Education, technological changes and economic development of Bosnia and Herzegovina

Abstract

Accumulation of knowledge, the role of education and innovations in the stimulation of economic development are important for understanding the endogenous theory of growth. The aim of this paper is to determine the strength and direction of relations between independent variables of education, technological development, innovations, foreign investments and the economic growth of Bosnia and Herzegovina (B&H). The relations between variables are assessed by multiple regression analysis for the period 2005 - 2017. GDP per capita (pc), as a measure of general wellbeing and economic development is a dependent variable of the regression model. Education Years Average, Technological readiness and Innovations are explanatory variables, whereas Foreign investments and Macroeconomic environment are control variables. The results indicate statistical significance of variables Education Years Average, Technological readiness and Innovations. The first two variables indicate a positive effect on the economic development, whereas Innovations have a negative effect on the economic development. The control variables are statistically insignificant. Therefore, more investment is recommended in the field of education, science and research. Institutions should be more developed and scientific-research systems should be harmonized with the European Union. It is the only way for B&H to be able to respond to global challenges when it comes to competitiveness, export and the GDP growth. Examples and experiences of this country can be useful for research activities in similar post-transition countries.