Original scientific paper
https://doi.org/10.18045/zbefri.2026.1.6
Impact of Investments on Productivity and Tourism Development in Bosnia and Herzegovina
Goran Balotić
; University of East Sarajevo, Faculty of Economics Pale
Predrag Mlinarević
; University of East Sarajevo, Faculty of Economics Pale
Slađana Paunović
; University of East Sarajevo, Faculty of Economics Pale
Nemanja Šarenac
; University of East Sarajevo, Faculty of Economics Pale
*
* Corresponding author.
Abstract
This paper examines the short- and long-run effects of investment on tourism value added and labour productivity in Bosnia and Herzegovina over the period 2000 - 2023. The analysis distinguishes between total investment in tourism and gross investment in long-term assets. Results indicate that long-term investments in fixed assets have a significant positive impact on both tourism value added and labour productivity: a 1% increase in gross investment in long-term assets raises tourism value added by 1.36% and labour productivity by 0.83%. In contrast, total investment in tourism exhibits a more complex pattern: while it positively affects tourism value added, it negatively affects labour productivity, highlighting a paradox whereby overall sector growth does not automatically translate into higher productivity per employee. This effect likely reflects structural constraints, including seasonality, spatial concentration of demand, prevalence of low-skilled or seasonal employment, and inefficient capital allocation. Short-run effects are limited, although the error-correction mechanism confirms stable adjustment toward long-run equilibrium, with approximately 60% of deviations corrected annually. The findings underscore the importance of sustained fixed-asset investment and capital deepening for enhancing sectoral output and labour productivity, while indicating that the quantity of investment alone is insufficient without addressing structural and institutional constraints.
Keywords
tourism investment; productivity; cointegration; Bosnia and Herzegovina; fixed assets
Hrčak ID:
348625
URI
Publication date:
30.6.2026.
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