Transition from Socialism to Capitalism in Bosnia

CHAPTER 1 INTRODUCTION Capitalism and socialism, as two major economic systems, have shaped the past century to a great extent. After many wars and political games, it seems that the battle between the two systems has come to an end. Capitalism proved to be the stronger system and, as a result, globalization became the most descriptive attribute of the world economy in the current century. Most of the socialist countries decided, or were forced, to start a painful process of transition, which would enable them to become capitalist countries in the future. The countries in transition have had to deal with numerous problems such as political and economic pressure from other countries, corruption at all levels of political and judicial power, and (un)armed resistance by certain fractions of population. The purpose of this thesis is to shed light on what Bosnia and Herzegovina and other countries have had to go through in order to adopt capitalism. The focus will be the ongoing process of transition in Bosnia. Bosnia is an excellent example of a country in transition. It used to be a part of a monarchy (Kingdom of Serbs, Croats and Slavs, later Kingdom of Yugoslavia) and a republic in a socialist country (Socialist Federal Republic of Yugoslavia). Bosnia and Herzegovina finally became an independent country in 1990s. During the monarchy, Bosnia was primarily an agricultural region, rich with natural resources that had not been used. It remained underdeveloped and one of the poorest republics in Tito’s socialist Yugoslavia. As an independent country, Bosnia is currently struggling both politically and economically. It is considered a representative democracy, making its way to capitalism. The population of Bosnia is mainly comprised of three different ethnic groups: Serbs, Bosniaks (Muslims), and Croats. Although very similar, these groups have distinct histories, cultures, and religions (Serbs are predominantly Orthodox Christians,

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