The Importance of Government Effectiveness and Regulatory Quality for the Economic Growth of Bosnia and Herzegovina

The aim of this research is to examine the impact of government effectiveness and regulatory quality (as key components of institutional quality) on the economic growth of Bosnia and Herzegovina, using correlation and regression analysis. Data were obtained from the World Bank database (Worldwide Governance Indicators and GDP per capita) and cover the period from 2002 to 2023. The results indicate that both government effectiveness and regulatory quality have a statistically significant impact on the economic growth of Bosnia and Herzegovina, with the note that government effectiveness shows a negative effect. The main limitation of the study lies in the perceptual nature of the indicators for government effectiveness and regulatory quality, which may affect the applicability of the results. This research provides an empirically grounded insight into the relationship between government effectiveness, regulatory quality, and economic growth in a country with a specific institutional framework – Bosnia and Herzegovina. By focusing specifically on Bosnia and Herzegovina, this study addresses a gap in the domestic literature and offers valuable policy recommendations for improving institutional quality and stimulating economic growth. In the first part of the paper, introductory considerations are presented; the second part is dedicated to the review of previous literature, while the third and fourth parts of the paper relate to the methodology, discussion, and research results.