downloads

Download data is not yet available.

References

Calderón, C. and Kubota, M. 2011, Sudden Stops - Are Global and Local Investors Alike? Policy Research Working Paper 5569, Te World Bank

Calvo, G.A., Izquierdo, A., Mejia, L.F. 2004, “On the empirics of sudden stops: Te relevance of balance-sheet effects.” NBER Working Paper 10520, May

Calvo, G.A., Izquierdo, A., Mejia, L.F. 2008, “Systemic sudden stops: Te relevance of balance-sheet effects and fnancial integration.” NBER Working Paper 14026, May

Edwards, S. 2004a, Tirty Years of Current Account Imbalances, Current Account Reversals, and Sudden Stops, IMF Staff Papers Vol. 51, Special Issue

Edwards, S. 2004b, Financial Openness, Sudden Stops and Current Account Reversals, Working Paper 10277, National Bureau of Economic Research, Cambridge, MA

Edwards, S. and Magendzo, I. 2004c, Hard Currency Pegs and Economic Performance, IMF

Edwards, S. 2009, “Sequencing of reforms, financial globalization, and macroeconomic vulnerability.” Journal of the Japanese and International Economies 23, 131-148

Eichengreen, B., Rose, K. A, Wyplosz, C. 1996, Contagious Currency Crises, NBER Working Paper 5681, National Bureau of Economic Research, Cambridge, MA

Freedom House 2011, Nations in Transit 2011, Washington

Hlivnjak, S. 2009, Nominal and Real Effective Exchange Rate for Bosnia and Herzegovina, International Journal of Economic Policy in Emerging Economies, Vol. 2, No. 1, 41-49

IMF Country Report No. 10/348, December 2010

Kuznets, S. Economic Growth of Small Nations, u Austin Robinson, ed. 1960, Te Economic Consequences of the Size of Nations, New York, St. Martin’s Press

Labus, M. i Milošević, S. 2009, Ekonomska kriza u Srbiji: Izmedju rasta i strukturnih promena, „Rast u uslovima globalne recesije i fnansijske krize:(ne)konvencionalne inicijative“, Savez ekonomista Srbije, Udruženje korporativnih direktora Srbije, Kopaonik biznis forum 2009

Lahiri, A. Singh, R. and Vegh, A. C. 2007, Optimalni režimi deviznog kursa: prevrtanje Mundell-Flemingove tvrdnje naglavačke, Panoeconomicus, No. 3, str. 249-270

Laurent, É. 2008, Economic consequences of the size of nations, 50 years on, OFCE, Paris

Lewis, M.K. 2002, ‘Currency Boards and Currency Arrangements in Transition Economies’, in Banking Reform in South East Europe, Z. Sevic (ed), Edward Elgar, Cheltenham UK, 125-146

Tomaš, R. 2010, Crisis and Gray Economy in Bosnia and Herzegovina, Friedrich Ebert Stifung, Sarajevo

Transparency International’s 2011, Corruption Perceptions Index (CPI), December 2011

The Heritage Foundation 2011, Highlights of the 2012 Index of Economic Freedoms

The World Bank and IFC 2011, Doing Business in a more transparent world 2012

Velde, D. 2008, The global financial crisis and developing countries, Overseas Development Institute, London

World Economics Forum 2011, The Global Competitiveness Report 2011- 2012

Downloads

Published

2012-06-30

How to Cite

Tomaš, R. (2012). Limited Possibilities of Adapting the Economy of Bosnia and Herzegovina to the External Pressures of the Economic Crisis. Acta Economica, 10(17), 9–30. https://doi.org/10.7251/ACE1217009T

Issue

Section

Original Scientific Papers