Author(s):
1. Sanja Alatović, Federation of Bosnia and Herzegovina , Bosnia and Herzegovina

Abstract:
Abstract Despite the numerous scientific articles and research studies which have been published on the competitiveness of countries, a widely accepted and all-encompassing framework of analysis is still lacking. The “Theory of Competitive Advantage”, as developed by M. Porter (1990), is used by the World Economic Forum (WEF) as a framework by which the competitiveness of a state is assessed, and many of its principles ensure a reliable basis for evaluating the competitiveness at both the regional and local level. To a large extent, this theory is based on the characteristics of the microeconomic business environment as seen through the prism of four attributes which, both individually and as a system, are referred to as Porter’s “Diamond of National Advantage”. These factors include: factor conditions; conditions of demand; the connection and support of industries, as well as the strategies of firms; structure and rivalry. The subject of the research as presented in this paper is the competitive position of Bosnia and Herzegovina in relation to the countries which make up the Western Balkans. According to the measurements of competitiveness which have been made by all relevant international organizations, Bosnia and Herzegovina is one of the least competitive countries in Europe. It is evident that the economic politics in the country do not respect the principles of international competitiveness which have led to a relative stagnation in development, as compared to other countries in the Western Balkans. It is asserted here that Bosnia and Herzegovina must develop, particularly by strengthening its existing institutional capacity, which is essential for ensuring competitiveness. This assumes that all levels of government as well as the business and academic communities must work together in order to solve the tremendous challenges which Bosnia and Herzegovina faces in regional and global markets. Research that is carried out on the competitiveness of a single state emphasizes the connection between the macro and micro dimensions of competitiveness, for not only does the total export capacity of one sector of industry reflect an overall success for individual firms, their dynamism and ability to compete, but the behavior and success of the firms are conditioned by the complex fusion of structural parameters which characterize the national environment in which they operate. Taking into consideration the limited available resources which could have a direct effect on improving its competitive position, Bosnia and Herzegovina should consider development based on the cooperation of business clusters, primarily with neighboring countries, when planning any future policies, especially industrial policy. A small country cannot become “a major player” in the international market simply on the basis of the development of individual firms, rather, an all-encompassing cluster is needed which provides economic develop

Key words:
competitiveness, Porter’s theory, Bosnia and Herzegovina, Western Balkans, cluster initiatives

Thematic field:
Economic development and the Environment

Date of abstract submission:
20.07.2012.

Number of visits:
451

Conference:
REDETE 2012