Challenge
Bosnia and Herzegovina (BiH) has overcome many setbacks in the last few decades, enabling it to thrive economically and become an upper middle income country that aspires to EU accession. However, the country’s highly decentralized governance, embedded in its post-war constitution, reinforces political instability, and hampers progress on much-needed structural reforms. The public sector is oversized and inefficient, comprising about 40% of all salaried workers, and wage-bill as a share of gross domestic product is among the highest in the world. Despite the public…