FROM DEFECTIVE TO EFFECTIVE BIH DEVELOPMENT POLICY

After 21 post-war years Bosnia and Herzegovina (BiH) found itself in a „middle-income trap”. It isnot classified into countries with low income because workers and citizens do not accept low wages and low living standard, nor does it fit into high income countries because those workers do not produce sophisticated products that ensure competitiveness, export and basis for high wages and living standard. The development vision of BIH is to become a high income country however the state has no suitable strategy or policy.This paper represents a detailed study of multifaceted secondary sources (i.e. journal articles,government publications, internet sources, etc.) conducted in a cross-sectional time manner. Byutilizing secondary sources of data we conducted our own calculations based on data from the World Bank, Central Bank of Bosnia and Herzegovina and Agency for Statistics of Bosnia and Herzegovina.We hold that key sectors which would provide return to pre-crisis GDP growth rate of 6-7 percent per year, should be: financial system, diaspora and digitalization of industry (with introduction of suitable strategies and policies), each of which would contribute to GDP growth of two percent per year. The key agents of change should be leaders of value chains (large-scale companies), cities-regions, gazelle companies (fast growing small and medium size companies) and micro digital companies.