156 10 3494 https://omeka.ibu.edu.ba/files/original/52cb07282885b187e483556d1329d18a.pdf 7d6f1649ea9033a46e6da62580b32f0e PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Ownership and Economic Effect of Foreign Bank Entry on performance of banks in Georgia Metin Mercan International Black Sea University, Tbilisi, Georgia mmercan@ibsu.edu.ge Salavat Sayfullin International Black Sea University, Tbilisi, Georgia A successful implementation of an overall reform program will enable Georgian banks to provide intermediation and assist in the country’s development from a weak market economy to a mature financial system. The changes for reform are better now than at any time during the last decade. Favorable economic and political conditions and changes in attitude among bank management have created an usual opportunities for development and growth. This study attempts to analyze the econometric analysis of the economic effects of foreign bank presence on banking market. Specifically, to determine which effects dominate whether spillover that could lead to the increase in the profitability and reduction in the overhead costs of domestic banks or competition affects that could lead both to the reduction in the profitability and overhead costs of domestic banks in the banking industry of Georgia economies using firmlevel data for the period 1999- 2010. Keywords: Ownership, Economic Effect, Foreign Bank Entry, Georgia. 205 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1627 Title A name given to the resource Ownership and Economic Effect of Foreign Bank Entry on performance of banks in Georgia Author Author MERCAN, Metin SAYFULLIN, Salavat Abstract A summary of the resource. A successful implementation of an overall reform program will enable Georgian banks to provide intermediation and assist in the country’s development from a weak market economy to a mature financial system. The changes for reform are better now than at any time during the last decade. Favorable economic and political conditions and changes in attitude among bank management have created an usual opportunities for development and growth. This study attempts to analyze the econometric analysis of the economic effects of foreign bank presence on banking market. Specifically, to determine which effects dominate whether spillover that could lead to the increase in the profitability and reduction in the overhead costs of domestic banks or competition affects that could lead both to the reduction in the profitability and overhead costs of domestic banks in the banking industry of Georgia economies using firmlevel data for the period 1999- 2010. Keywords: Ownership, Economic Effect, Foreign Bank Entry, Georgia. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/cc9b49c2ba99a1188b6560371faec0b9.pdf 43839bdde8b0a4e33e782f773e3f7fbd PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Debt Crisis that Occurred after the Global Economic Crisis in Developed Countries and Recommendations for Controlling those Crises Metin Meriç Gazi University, Ankara, Turkey metinmeric@hacettepe.edu.tr Emre Atsan Hacettepe University, Ankara, Turkey eatsan@hacettepe.edu.tr Since the World Economic Depression of 1929 in developed economies, the economic crisis did not cause a serious debt problem, especially in lessdeveloped countries, high debt and cost of debt was known as a chronic problem. However, although the sound of footsteps, the crisis erupted in 2008 and with the decline in the U.S. housing market, the so-called subprime mortgage collapse of credit markets, over-growing derivatives markets since the 2000s, and the associated impact on banks, ie, the financial system has brought to the point of bankruptcy. Have a transnational network of financial markets; crisis has led to the spread of the whole world. At this point the sovereign debt crisis in some countries, the international monetary system, economic preferences, the current account deficit, borrowing for the purpose of regional development and investments have emerged for reasons such as ineffective use of resources, and today has become a very serious problem. In our paper dealing with this problem to observations and measures, will give a solution to the debt crisis. Keywords: Debt Crisis, Eurozone Crisis, Finance. 206 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1595 Title A name given to the resource Debt Crisis that Occurred after the Global Economic Crisis in Developed Countries and Recommendations for Controlling those Crises Author Author MERIC, Metin ATSAN, Emre Abstract A summary of the resource. Since the World Economic Depression of 1929 in developed economies, the economic crisis did not cause a serious debt problem, especially in lessdeveloped countries, high debt and cost of debt was known as a chronic problem. However, although the sound of footsteps, the crisis erupted in 2008 and with the decline in the U.S. housing market, the so-called subprime mortgage collapse of credit markets, over-growing derivatives markets since the 2000s, and the associated impact on banks, ie, the financial system has brought to the point of bankruptcy. Have a transnational network of financial markets; crisis has led to the spread of the whole world. At this point the sovereign debt crisis in some countries, the international monetary system, economic preferences, the current account deficit, borrowing for the purpose of regional development and investments have emerged for reasons such as ineffective use of resources, and today has become a very serious problem. In our paper dealing with this problem to observations and measures, will give a solution to the debt crisis. Keywords: Debt Crisis, Eurozone Crisis, Finance. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/baa398d73a35c08d807c6dedfbdca2e5.pdf 99c5388a83db918f878f67d0f81a09a3 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Towards regional market of creative industries and “creativisation“ of Western Balkans economy Hristina Mikid Modern Business School/Creative, Economy Group, Belgrade, Serbia hristinamikic@gmail.com Mirjana Rikalo Creative Economy Group, Belgrade, Serbia mirjana.rikalo@gmail.com The objective of this paper is to compare and analyze developmental role of the creative industries in Western Balkans countries (Serbia, Bosnia and Herzegovina, Croatia, Montenegro, Albania, Macedonia) for the period 2000-2012. Statement and trends of creative industries development is analyzed by cross-country based structural analysis that explains economic situation in creative industries of the selected countries with special emphases on impact of the economic crisis and institutional framework on their position and development. The creative industries are studied on the basis of some selected variables- employment, gross value added, business activities (size and structure of creative sector), trade performances, etc. as well as their contribution in fostering economic growth and development in Western Balkan countries (“creativisation” effect). Institutional framework is study by evaluation of economic, legal and organizationaladministrative measures and their influence in supporting or limiting developmental process in creative industries. The paper aim is also to provide analysis of options and potential effects of the creation a regional market of creative industries in the Western Balkans. The idea of a common creative industries market in the territory of the Western Balkans is based on the assumption that this regional market would include existing national creative industries markets in the area of mentioned region, providing possibility for expansion on other countries in the wider environment of the region. Creation of this regional creative industries market can be understand as a positive component of the integration process of the Western Balkans into the EU, but also as a important step towards the stability of the national creative industries systems, better nurturing of creativity, creative industries sustainable development in all the Western Balkan countries, especially in the 158 �International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo conditions of economic crisis as well as higher level of “creativisation” of Western Balkans economy. The main hypotheses which should be validated are: What is the economic contribution and potential of creative industries in Western Balkan countries? Do they can affect the catalytic conditions of the economic crisis in Western Balkans? How institutional framework influenced development of creative industries in Western Balkans? Which innovative policy response should be developed for encouraging of creative industries in Western Balkans? How creative intangible assets could be transforming into better source of economic development and what can be effects of “creativisation” of Western Balkans economy? What are options and potential effects of the creation a regional market of creative industries in the Western Balkans? Keywords: Public Policies, Creative Industries, Western Balkans, Economic Development, Regional Market, Employment, Gross Value Added, Creativisation of Economy. 