Economic Development

Will it be better if we solve the problems of this country?

I’m not sure the majority of things we identify as problems of this country are relevant to the citizens. I’m also not sure that these are actually problems. And if they are, let’s not miss to ask a question I often hear from a friend: To who is this a problem? There’s one more question that bothers me and it’s related to the definition below:



A matter or situation regarded as unwelcome or harmful and needing to be dealt with and overcome.

Are all problems solvable?

World Economic Forum organized a poll with B&H business community regarding top problems in B&H. Here are the results:

  1. Inefficient government bureaucracy
  2. Corruption
  3. Tax rate
  4. Policy instability
  5. Government instability/coups

Inefficient government bureaucracy. Is there an efficient one? Bureaucracy is slow in all neighbor countries, possibly in the majority of the countries if not all of them. It’s slow with a reason – it uses public money, so it has a budget which is planned on a yearly basis. It needs to balance different interests, too. And it has to follow rules some other stakeholders don’t have to follow, e.g. in procurement public institution has to follow public procurement law while a private company doesn’t have to do that. At the same time, results of economies in countries with “inefficient” government bureaucracy is improving faster than in some of those with government assessed as more efficient, so it seems that it is not all that important for economic results. Why is it then ranked as top priority by business community? Could it be because of the research methodology? I.e. if they were offered several answers, that already limited their choice, so that they have chosen not what real priority is, but what is priority among offered answers. I wouldn’t be so happy if the Republic of Srpska’s Government was efficient in a way that business community prefers, because I do not necessarily believe in their respect for the workers’ rights and interests, neither do I think that should be expected from them. They are competing on a global market while lacking research and development infrastructure, skilled workers, consultancy market is not developed in accordance with their needs, etc. That’s why I don’t think solidarity and social responsibility should be expected in this phase.

Corruption. Where’s money and power, there’s corruption. Everywhere. But the one in B&H is raw, since people who have power and money are often raw, so it’s visible. When corruption fighters become more sophisticated, so will people with power and money. But let’s return to regular citizens, me or you. How does corruption influence us? When a policeman stops you after the traffic violation, and instead of 100 EUR and 1-month driving ban, you give him 20 EUR, do you mind the corruption? Remember that when a doctor asks you to pay for surgery, although all B&H citizens have health insurance. Use those 80 euros and all other 80 euros to pay for the surgery. I’m not saying corruption is not a problem, because it is, we should all fight it, but we don’t and people are generally part of it, so what’s the problem? To me, it seems that corruption is the biggest problem for foreign investors. Is that a problem for citizens? Yes, unless we are talking about usual foreign investors who come here because of cheap labor. Then no. Nevertheless, it is not okay for politicians to ask money from them, but it’s also not okay to pay workers 200 EUR per month or less. So, from the point of view of society, there seem to be bigger problems than this.

The tax rate is what it is. If you ask anyone, business community included, are tax rates too high, the answer will be positive. But it would also be positive if we made it lower. The standard VAT in B&H is 17%. For comparison purposes, in Serbia it’s 20%, in Croatia it’s 25%, Montenegro 19%…

Policy instability. Policies regarding industry and SMEs as most numerous enterprises, mostly derive from SME development strategies, which are, at least in theory, harmonized with the needs of local industry but also with opportunities created by international development organizations and institutions. Currently, the Republic of Srpska is focused on the competitiveness of its industry, business-friendly environment and entrepreneurship. Since RS and the whole country are a relatively small market, and since the export-oriented industry is growing, aiming for increasing competitiveness and entrepreneurship development, while working on the business-friendly environment makes sense, and current policies are trying to contribute to this. I am not sure how much sense does calling them unstable has since we live in a period of increased complexity when things change in a great speed and no one knows how exactly will European economy look like in 10 years, but I can agree that funds for their implementation are limited. B&H is very dependent on the West and Central European economy and that should be taken into account. Stability of our policies strongly depends on the stability of the European economy. What I see as one of the most important things is adjusting to future needs of the European economy, which is extremely hard since as I said who knows how will it look in 10 years, but we might forecast how it might look in 3 years and adjust accordingly using agile principles. However, I am not sure if we have the capacities to do that.

Government instability/coups. I’m not sure how this got here. Governments rarely last less than 4 years, the replacement of ruling political parties in power is becoming less and less frequent, while the coups do not happen in B&H.

Will it be better if we solve the problems of this country? If these are the problems of B&H and if these are solvable, then I believe no. If we identify the right problems and if these are solvable, then I’m not sure, some improvements may be achieved. I’m not sure that we can identify our problems in a way that would enable us to solve it and live better, I’m not sure that’s how it works.


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