Download impact of small and medium enterprises on gross domestic product

IMPACT OF SMALL AND MEDIUM ENTERPRISES ON GROSS
DOMESTIC PRODUCT IN FEDERATION OF BOSNIA AND
HERZEGOVINA FOR PERIOD 2011-2015
─ ABSTRACT ─
Sanjin Čengić
Institute for Statistics of FB&H
71000 Sarajevo, Bosnia and Herzegovina
Phone: ++ 387 61 619 230;
E-mail: [email protected]
Today’s economy has changed significantly compared to previous decades, and is still
changing rapidly. Due to the process of globalisation, new markets are opened, new
technologies are developed and new knowledge is required. Small and medium enterprises
(SMEs) are defined as the ones who are able to adapt to any market changes, which makes
them more efficient, having low management costs. SMEs are not affected due to economic
crises, such as big companies. Therefore, SMEs are more efficient and play major role in
developing economies such as economy of the Federation of Bosnia and Herzegovina
(FB&H). Apart from that, SMEs also play a significant role in creating Gross Domestic
Product (GDP) in developed economies around the world. Most authors state their importance
in solving problems such as unemployment, economic growth and adjustment to technology,
and market changes. On the other hand, SMEs in developed economies have an influence on
GDP around 90% and provide approximately 60-70% of the total number of employed
people. The main goal of this paper is to explore and identify the current situation in FB&H in
five year period and to enhance development of SMEs, which will lead to improved economic
development and growth. Results and recommendations that will be given in the paper
regarding situation of SMEs in FB&H can be used to advance all necessaries for development
of SMEs, economic policy, growth and development of GDP. SMEs significant role also lies
in development of urban and rural areas, as well as developing national economic growth. The
European Commission and EU Member States have shown that SMEs are considered as a key
element of Europe’s competitiveness while being open to innovations. This paper aims at
presenting the real situation in FB&H, which is one of the key elements in strengthening the
economy and making steady progress. It will be shown where improvements can be made,
and how to encourage people to take the step further and open new companies which will lead
in a higher number of employees and improving growth of FB&H economy. Research data
used for writing this paper were existing SMEs and entrepreneurs, non-observed economy
excluded. The impact of compensation of employees in SMEs on total compensation in
FB&H will be shown in the paper. Emphasis will be placed on encouraging people to make a
decision of becoming entrepreneurs in our economy by taking the example of EU and other
world economies being based on the SME sector. This paper aims to present the impact of
SMEs on GDP in FB&H for the period 2011 - 2015, using comparative statistics and showing
everyone the importance of SMEs. It will be used as a model for creating national policy for
guidance and support to everyone who wishes to become an entrepreneur. These steps would
highly motivate, inspire and trigger community to take matters into their own hands and be a
part of creating something which will be beneficial not only for the individuals but also for
the economy.