159 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1672 Title A name given to the resource Towards regional market of creative industries and “creativisation“ of Western Balkans economy Author Author MIKIĆ, Hristina RIKALO, Mirjana Abstract A summary of the resource. The objective of this paper is to compare and analyze developmental role of the creative industries in Western Balkans countries (Serbia, Bosnia and Herzegovina, Croatia, Montenegro, Albania, Macedonia) for the period 2000-2012. Statement and trends of creative industries development is analyzed by cross-country based structural analysis that explains economic situation in creative industries of the selected countries with special emphases on impact of the economic crisis and institutional framework on their position and development. The creative industries are studied on the basis of some selected variables- employment, gross value added, business activities (size and structure of creative sector), trade performances, etc. as well as their contribution in fostering economic growth and development in Western Balkan countries (“creativisation” effect). Institutional framework is study by evaluation of economic, legal and organizationaladministrative measures and their influence in supporting or limiting developmental process in creative industries. The paper aim is also to provide analysis of options and potential effects of the creation a regional market of creative industries in the Western Balkans. The idea of a common creative industries market in the territory of the Western Balkans is based on the assumption that this regional market would include existing national creative industries markets in the area of mentioned region, providing possibility for expansion on other countries in the wider environment of the region. Creation of this regional creative industries market can be understand as a positive component of the integration process of the Western Balkans into the EU, but also as a important step towards the stability of the national creative industries systems, better nurturing of creativity, creative industries sustainable development in all the Western Balkan countries, especially in the conditions of economic crisis as well as higher level of “creativisation” of Western Balkans economy. The main hypotheses which should be validated are: What is the economic contribution and potential of creative industries in Western Balkan countries? Do they can affect the catalytic conditions of the economic crisis in Western Balkans? How institutional framework influenced development of creative industries in Western Balkans? Which innovative policy response should be developed for encouraging of creative industries in Western Balkans? How creative intangible assets could be transforming into better source of economic development and what can be effects of “creativisation” of Western Balkans economy? What are options and potential effects of the creation a regional market of creative industries in the Western Balkans? Keywords: Public Policies, Creative Industries, Western Balkans, Economic Development, Regional Market, Employment, Gross Value Added, Creativisation of Economy. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/39fa71615e0942835852e5f6af840df8.pdf c7a887c620c3a4b1ef40017fe5425178 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Entrepreneurial Culture as a Prerequisite for the Formation of Innovation Driven Organization Bojan Moric Milovanovic Faculty of Economics and Business, University of Zagreb bmoric@efzg.hr Boris Sisek Faculty of Economics and Business, University of Zagreb bsisek@efzg.hr Marko Kolakovic Faculty of Economics and Business, University of Zagreb mkolakovic@efzg.hr Mladen Turuk Faculty of Economics and Business, University of Zagreb mturuk@efzg.hr Corporate entrepreneurship refers to the explanation of entrepreneurial activity in the medium and large enterprises, and includes the creation, development and implementation of new ideas, while innovation may represent new products and services, administrative procedures and production processes. Literature shows that corporate entrepreneurship and successful entrepreneurial orientation can significantly increase the company’s competitive position and value added, and that the innovation is a crucial aspect of the entrepreneurial process. Creativity and innovation are critical for the success and survival of the company. In modern economic conditions it is evident that the economy is becoming primarily based on intangible sources of value and those concepts such as reputation, trust and loyalty have a concrete impact on competitive advantage, financial performance and businesses survival. Company’s culture is an example of an intangible element. The culture of an organization consists of the basic assumptions and beliefs upon which companies are formed, how its members behave and how it defines itself in relation to the external environment. In forming a system for promoting entrepreneurial activities various factors should be taken into considerations, such as: fostering the entrepreneurial and risk-taking spirit in the organization, attracting and retaining the best talent, and promoting venture success. Since the organizational culture is necessary for the 67 �International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo realization of business excellence and stakeholders’ value, in its essence it has to be entrepreneurially inclined, therefore a certain contradiction between individual autonomy and collective cooperative culture remains the problem of a new entrepreneurial culture model. The paper analyzes entrepreneurial culture as a factor that influences realization of business excellence. In modern times this distinct competitive advantage is extremely difficult to achieve if a company is not entrepreneurially oriented. That means meeting prerequisites necessary for continuous innovation as the source of competitive advantage. Support and development of innovation presupposes favorable work environment, adequate human resources management, entrepreneurially oriented organizational culture and a balance between individual initiative and cooperative behavior. Keywords: Organizational Culture, Corporate Entrepreneurship, Business Excellence, Stakeholder Approach 68 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1520 Title A name given to the resource Entrepreneurial Culture as a Prerequisite for the Formation of Innovation Driven Organization Author Author MORIĆ MILOVANOVIĆ, Bojan ŠIŠEK, Boris KOLAKOVIĆ, Marko TURUK, Mladen Abstract A summary of the resource. Corporate entrepreneurship refers to the explanation of entrepreneurial activity in the medium and large enterprises, and includes the creation, development and implementation of new ideas, while innovation may represent new products and services, administrative procedures and production processes. Literature shows that corporate entrepreneurship and successful entrepreneurial orientation can significantly increase the company’s competitive position and value added, and that the innovation is a crucial aspect of the entrepreneurial process. Creativity and innovation are critical for the success and survival of the company. In modern economic conditions it is evident that the economy is becoming primarily based on intangible sources of value and those concepts such as reputation, trust and loyalty have a concrete impact on competitive advantage, financial performance and businesses survival. Company’s culture is an example of an intangible element. The culture of an organization consists of the basic assumptions and beliefs upon which companies are formed, how its members behave and how it defines itself in relation to the external environment. In forming a system for promoting entrepreneurial activities various factors should be taken into considerations, such as: fostering the entrepreneurial and risk-taking spirit in the organization, attracting and retaining the best talent, and promoting venture success. Since the organizational culture is necessary for the International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo 68 realization of business excellence and stakeholders’ value, in its essence it has to be entrepreneurially inclined, therefore a certain contradiction between individual autonomy and collective cooperative culture remains the problem of a new entrepreneurial culture model. The paper analyzes entrepreneurial culture as a factor that influences realization of business excellence. In modern times this distinct competitive advantage is extremely difficult to achieve if a company is not entrepreneurially oriented. That means meeting prerequisites necessary for continuous innovation as the source of competitive advantage. Support and development of innovation presupposes favorable work environment, adequate human resources management, entrepreneurially oriented organizational culture and a balance between individual initiative and cooperative behavior. Keywords: Organizational Culture, Corporate Entrepreneurship, Business Excellence, Stakeholder Approach Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/a1d9d35d6caf6fed284e83328710f6fa.pdf 745562656081c65f9786db4c2b8c8f41 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Diversification Strategies of Business Groups in Bosnia and Herzegovina Muhammet Sait Dinç International Burch University, Sarajevo, Bosnia and Herzegovina sdinc@ibu.edu.ba Mustafa Kurt Yalova University, Yalova, Turkey mustafakurt90@hotmail.com A Business group has become one of the most important phenomenon in especially developing countries in the last fifty years. Diversification strategies have been crucial for these groups. Bosnia and Herzegovina is a country which became one part of the former Socialist Federal Republic of Yugoslavia and encountered brutal ethnic conflict. It has been in the restructuring process after Dayton Agreement which ended the conflict. In this period, the role of business groups with diversification strategies is indisputable. The purpose of this study is to focus on diversification strategies of business groups in B&H after ethnic crisis. According to this purpose, business groups in BIH were investigated in terms of diversification levels and ways, new entered sectors and internationalization levels. Keywords: Business Groups, Diversification Strategies, Bosnia And Herzegovina. 