Analysis of some important indicators related to the initial agenda of the Berlin Process

By Emil Knezović

Without clearly set objectives and KPI it is very difficult to measure the outcomes of the process. Therefore, taking everything into consideration, several indicators that are related to the initial agenda of the Berlin Process, such as global competitiveness index, unemployment, and trade, were analyzed. The analysis is mainly focused on Bosnia and Herzegovina, but similar but some comparable indicators in the region of the Western Balkans are observed as well.

Bosnia and Herzegovina, at the beginning of the process, was “faced with many challenges on its path of economic prosperity and suffers from many disappointments and setbacks of transition process”1. Besides social and economic inequalities, the region of the Western Balkans has been faced and highly affected by the nature and complexity of transition process and confusing inter-related issues.2 In short, the economy of Bosnia and Herzegovina can be described with a few key words such as a steady decline in the ratings in terms of ease of doing business, reduction in foreign investment, decline in credit rating as a result of permanent political crisis, and the lack of economic development.3

The first indicator analyzed in this study is Global Competitiveness Index (GCI) criteria that is measured by several indicators, such as: institutions, innovation, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial development markets, technological readiness, market size and business sophistication. One of the main reasons for the constant trade deficit and the entry of foreign companies into our market is the inability of domestic companies to be competitive.

Figure 2: GCI in Western Balkans (World Economic Forum, 2014 & 2018)

*For F.Y.R. Macedonia the last data is from 2017.

Observing the figure above, it can be seen that some of the countries improved their ratings in a 5-year period. The EU countries from the Western Balkans that were among the initiators of the process have improved their GCI and also progressed on the ladder. Croatia progressed from the position 75 (2014) to 74 (2018), while Slovenia progressed even more from 62 to 48. Besides them, Serbia progressed from the position 101to 78, F.Y.R. Macedonia from 73 to 68, while Albania progressed from 95 to 75. On the other hand, two countries dropped in GCI ratings. Bosnia and Herzegovina went from 87th to 103rd place, while Montenegro dropped from 67th to 77th place. According to this data, Bosnia and Herzegovina is one of the most noncompetitive countries in Europe4.

The report on doing business in Bosnia and Herzegovina has not significantly improved either. While the country has progressed from 126th position to 86th position in the overall rank, the rank for starting a business dropped (from 162 to 175). It is very interesting that the biggest obstacle in 2013 was access to financing (17.2%), while the biggest obstacle in 2017 was inefficient government bureaucracy (14.1) and corruption (11.5).5 These obstacles were actually one of the main objectives of the Berlin Process.

Without having to analyze all of the economic indicators of Bosnia and Herzegovina, it is enough to look back to the note made by Klapić which states that “employment of citizens of one region or country is a valid indicator of the level of economic development”.6  Because of that, employability of people in the country is a very important part of the wheel toward the economic and social development. Although employment of people represents a very important development resource, many developing countries are highlighting the problem of unemployment as the number one among the many problems with which they face.7

A very worrying fact is that more than a half (57.9% in 2013) of unemployed people falls under the category of youth.8 This fact is closely related with the fact that the number of juvenile delinquents is more present in our society today. Further, higher unemployment of youth resulted in the so-called brain drain which is a situation where young people are leaving the country to search for a better life. It is very important to state that this type of problem has not bypassed the European Union (EU) either, because judging by the data from 2013, young people make up 23.5% of the jobless in the EU.9 What is really alarming is the fact that unemployment is not just a problem of certain communities, and Kandžija refers to it as “a generational problem”, which is in large part the consequence of the global economic crisis. 10

The unemployment problem is an existential problem of every individual and it represents the inability to use own one’s competence in terms of knowledge, skills and abilities (KSA) for the purpose of turning it to the means by which one can obtain required conditions for further life.  Kljaić states that: “unemployment as a sociological and economic category causes negative phenomena in the development of the economy of each community and is highly correlated with the level of total development and most directly associated with the realization of gross domestic product per capita”.11 The conclusion is that unemployment is, to a large extent, the reflection of a society. The unemployment data for Bosnia and Herzegovina is shown in Figure 3.

Figure 3: Unemployment in Bosnia and Herzegovina (Agency for Statistics of Bosnia and Herzegovina, 2018)

During the Berlin Process, the number of unemployed people had a decreasing trend, however, the problem was that the Berlin Process was more oriented toward youth problems in terms of cooperation and employment within the Western Balkans region. The percentage of youth unemployment in total unemployment in Bosnia and Herzegovina is presented in Figure 4.

Figure 4: Youth Unemployment in Bosnia and Herzegovina (Statista, 2018)

https://www.statista.com/statistics/811689/youth-unemployment-rate-in-bosnia-and-herzegovina/

As we can see, the unemployment rate of youth has increased in a period from 2013 to 2017. What is very interesting is that in 2015 it was above 80%.

The last indicator that has been analyzed in this study is trade with the members of the Berlin Process.

