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Internal and External Obstacles to the Development of SMEs in Bosnia and Herzegovina


  • Zijad Dzafic

    () (Faculty of Economics, University of Tuzla, Bosnia and Herzegovina)

  • Sejfudin Zahirovic

    () (Faculty of Economics, University of Tuzla, Bosnia and Herzegovina)

  • Jasmina Okicic

    () (Faculty of Economics, University of Tuzla, Bosnia and Herzegovina)

  • Amra Kozaric

    () (Faculty of Economics, University of Tuzla, Bosnia and Herzegovina)


This article describes the small and medium enterprise (SME) sectors in Bosnia and Herzegovina (BiH) and other Western Balkan countries, and compares their development. The authors identify the levels of development achieved, remedial measures and activities for stimulating this sector. There is special emphasis on external and internal obstacles to small and medium-sized manufacturing enterprises in BiH. The authors conclude that in respect to SMEs BiH lags behind other countries in the region, where this sector has achieved dynamic development and a majority share in the employment market, exports and GDP. That said, there remains a need across the whole region to resolve obstacles in the domestic market, alongside initiating intensive activities aimed at introducing the SMEs to the Single European Market. For BiH, primary research has been carried out to determine the external and internal obstacles to SMEs in the country’s manufacturing sector. The key obstacles are identified, their intensity and grade determined, and they are classified into three groups. Factor analysis was used in determining six factors explaining external obstacles and two factors for internal obstacles. It has also been confirmed that other companies apart from manufacturing SMEs face broadly similar external obstacles, and that these obstacles are more in evidence when compared to the situation in other Western Balkan countries. Recommendations are offered to the Government of BiH and SME managements for removing the obstacles which have been identified.

Suggested Citation

  • Zijad Dzafic & Sejfudin Zahirovic & Jasmina Okicic & Amra Kozaric, 2011. "Internal and External Obstacles to the Development of SMEs in Bosnia and Herzegovina," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 13(1), pages 143-171, April.
  • Handle: RePEc:iez:survey:ces-v13_04-2011_dzafic-zahirovic-okicic-kozaric

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    References listed on IDEAS

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    More about this item


    SMEs; manufacturing; obstacles; factor analysis; Western Balkans; Bosnia and Herzegovina (BiH);

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis


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