192 � https://omeka.ibu.edu.ba/files/original/eff682895c8b9d21d3bff9cbd71fdca1.docx 52bb764eda577063cefea096fbaf2b4b https://omeka.ibu.edu.ba/files/original/a1a12743d80ecd0aaba4cd6fb4315cd9.pdf d64e16a381d0f41767e852d12da0eb26 PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Diversification Strategies of Business Groups in Bosnia and Herzegovina Muhammet Sait Dinc International Burch University, Sarajevo, Bosnia and Herzegovina sdinc@ibu.edu.ba Mustafa Kurt Yalova University, Yalova, Turkey mustafakurt90@hotmail.com Abstract A business group has recently become one of the popular topics in the literature. Although some countries such as South Korea, India, China and Turkey have widely focused, still many countries along the world has been neglected in the English literature. Bosnia and Herzegovina is a country which became one part of the former Socialist Federal Republic of Yugoslavia and encountered brutal ethnic conflict. It has been in the restructuring process after Dayton Agreement which ended the conflict. In this period, the role of business groups with diversification strategies is indisputable. The purpose of this study is to focus on diversification strategies of business groups in B&H. According to this purpose, business groups in BIH were investigated in terms of diversification levels and ways, new entered sectors and internationalization levels. Key words: Business groups, Diversification strategies, Bosnia and Herzegovina Introduction In simplest terms, a business group is defined as “a collection of firms bound together in some formal and/or informal ways (Granovetter, 1994)”. It is a rather stable organizational structure, common to many countries that underwent industrial development relatively late (Kock and Guillén, 2001). There are many well-known examples of business groups throughout the world. Keiretsu in Japan, qiye jituan in China, business houses in India, grupos economicos in Latin American countries, grupos in Spain, chaebol in South Korea, guanxi qiye in Taiwan, and family holdings in Turkey (Granovetter, 1994).Their exact features differ from country to country because of distinct economic, social, and cultural environments (Chang, 2006). Due to these differences, there is no ‘clear framework for business groups’ according to Yiu and others (2007). They also have important similarities. Most notably, business groups pursue unrelated product diversification under centralized control(Chang, 2006). Business groups have tended to grow very quickly through diversification (Kock and Guillén, 2001). ‘Diversification’ is entrance of an organization to different sectors like new product and services by developing business or buying other organizations (Ramanujam and Varadarajan, 1989). If new sectors have direct relationship with current business activities of organization in terms of basic capabilities and resources, it is called ‘related diversification’, if they do not have direct relationship, it is known as ‘unrelated diversification’ (Rumelt, 1982). Business groups emerged in former socialist countries during the privatization process. During the rapid privatization in Czechoslovakia, various forms of cross ownership among banks and investment trust funds were formed, and many of those investment trust companies turned themselves into holding companies (Coffee, 1999). Similarly, Stark 1 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo (1996) showed how previously state-owned firms in Hungary purchased small firms and formed groups. Like Czechoslovakia and Hungary which were the former socialist countries in Eastern Europe, Bosnia and Herzegovina was one of the six constituent republics of the former Socialist Federal Republic of Yugoslavia. Though transition started with significant delays compared to other countries in southeast Europe, privatization has been an important part of this process.The institutional and legislative framework for privatization was completed in 1998 and a voucher privatization has also finished. According to an EU feasibility study, 70 percent of companies in FBiH and 47 percent in RS had been sold by 2002 (European Commission, 2004). By this way, the number of business groups in BiH has increased. Strategies, structures and different characteristics of these business groups have awakened curiosity in this post conflict country. The purpose of this study is to reveal business groups in BiH and to focus on diversification strategies of business groups in BiH after war. Literature Review Cuervo-Cazurra (2006) combining sociology and economics-based definitions of business groups defined business groups as a set of legally-separate firms operating in multiple strategically-unrelated activities that are under common ownership and control and argued that there are different types of business groups based on their ownership: family-owned, widely-held, and state-owned. Each type has different actors who own, control, and manage it. According to Cuervo-Cazurra (2006), while in a widely-held business group, the ultimate ownership of the business group is widely dispersed among multiple shareholders and managers are the ones in control, politicians and civil servants are the ones who exercise control and they manage the firm either directly or indirectly, through the control of appointed managers in state-owned business groups. On the other hand, in a family-owned business group, an individual or family are involved in the ownership, control, and management of the business group. Different theoretical frameworks have been beneficial to explain formation of business groups (Chung, 2001). One of these approaches is thesis of late industrialization (Ozkara, Kurt and Karayormuk, 2008). Literature that belongs to late developing countries put the state in the centre of economic activities (Buğra, 1994). According to this approach, the state which provides supports to accelerate economic improvement because of late development affects the birth and growth of a certain organizational form by regulations in money and capital market at the same time (Chung, 2001). At this point, local institutions and institutional systems create their own organizational forms. Foreign trade and investment policies of governments and their encouragements to invest different sectors or export played role in transformation of firms which want to take advantage of opportunities into a diversified business group (Chang ve Choi, 1988; Guillén, 2000). It is able to claim that the changes of government policies in economic development process and the change in socio-economic structure affect business groups (Ozkara, Kurt and Karayormuk, 2008). For example, through Kock and Guillén (2001)’ s evolutionary view, the selection environment in the late-developing countries changes systematically as (i) firms within the country gain more experience and (ii) the country’s infrastructure (education, labor and financial financial markets, etc.) develops at a slower speed than the demand for such services from the business community. According to Kock and Guillén (2001), at the first stage, some locals create firms based on contact capabilities. At the second stage, entrepreneual survival and growth in the country shift to effectiveness and 2 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo efficiency at executing projects and running plants as well as to finding ways to cope with inefficient local factor markets. A third stage may start if local firms develop organizational and technological capabilities that allow them to engage in advanced product and process innovation on their own. In addition, there have been some arguments that economic crises have also evolutionary effect on business groups. (Ozkara, Kurt and Karayormuk, 2008). For example, Chang (2006)pointed out that East Asian business groups face an uncertain future. Since the 1980s, foreign creditors and investors have become more important to East Asian economies. The sudden outflow of foreign capital out of the region in 1997, known as the Asian Crisis, significantly affected business groups in this region. According to Chang (2006), prior to the crisis, there were many structural weaknesses in the financial sector. Ineffective bank regulation and supervision and poor accounting and disclosure diminished transparency.For example, many family-controlled business groups in Indonesia and Malaysia owned banks. They used the banks’ reserves as if these funds belonged to them and extended credit to their own affiliates. Non-bank financial institutions, especially in Korea and Thailand, often lacked adequate discipline. Right after the crisis, many financial institutions in Indonesia, Korea, Malaysia, and