Economy
As a republic of the Yugoslav federation, Bosnia and Herzegovina adhered to the unique economic system known as socialist self-management. In this system, business enterprises, banks, administration, social services, hospitals, and other working bodies were intended to be run by elected workers’ councils, which in turn elected the management boards of the bodies. In practice the level of workers’ control was extremely variable from enterprise to enterprise, since ordinary workers often were not motivated to participate except in matters such as hiring, firing, and benefits and in any case lacked the necessary time and information to make business decisions. In the 1980s Yugoslavia’s large foreign debt and rising inflation lowered the standard of living in Bosnia and Herzegovina. In the period immediately following the 1991 war in Croatia, Bosnia and Herzegovina’s official economy collapsed. Huge increases in the price of oil, falling imports and exports, hyperinflation, shortages of food and medicine, insolvent banks, and unpaid pensions all resulted in a swelling black market, or informal economy. In addition, the 1992–95 war (see Bosnian conflict) caused widespread destruction.
International financial organizations were heavily involved in the postwar reconstruction of the economy. As a result, inflation fell, exports increased and were diversified, and the gross domestic product (GDP) experienced growth, at least until a global financial crisis began in 2008. However, privatization was contentious and remains incomplete. Moreover, the number of workers in the informal sector and the unemployment rate both remain stubbornly high. Remittances from Bosnians working abroad continue to be a significant source of income.