Public Debt And Economic Growth Nexus: Dynamics In Bosnia And Herzegovina

It is well known that the economic growth of the country is a complex phenomenon and that it is influenced by a large number of different factors. The intensity of the influence of each factor is important, as well as their mutual relationship. Almost every decision concerning economic growth is long-term, that is, it has long-term effects on the citizens of a certain country. The main goal of this research is to investigate determinants of economic growth in Bosnia and Herzegovina with an emphasis on the effects of public debt. In order to determine the mutual influence of these two phenomena, correlation and partial correlation coefficients will be used on the available data for public debt, gross domestic product (hereinafter referred to as GDP) and gross national income (hereinafter referred to as GNI) of Bosnia and Herzegovina. The research results suggest to a positive correlation between public debt and gross national income of Bosnia and Herzegovina, and to an inversely proportional relationship between public debt and gross domestic product. Research findings may help decision-makers when designing policies and strategies, that is, when making decisions regarding future internal and external borrowing and directing the economic growth of Bosnia and Herzegovina. Policy implication in BiH should accentuate growth-oriented policy measures with care regarding future public borrowing.