Thailand were severely distressed or insolvent. Many banks were closed and others were placed under government supervision.In another example,Choe ve Pattnaik (2007) who examined the evolution of Korean business groups after the Asian economic crisis claimed that in the wake of Korean economic crisis in 1997, the efficacy of these business groups was called into question. To facilitate the transformation, the Korean government implemented a series of corporate reform programs. Korean business groupshave undergone significant change since the crisis. Unlike other examples above, Bosnia and Herzegovina represent very small business environment. BiH was a part of the former Socialist Federal Republic of Yugoslavia. Yugoslavia’s post-World War 2 planned economy took shape in the 1970s with the introduction of autonomous workers’ councils, although they were effectively controlled by the political elite. State control reduced production and competition while workers’ councils directed most of their subsidies to payroll, neglecting investment in research and development. Economic breakdown was inevitable and the disintegration that arguably led to the war began with Yugoslavia’s debt crisis in 1979 and the subsequent stagnation in GDP growth, which converged with the rise of nationalism in the 1990s (Divjak, 2006). After Yugoslavia’s disintegration, BiH declared its independency like other five republics. This declaration caused the Serb-controlled Yugoslav People’s Army surround hills of Sarajevo and invade Bosnian cities in 1992. This ethnic conflict ‘between the three constituent nations of BiH was Europe’s bloodiest since World War 2 (Divjak, 2006)’ lasted until the Dayton Peace Agreement was signed on 21 November 1995. During the ethnic conflict, transportation, power and communications infrastructure were almost completely obliterated. Various estimates put the cost of direct and indirect damage at over $50 billion. By 1995, GDP had shrunk to $2.1 billion, less than a third of its pre-war level, and per capita GDP to $500. Industrial production fell by more than 90 percent (World Bank, 1997). Table 1 illustrates the state of the economy at the beginning and immediately after the conflict. 3 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo BiH’s main post-war achievements are a stable currency, functioning central bank, sound private banking sector and on-going reforms to the tax system, although critics claim that these reforms have not yielded satisfactory results (Divjak, 2006). BiH received one of the largest per-capita assistance packages in recent history, with over $5 billion, mostly in grants, committed in the first five years after the war (OECD Development Assistance Committee and Creditor Reporting System ‘Database on Aid Activities’ 1. Ten years of reform has however failed to create a favorable investment climate for private sector growth, and BiH has fallen behind most transition countries. A rough estimate of the private sector’s portion in the country’s GDP is around 40-44 percent (EBRD, 2003). In this post-conflict, transition and slowly developing country, diversification strategies of business groups has awakened curiosity. Our purpose in this study is to concentrate on diversification strategies of business groups in BiH after ethnic crisis. One of defining properties of business groups is to form strategies. It can be argued that four different dimensions of strategies can show differences among business groups. These are (1) diversification level, (2) diversification ways, (3) new entered sectors and (4) internationalization degrees. Diversification level is related to what degree diversification of business groups is unrelated. It is important to reveal in which level business groups have diversification. Diversification ways is related to how they are entering new sectors. Founding new firms and purchasing them are the options from this point of view. Another important dimension of business groups strategies is possibility to enter new sectors. The last strategic dimension is internationalization. Here, it is possible to say about two different internationalization (inward – outward) according to Guillén’s (2000) classification. Inward internationalization is that density of firms in BiH which were founded by business groups along with a foreign partner. Outward internationalization is density of activities of business groups in outside of BiH among their all business activities (Ozkara, Kurt and Karayormuk, 2008). Methodology By taking purpose and framework of this study into consideration, a methodology with three criteria was followed. First of all, through internet and business associations, a list of business groups in BiH which have at least two companies were found. From this list, it has been confirmed by business associations that nine of business groups were active. Thus, the first list of business groups was formed. The second criterion which was used to determine new business groups for the last list was the number of sectors. According to that, being active in three or more sectors for business groups was the main condition. In order to provide this criteria, official web sides and business reports of all firms which are in the structure of business groups were investigated in the first stage. Lack of information 1 www.oecd.org 4 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo about these firms was completed through calling and sending electronic mail. By this way, an information file was formed. In this file, (1) number of firms that belong to business group and their names, (2) date for foundation and purchase for each firm, (3) information about firm’s sector were included. These files were sent to relevant part of all business groups and asked for confirmation or correction of information table from an official. In the second stage, the sectors of the firms which are determined to belong to business groups in the list were coded. In coding system, ‘International Standard Industry Classification of All Economic Activities – ISIC Rev 3.1’ of United Nations was used2 to classify sectors of firms. After this process, some of the business groups were removed. Diversification level which is from strategy dimensions was calculated by counting the number of sectors in which the firms of business groups are working. In determining diversification ways of business groups, it was found that how many firms did business groups found and purchase in the last 10 years and purchasing rate for each group was calculated. To determine new entered sectors, the number of new sectors which are entered by business groups was looked at. Internationalization dimension was calculated in terms of inward and outward sides. While the number of firms in BiH which are founded by business groups along with any foreign partner became indicator for inward internationalization, determination of whether business group has any business part in abroad or not was outward side of internationalization. Results and Discussion Results relevant to research question are shown on Table 1. There are values with different variables about nine business groups on the Table. The results are explained in following sections in detail. Table1: Statistics about variables. Variables Mean Standart Deviation Number of Sectors 4,44 7,071 Number of Purchase 1,11 1,41 Number of Firms in Foreign Countries 0,77 0 Diversification Levels and Ways According to results in this study, diversification levels of the business groups were taken into consideration. Before the ethnical crises, the former Socialist Federal Republic of Yugoslavia owned and controlled the business groups. So, diversification level in these state-owned groups was very low. Most of the business groups in BIH were founded after Dayton Agreement in 1995. But, due to some reasons like the devastating effect of ethnical crisis and post-crisis insecure economic environment, diversification level in business groups became low. So, as it is shown in Table 1, the average number of sectors in the business groups is very low in the study. 