Table 1: Trade with Serbia, Montenegro, and F.Y.R. of Macedonia (Agency for Statistics of Bosnia and Herzegovina, 2018)

 

2013

2014 (+)

2015 (-)

2016 (+)

2017 (+)

in 000 of BAM

Export

Import

Export

Import

Export

Import

Export

Import

Export

Import

Montenegro

23,764

4,383

33,313

10,745

20,877

4,536

22,506

8,951

31,124

9,495

Macedonia

9,735

12,738

9,076

12,915

10,776

13,091

10,982

14,795

10,549

14,337

Serbia

85,449

131,846

78,558

152,446

61,572

151,196

82,919

163,498

107,585

181,285

TOTAL

118,948

148,967

120,947

176,106

93,225

168,823

116,407

187,244

149,258

205,117

Except 2015, the trade with the members of the Berlin Process was increasing which is a positive indicator. However, it is important to note that Bosnia and Herzegovina has been recording an increase even before the Berlin Process, so that for example, the increase in exports in 2013 compared to 2012 was 46.8 million of BAM, while the increase in imports was 38 million of BAM.

Table 2: Trade with Croatia and Slovenia (Agency for Statistics of Bosnia and Herzegovina, 2018)

 

2013

2014 (+)

2015 (-)

2016 (+)

2017 (+)

in 000 of BAM

Export

Import

Export

Import

Export

Import

Export

Import

Export

Import

Croatia

1,194,637

1,956,353

955,044

1,851,679

925,166

1,673,161

985,360

1,617,692

1,282,862

1,828,430

Serbia

686,503

754,344

697,785

763,235

748,870

773,559

807,200

831,403

973,397

912,704

TOTAL

1,881,140

2,710,697

1,652,829

2,614,914

1,674,036

2,446,720

1,792,560

2,449,095

2,256,259

2,741,134

A similar situation in foreign trade took place with the EU countries such as Croatia and Slovenia. With the exception of 2015, there was an increase in the exchange of goods. However, Bosnia and Herzegovina was the only member who did not sign the agreement on Transport Union during the Trieste Summit in July 2017, but have signed the agreement on December 17, 2017. Furthermore, Bosnia and Herzegovina still has disputes over boarders with Croatia and Serbia.

Disclaimer: The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of the Balkan Studies Centre (BSC).

*Originally written in Bosnian language within the project "Bosna i Hercegovina i Berlinski proces: Analiza stanja ključnih procesa u BiH pred Londonsku konferenciju 2018" [Bosnia and Herzegovina and the Berlin Process: Analysis of Key Processes in BiH prior to the London Conference in 2018], Balkan Studies Center (BSC).

 


BIBLIOGRPAHY

1 Ganić, M., Sarajčić, S., & Omerhodžić, S. (2015). Lessons from transitional economies’ failures: Why is B&H a transitional (non) success story? Inquiry, 1(1), p. 9.
2 Ganić, M., Sarajčić, S., & Omerhodžić, S. (2015). Lessons from transitional economies’ failures: Why is B&H a transitional (non) success story? Inquiry, 1(1), pp. 9-27.
3 Mujanović, E. (2013). Nezaposlenost mladih u Bosni i Hercegovini; trenutna situacija, izazovi i preporuke. Friedrich-Ebert-Stiftung (FES).
4 In 2018, 137 countries were analzed.
5 World Economic Forum (2018). Preuzeto sa: target="_blank" rel="nofollow" http://www3.weforum.org/  [25. April, 2018].
6 Klapić, M. (2011). Alarmantnost problema nezaposlenosti na području Tuzlanskog Kantona. Zbornik radova poslovne ekonomije, 3(1), 125-134.
7 See more: Mahmutović, H. & Šabić, A. (2011). Doprinos ekonomskom razvoju kreiranjem aktivne politike zapošljavanja u B&H. Zbornik radova poslovne ekonomije, 3(1), 89-102; &  Klapić, M. (2011). Alarmantnost problema nezaposlenosti na području Tuzlanskog Kantona. Zbornik radova poslovne ekonomije, 3(1), 125-134.
8 Mahmutović, H. & Šabić, A. (2011). Doprinos ekonomskom razvoju kreiranjem aktivne politike zapošljavanja u B&H. Zbornik radova poslovne ekonomije, 3(1), 89-102.
9 Hadžimahmutović, B. & Murtić, M. (2013). Nezaposlenost mladih: EU i B&H dijele isti problem, mogu li rješenja biti zajednička? Centar za istraživanja i studije GEA. Preuzetio sa: https://www.gea.ba/nezaposlenost-mladih-eu-i-bih-dijele-isti-problem-mogu-li-i-rjesenja-biti-zajednicka-2/  [20. April, 2018].
10 Kandžija, V. (2011). Socijalne nejednakosti i tržište rada. Zbornik radova poslovne ekonomije, 3(1), p. 33.
11 Kljaić, A. (2001). Istraživanje problema nezaposlenosti u Hrvatskoj s mogućim prijedlogom rješenja. Ekonomski pregled, 52(1-2), p. 125.