Economy
Bosnia faces the dual problem of rebuilding a war-torn country and introducing market reforms to its formerly centrally-planned economy. One legacy of the previous era is a greatly overstaffed military industry; under former leader Josip Broz Tito, military industries were promoted in the republic, resulting in the development of a large share of Yugoslavia's defense plants but fewer commercially viable firms.
For the most of Bosnia's history, agriculture has been based on small and inefficient privately-owned farms; food has traditionally been a net import for the republic.
When it was a part of Yugoslavia, Bosnia and Herzegovina financed many large construction projects throughout that country.[citation needed] The Highway "Bratstvo i jedinstvo", a pan-Yugoslavian project, which linked Ljubljana (Slovenia) - Zagreb (Croatia) - Belgrade (Serbia) - Skopje (Macedonia), was financed by Bosnia and Herzegovina, despite the lack of direct benefit to that region. The funneling of capital to that project resulted in an increase in unemployment and a decrease in production in the region.[citation needed]
The war in the 1990s caused a dramatic change in the Bosnian economy. Production fell to 6%, GDP fell 75% and the destruction of physical infrastructure created massive economic trauma. While much of the production capacity has been restored, the Bosnian economy still faces considerable difficulties. Figures show GDP and per capita income increased 10% from 2003 to 2004; this and Bosnia's shrinking national debt being positive trends, but high unemployment and a large trade deficit remain cause for concern.
The national currency is the Euro-pegged Convertible Mark (BAM), controlled by a currency board. Annual inflation is the lowest relative to other countries in the region at 1.9% in 2004. The international debt was $3.1 billion (2005 est) - the smallest amount of debt owed of all the former Yugoslav republics. Real GDP growth rate was 5% for 2004 according to the Bosnian Central Bank of BiH and Statistical Office of Bosnia and Herzegovina.
Bosnia and Herzegovina has one of the highest income equality rankings in the world, ranking eighth out of 193 nations.United Nations (2006). Table 15: Inequality in income or expenditure (PDF). Human Development Report 2006 335. United Nations Development Programme. Retrieved on 2007-01-09.