2 This classification is found from webside of http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=17 5 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo The study showed that business groups in Bosnia and Herzegovina have generally preferred the diversification way of founding the firms. Founding and purchasing ways of business groups in the last decade was investigated in the study. The number of firms which were purchased by business groups are very weak (Table 1). These firms were purchased in privatization process of state-owned companies after collapse of the former Socialist Federal Republic of Yugoslavia. The study also showed that most of the firms of the business groups in BIH were founded after the ethnical crisis. New Entered Sectors Another strategically dimension on which was focused in the study is new entered sectors. New sectors which business groups entered in the last 20 years were coded (Table 2). When new sectors which were entered by business groups in that period are taken into account, it is clear to say that some sectors have become prominent. Two sectors have been especially remarkable in this period. While 6 business groups entered "Manufacturing" sector, 4 of them started to work in "Financial Intermediation". Table 2 Sectors in which business groups started to work in last decade* Sector Manufacturing Business Groups 6 Financial Intermediation 4 Wholesale 1 Media 1 Construction 1 * In coding system, ‘ International Standard Industry Classification of All Economic Activities – ISIC Rev 3.1’ of United Nations was used (This classification is found from webside of http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=17) to classify sectors of firms. In Table 2 relevant to "Manufacturing", the influence of restructuring of BIH post-conflict period is very important. After devastated crisis, the companies were founded in order to provide the basic needs of people. Manufacturing of food and textile products can be examples of sectors which were given importance to after conflict. Many banks and leasing companies have been founded so as to support them economically in BIH's post-conflict period. So, according to the study, "Financial Intermediation" became the second sector which business groups in BIH intensified. Internationalization Levels As it was explained in the literature part of the study, there are two different internationalization (inward – outward) according to Guillén’s (2000) classification. While inward internationalization is density of firms in BiH which were founded by business groups along with a foreign partner, outward internationalization is an amount of activities of these groups in outside of BiH among their all business activities. The study showed that inward internationalization is more effective in BIH than outward one. Some foreign 6 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo groups have made investment in BIH with Bosnian business groups. Bosnian business groups rarely have made business activities in foreign countries. Conclusion Business groups have emerged in a variety of forms depending on different politiceconomic environmental situations. Wars and economic crisis are some of the important factors which affect and shape strategies of business groups. According to Ozkara at al. (2008), especially economic crises have evolutionary effect on business groups. For example, How business groups in the East Asian countries which encountered crisis developed some strategies to overcome this situation was pointed out by Chang (2006). In this study, business groups in BIH which was devastated in ethnical conflict and their strategies were concentrated on. Four different dimensions of strategies among business groups in BIH have been investigated. These are diversification levels, diversification ways, new entered sectors and internationalization levels. According to study results, diversification levels of business groups in BIH became low. One of the most important factors for this result is economic instability in this post-conflict country. As a result of uncertainties in economic policies of the state, very powerful business groups have not emerged and current business groups have not preferred to diversify in many sectors. In another dimension of the strategies, business groups in BIH have founded the firms instead of purchasing. Although some state-owned firms were privatized after collapse of the former Socialist Federal Republic of Yugoslavia, business groups have preferred to found different companies in especially post-conflict period. However, when new entered sectors of business groups were taken into consideration, study showed that two sectors have been remarkable in the last 20 years period: "Manufacturing" and "Financial Intermediation". In developing and transition process of post-conflict BIH, business groups' focus on the production of basic necessities of people seems normal. In internationalization level as a final dimension, when some of foreign groups have made investment in BIH, Bosnian business groups rarely have made business activities in foreign countries. Findings and discussions in this study which focused on strategies of business groups in BIH point out that business groups in this developing country should be investigated in terms of different aspects. Differences in diversifications strategies between privatized business groups after the collapse of the former Socialist Federal Republic of Yugoslavia and business groups which were founded can be investigated. Although this study which was concluded by depending on secondary sources tried to analyze limited number of business groups in BIH, it aimed to contribute to restricted literature about the emergence of business groups and their diversification strategies. Another study with a large number of business groups and their sectors and with recent data will be very important to support this kind of studies. References Bray, J (2004) ‘MIGA’s Experience in Conflict-affected Countries’ Multilateral Investment Guarantee Agenc Paper No. 13 (Washington DC, US: World Bank). 7 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Buğra, A. 1994. Political and institutional context of business activity in Turkey. A.Öncü, S.E. Ibrahim ve Ç. Keyder (Der.), Developmentalism and beyond: society and politics in Egypt and Turkey: 233-255. The American U Chang, S., and Choi, U. 1988. Strategy, structure and performance of Korean business groups: A transactions cost approach. The Journal of Industrial Economics, 37 (2): 141-158. niversity in Cairo Press. Chang, S. 2006. Business groups in East Asia: Post-crisis restructuring and new growth. Asia Pacific Journal of Management, 23: 407-417. Choe, S., and Pattnaik, C. 2007. The transformation of Korean business groups after the Asian crisis. Journal of Contemporary Asia, 37 (2) : 232–255. Chung, C. 2001. Markets, culture and institutions: The emergence of large business groups in Taiwan, 1950s-1970s. Journal of Management Studies, 38(5):719-745. Coffee, J. 1999. Privatization and corporate governance: The lessons from securities market failure. Journal of Corporate Law, 25(1): 1–39. Cuervo-Cazurra, A. 2006. Business groups and their types. Asia Pacific Journal of Management, 23: 419–437. Divjak, B. (2006). Local Business, Local Peace: the Peacebuilding Potential of the Domestic Private Sector, International Alert. EBRD (2003) Strategy for BiH. Available at www.ebrd.com European Commission (2004) The Stabilisation and Association Process for Southeast Europe (Brussels,Belgium: EC). Available at www.europa.eu.int/scadplus Granovetter, M. 1994. Business groups. In Smelser, N. J., & Swedberg, R. (Eds.) Handbook of economic sociology. Princeton University Press. Guillén, M. F. 2000. Business groups in emerging economies: A resource-based view. Academy of Management Journal, 43 (3): 362-380. Kock, C. J., and Guillén, M. F. 2001. Strategy and structure in developing countries: Business groups as an evolutionary response to opportunities for unrelated diversification. Industrial and Corporate Change, 10 (1) : 77-113. Ozkara, B., Kurt, M., and Karayormuk, K. 2008. Türkiye’de İşletme Grupları: Eskiler ve Yeniler. Yönetim Araştırmaları Dergisi, 8(1-2): 59-83 Ramanujam, V. ve Varadarajan, P. 1989. Research on corporate diversification: a synthesis. Strategic Management Journal, 10: 523-551. 8 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Rumelt, R. P. 1982. Diversification strategy and profitability. Strategic Management Journal, 3: 359-369. Stark, D. 1996. Recombinant property in Eastern Europe capitalism. American Journal of Sociology, 101(4): 993–1027. Yiu, D. W., Lu, Y., Bruton, G. D., and Hoskisson, R. E. 2007. Business groups: An integrated model to focus future research. Journal of Management Studies, 44 (8) : 1551-1579. Appendix A. Business Groups Which Were Investigated in the Research 1 ASA GROUP 2 HIFA GROUP 3 PINK MEDIA GROUP 4 AKOVA GROUP 5 OPTIMA GROUP 6 RAIFFEISEN GROUP 7 VELBOS D.O.O. ŽEPCE 8 MIMS GROUP 9 NLB GROUP 9 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1598 Title A name given to the resource Diversification Strategies of Business Groups in Bosnia and Herzegovina Author Author MUHAMMET DINC, Sait KURT, Mustafa Abstract A summary of the resource. A Business group has become one of the most important phenomenon in especially developing countries in the last fifty years. Diversification strategies have been crucial for these groups. Bosnia and Herzegovina is a country which became one part of the former Socialist Federal Republic of Yugoslavia and encountered brutal ethnic conflict. It has been in the restructuring process after Dayton Agreement which ended the conflict. In this period, the role of business groups with diversification strategies is indisputable. The purpose of this study is to focus on diversification strategies of business groups in B&H after ethnic crisis. According to this purpose, business groups in BIH were investigated in terms of diversification levels and ways, new entered sectors and internationalization levels. Keywords: Business Groups, Diversification Strategies, Bosnia And Herzegovina. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/58b4902cb492b3b6f2c108b46dafe6a8.pdf 044b1d877c6b2193bc05bae3d784e7c7 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo The effects of organizational structure on the efficiency managers Mirjana Nedovid Veleučilište Lavoslav Ružička, Vukovar, Croatia mnedovic@vevu.hr Dino Božinovid Veleučilište Lavoslav Ružička, Vukovar, Croatia dbozinovic@vevu.hr The organizational structure is viewed as an activity management and is well positioned to enable efficient business enterprise. Setup organization covers a range of methods that enable troubleshooting and contribute the development of enterprises. The structure is a dynamic element of the organization makes it a unique set of all parts of the enterprise and incorporates the use of all available resources in the enterprise. Because of its importance in achieving the manager’s goals and business, purpose of this paper is to investigate the effects of organizational structure on the effectiveness of managers in the company. The research results show that less formal organization structure has a greater impact on the effectiveness of managers. An effective manager skill in such organizational structure becomes a key success factor in business. Keywords: Organizational Managerial Skills. Structure, 209 Effectiveness of Managers, � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1649 Title A name given to the resource The effects of organizational structure on the efficiency managers Author Author NEDOVIĆ, Mirjana BOŽINOVIĆ, Dino Abstract A summary of the resource. The organizational structure is viewed as an activity management and is well positioned to enable efficient business enterprise. Setup organization covers a range of methods that enable troubleshooting and contribute the development of enterprises. The structure is a dynamic element of the organization makes it a unique set of all parts of the enterprise and incorporates the use of all available resources in the enterprise. Because of its importance in achieving the manager’s goals and business, purpose of this paper is to investigate the effects of organizational structure on the effectiveness of managers in the company. The research results show that less formal organization structure has a greater impact on the effectiveness of managers. An effective manager skill in such organizational structure becomes a key success factor in business. Keywords: Organizational Structure, Effectiveness of Managers, Managerial Skills. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/ce15a567bf472be4a954b5fb8714f86b.docx 7ea23e07d74cb2aea123fad0342aedc4 https://omeka.ibu.edu.ba/files/original/c0c2426160528cc555c8940036044f55.pdf 2e87783c349ac6ad451e4f81027b986e PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo The effects of organizational structure on the efficiency managers MirjanaNedović VeleučilišteLavoslavRužička, Vukovar, Croatia mnedovic@vevu.hr Dino Božinović VeleučilišteLavoslavRužička, Vukovar, Croatia dbozinovic@vevu.hr The organizational structure is viewed as an activity management and is well positioned to enable efficient business enterprise. Setup organization covers a range of methods that enable troubleshooting and contribute the development of enterprises. The structure is a dynamic element of the organization makes it a unique set of all parts of the enterprise and incorporates the use of all available resources in the enterprise. Because of its importance in achieving the manager’s goals and business, purpose of this paper is to investigate the effects of organizational structure on the effectiveness of managers in the company. The research results show that less formal organization structure has a greater impact on the effectiveness of managers. An effective manager skill in such organizational structure becomes a key success factor in business. Keywords: Organizational Structure, Effectiveness of Managers, Managerial Skills. 1. Introduction In today's turbulent business environment, knowledge becomes the main source of competitive advantage. Entrepreneurial behavior is not only related to the smaller private companies, but it is widely applicable to those companies that counted more employees. Entrepreneurial behavior in large companies is actually responsible behavior and treatment resources for work and available tools as their own which is given much attention in operation and the application. Possessing knowledge benefits the company only when it is applied, and in the daily execution of missions. Possessing knowledge without its application in practice will not yield significant benefits for the business. It is indisputable that the value created only when knowledge is shared throughout the organization and applied where necessary (Grant, 1996). Organizing is a managerial function of strategic character, if it's good appointment will contribute to greater efficiency and achieving the set goals of the company. Within the organization sets the optimal organizational structure against which to place business strategy. Characteristics of organizational structures have been identified as key elements that affect productivity and innovation in companies (Drucker, 1999). The linguistic expression, and also the notion of science is used very diverse. Organizations are studied in several disciplines, including: economics, sociology, psychology, political science and management. Acknowledging these disciplines have developed various theories of organizations to study their formation, functioning and existence �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Employee satisfaction in performing everyday tasks has a positive impact on business. In wellorganized set satisfied employees create a positive work environment. Such a positive environment and a sense of satisfaction will affect their higher productivity. Therefore, (Saeed et al., 2012) Employee satisfaction is a key to success of organization and operation, as well as the structure of the organization in which employees work affects their satisfaction and efficiency. The research in this paper seeks to answer the question whether there is a link between particular organizational structures with effective managers. 2. Organizing as a management function After defining the objectives and strategies selected to execute the objectives, it is necessary to form an effective organization as an instrument to achieve these goals. In this context, the organization manifests as activity management, which often occurs as the design and planning organizations (Buble, 2006, p 227). Design of a serious business and it is necessary to think over, and how to organize a company with low costs and increasing efficiency. The process of organizing is not easy as necessary to coordinate all existing organizational units that actually make the company. Project organization can be viewed as a process that establishes the ideal organizational structure, created authority managers, set tasks and responsibilities in order to better achieve company objectives. The process of establishing the organization must contain all of the essential components and solutions that would enable efficient business enterprise. According Kapustic (1984, pp. 77-83), the process of designing and establishing the organization knows two types of models, namely: 1. Linear decorated models that treat the process of organizing the time sequence and thus distinguish the recording phase of the existing situation, a critique of the existing situation, the proposal and implementation of new solutions and new control solutions. This procedure is commonly used in solving simple problems. 2. Cyclic decorated models are based on a system of solving complex problems in the organization. Their characteristics are established need for exploring the existing unsatisfactory situation and analyze problems, assess the possibilities of development and setting requirements, then the quantitative collection of information, relevant information at the stage of labor. The modern approach to the design of organizations based on the concept of project management and cyclically regulated model. Designing the application of methods required several methods that enable to solve problems and to contribute the development of the organization. These methods can be divided into two groups namely: general and specific. General methods are intended to solve the basic problems in the organization, at the thought of all those problems related to the organization as a homogeneous entity, and specific methods have a different purpose, which is to solve specific problems related to any distinct offense of which can be organizational unit or working place. �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 3. Features of organization The meaning of organization1 dates since the dawn of man and the history of human civilization, leading to the theory come to the realization that man is essentially from its inception knows and understands the concept of its importance and significance. Man their problems, working and / or living together solves organized with other people, which means that a man all his life carried in a sort of whether the educational institutions such as schools or colleges or to an organization in which a man spends his free time such as sports organizations, charities, political, and many others. Individual human being in any type of organization operates, and directly or indirectly contributes to the development. Let's just the fact that the active population, that most adults, daily carried about a third of the time in the organizations in which it operates (Žugajet.al., 2004). You could never, and cannot now live without the organization, that man is constantly connected to the organization because it essentially ensures the existence and prosperity of the world that surrounds him. Therefore, man actually always has been adept at organizing. The organization has developed in proportion to the development of productive forces, which followed a certain socio-economic trends. The organization of the future development of socio-economic and industrial factors multiplied in various forms, significantly increasing the number of organizations until she took today's proportions. The meaning of the foreground is reflected in the kind man benefits from the organization in any area of his life and work. Man achieves its objectives and tasks through organization. Therefore the organization is expanding the volume of individual human power because it forces the individual creates social force. Today we can no longer talk about only the organization but rather on a useful and effective organization for the development of new information technologies and technological processes and provides enormous opportunities in the development, improvement of the working and living both in economic and in all areas of activity Sometimes the organization man imposes duties which are not in accordance with his mentalphysical abilities or opposes his idea of work, and thus harms the human body as mentally and physically. Therefore, we can say that a man in such organization in most cases feel degraded and alienated from himself and the conditions and results of their work. So any association or establish certain connections and relationships with other people, restricts freedom of behavior (Žugaj et al., 2004). But to find someone to opinions and to confront the organization crazy idea and that the false claims about how a man loses his individuality as a member of strengthening its personality and it certainly comes to the fore. 1 Organization (latinorganisation)bonding, structure, unification of something in oneunit, bringingtheregulatedsystem (Klaić, 1986) �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 5. Organization structure The organizational structure2 represents relationship between factors of production, and the relations within these factors. This is the most important part of any organization. These relations are established to carry out specific tasks. Also represent organizational resources schedule. Significant place in the organizational theory holds exploration of organizational structures for the simple reason that the structure is very important in every organization. Numerous scholars both foreign and domestic have developed several theories of organizational structure. Diversity of defining the organizational structure resulting from different approaches conceptualizing. Sikavica (1999, p 142) states that the organizational structure involves the totality of connections and relationships between all the factors of production, as well as the totality of connections and relationships within each factor of production or operations. The organizational structure is usually categorized in three dimensions: formalization, centralization and integration (Andrews, 2001); Formalizing a significant dimension of the organizational structure, and is associated with the complexity of the organization. It refers to the degree of prescription, the level of standards and measures of employee behavior in accordance with the prescribed rules and procedures. In organizations where there is a high degree of formalization, prescribed the correct rules and procedures. In organizations with low formalization, job behaviors are relatively Unstructured and members have greater freedom in dealing with the demands of their relevant tasks (Sivadas, 2000). Centralization refers to the locus of decision-making authority lying in the higher levels of a hierarchical relationship (Tsai, 2002). Centralization creates a non-participatory environment that reduces communication, commitment, and involvement with tasks and projects among participants (Sivadas and Dwyer, 2000). Valid answers to these questions can be recognized as an organization is centralized or decentralized (Sikavica, 1999):  What is the number of decisions to be made at lower levels? A large number of decision points to greater decentralization.  What is the importance of the decisions that are made at lower levels? If these are important decisions, then it is a significant decentralization and vice versa.   What is the impact of decisions to be made at lower levels? Little or no effect indicates a greater centralization of decision-making. How often subordinated levels checked by senior management? Integration refers to the extent to which various subdivisions of an organization work interrelated (Sciulli, 1998). Employees in the organization should be able to have access to the 2 Structure(lat.structura)method of construction, composition (Anic, 2002). �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo broadest variety of knowledge for work and problem solving. Integrative work structure provides opportunities for employees to learn from their colleagues (Chung-Jen & Jing-Wen, 2007). In accordance with overall criteria parsing tasks, identified two types of organizational structure, functional and division. Functional organizational structure is focus on the tasks, business functions, while divisional organizational structure focuses on the product or service and is a consequence of the complexity of operations, (Sikavica and Novak, 1999, p 167). 6. Elements of organizational structure The organizational structure includes elements between which there are connections and relationships. These connections and relationships are an important component of these structures and these include (Žugajet.al., 2004):  organization of the means of production and rational arrangement of space,  organization of human resources,  parsing tasks until details,  organization and internal affairs,  determine the temporal sequence of operations. The first element of the organizational structure of the organization includes the means of production as in the former theory and practice was not the case on the grounds that these funds are sometimes not changed so often. In the past, an element of the means of production was considered a necessary condition for the establishment of the organization in general and without them could join the organization. But today, the presence of more and more automation of business resources for the production of ''transformed'' from once only technical variables to the basic element of the organizational structure. It is also an essential component of the elements of the organization makes use and management of equipment. Equipment basically makes fixed assets for the business. Activity of the individual companies engaged largely influence the decision on the purchase of equipment, thus the selection and purchase of equipment becomes an organizational problem. Since we live in an age of high technology development in various companies, which increasingly is the case comes to automation of business and is therefore a more sensitive and expensive equipment and make any inappropriate handling of it could greatly affect the final result of the business. Then, very important element in the organizational structure is organization of human resources. This refers to the working atmosphere in the company, division and redistribution of tasks, structure and integration of the collective and all the problems that arise from these, such as motives, frustration, passion for work, training, etc. Human Resources Management now has a significant role in the organization of the company. It manifests itself on the one hand the involvement of managers in the implementation of personnel management functions, on the other hand the position of specific organizational units (departments) who are professionally engaged in human affairs (Buble, 2006). To the company existed and successfully fulfilled their tasks and economic objectives must be employees, as long as people participate actively in the company the means of production are a passive participant in the production. But the fundamental problem that occurs in every company is how to establish a successful organization of human resources in a way to satisfy the common and personal interests. This is the main problem for the entire collective work is needed systematization of jobs that will define and describe in detail all the tasks and the expected goals of the individual employee at the specific �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo workplace that is conducted systematization. A certain group of people then it becomes work collectives mutually dependent or independently perform tasks and thus contribute to the betterment of their business. Also working collective is a unique organization with a common purpose and morality as well as the individual realizes his personal desires, needs and goals. Redistribution of the entire task to the individual and specific tasks makes it the third element of the organizational structure, but the reallocation of tasks to specific and individual belong also mutual sharing. This includes the organization of jobs, the organization functions in the economic entity, the determination of organizational units in carrying out specific tasks or individual. Analyze the entire task on a specific organization that will enable perfect execution of tasks, which can be achieved by establishing the specific functions of the company. Business function of a set of related activities is most useful to perform special task enterprises (Žugaj et al., 2004). For definitions of business functions essential component of this is that it is a mutually working operation. Basic classification of functions of the company is: market research, development function, purchase, sales, production, personnel, and accounting. The fourth element of the organizational structure deals with the problem of internal relations management and leadership and management. Since management is the process of managing resources more efficiently and effectively, only managing executive activity that focuses on the achievement of pre-planned targets. Element that ensures the orderly and timely execution of specific tasks is to determine the temporal sequence of operations which is the fifth element of the organizational structure. It is done with the help of technical and organizational resources such as scheduling to achieve the ultimate goal of tasks (fig. 1). Figure 1: Presentation of the organizational structure of enterprises The organization of the means of production Organization timing of operations The organization of human resources Organization of internal relations Breakdown of tasks Source: created authors 7. Research and analysis of results The study was conducted by a staff questionnaire. The questionnaire was sent by e-mail on behalf of employees who are in management positions (middle management) into fifteen �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo companies X3. The questionnaire consisted of three parts. The first part consisted of six questions regarding the formalization of enterprises. The second section consisted of two questions related to the integration of companies; the third unit consisted of two questions related to the centralization of business. Respondents had to answer the questions and answer, "I agree" or "disagree". Questions Answered "agree" are combined and presented in absolute and relative numbers (Table 1) Table 1: Measuring organizational structure Organization structure Respondents n =15 Formalization The company provides a number of rules, procedures and policies Prescribed procedures are useful and appropriate Execution of tasks on a daily supervised Decisions taken important decisions Adopted decisions have a major impact on business The flow of information is quick and accessible Integration The company is vertically integrated The company is horizontal integrated Centralization Autonomy in the area of work is large Feel free to propose new ideas and solutions for the process is welcome Agree (%) Disagree (%) 14 (90%) 1 (10%) 9 (60%) 6 (40%) 9 (60%) 6 (40%) 3 (20%) 12 (80%) 4 (27%) 11 (73%) 10 (67%) 5 (33%) 7 (47%) 8 (53%) 8 (53%) 7 (47%) 12 (80%) 3 (20%) 13 (87%) 2 (13%) Source: own research The results showed that the company actually observed a highly formalized, and 90% of employees believe that there are a number of rules, procedures and policies, and conversely only 10% of employees believe that the company is highly formalized. 60% of employees are satisfied with the prescribed procedures, while only 6% are not satisfied 3 X - indicatesobservedcompaniesbecause not permittedtakingnames in thispaper �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo with the same. A small number of employees (20%) think that makes important decisions, while 80% of employees think that senior management makes the decision. A large number of employees is of the opinion that the rapid flow of information and available (67%), while fewer believe that the information could be made available (33%). When asked about the integration of companies noted that employees do not really differ that the company integrated vertically or horizontally so that the results show that 47% of employees believe that their company is vertically integrated, and 53% of employees believe that the company is integrated horizontally. 80% of respondents believe that managers have autonomy in their work, while only 20% believe that there is. When asked if they could free their ideas for business processes as much as 83% answered in the affirmative, while only 13% think they do not have that option. Looking at the results it can be concluded that the company highly formalized, however, employees are satisfied with the prescribed procedures and there is a great autonomy in business and freedom to propose their own ideas for the improvement of all processes which results in good business results observed companies. Stepping senior management should be in the direction of middle management authority to make decisions of great importance for the company that will transcend organizational unit of middle management and have a greater impact on the overall business. It can be assumed that placing the less formal organization have a positive incentive to managers in terms of even greater freedom to propose new ideas and solutions to existing problems in business. Managers need to create a sense that their proposals are important for the entire company and all operations, which will boost their efficiency and increase a sense of importance in a hierarchical structure. 8. Findings The structure of the company is laying the groundwork of its proper functioning. Good set structure is a task manager that is, a level of managerial control. The structure is composed of several elements that are interconnected and should work harmoniously in terms of achieving greater efficiency and effectiveness. Without employee cannot be done any work assignments, same as their right organization where every employee knows his role. This is the basis of good appointment structure. The organization can be set up as a more or less formal, depending on the intensity of structuring; in fact it can be viewed in three dimensions: formalization, centralization and integration. Results of research carried out in this paper indicate that less formal organization affects the greater efficiency of managers and actually encourages their creative side of thinking about the tasks at work. Sam importance and it actually makes the organizational structure should be well understood managerial employees at all hierarchical levels to actually better understand their role in the company, but also the expectations of their superiors. Middle management needs to create a sense that their decisions are important for the whole company, or to have a significant impact on the overall business. In this context, the results of their operations will then be successful. Setting the organization includes a number of methods that contribute to a better development of enterprises, and before �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo its setting should be studied in detail all the factors, and eventually upgraded and changed in response to changes in the environment. References Andrews, M. C., & Kammar, K. M. (2001). Discriminating among organizational politics, justice, and support. Journal of Organizational, 22, p. 347-366. Buble, M. (2006). Menadžment. Split. Chung-Jen, C., & Jing-Wen, H. (2007). How organizational climate and structure affect knowledge. International Journal of Information Management, 27, p. 104-118. Drucker, P. (1999). Management challenges for 21 century. New York: Harper Collins. Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journa, 17, p. 109-122. Klaić, B. (1986). Rječnik starnih riječi A-Z. Zagreb: Grafički zavod hrvatske. Saeed, R., Arbabisarjou, A., Zivarirahman, M., & Shokouhi, S. (2012). Relationship between Organizational Structure and Organizational. Interdisciplinary Journal of Contemporary Research In Business (12), p. 188-196. Sciulli, L. M. (1998). How organizational structure influences success in various types of innovation. Journal of Retail Banking Services, p. 13-18. Sikavica, P., & Novak, M. (1999). Poslovna organizacija. Zagreb: Informator. Sivadas, E., & Dwyer, F. R. (2000). An examination of organizational factors influencing new product success in internal and alliancebased. Journal of Marketing, 64, p. 31-50. Tsai, W. (2002). Social structure of ‘‘coopetition’’ within a multiunit organization: Coordination, competition, and intra-organizational. Organization Science, 13, p. 179-190. Žugaj, M., Šehanović, J., & Cingula, M. (2004). Organizacija. Varaždin. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2339 Title A name given to the resource The effects of organizational structure on the efficiency managers Author Author NEDOVIĆ, Mirjana BOŽINOVIĆ, Dino Abstract A summary of the resource. The organizational structure is viewed as an activity management and is well positioned to enable efficient business enterprise. Setup organization covers a range of methods that enable troubleshooting and contribute the development of enterprises. The structure is a dynamic element of the organization makes it a unique set of all parts of the enterprise and incorporates the use of all available resources in the enterprise. Because of its importance in achieving the manager’s goals and business, purpose of this paper is to investigate the effects of organizational structure on the effectiveness of managers in the company. The research results show that less formal organization structure has a greater impact on the effectiveness of managers. An effective manager skill in such organizational structure becomes a key success factor in business. Keywords: Organizational Structure, Effectiveness of Managers, Managerial Skills. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/0e4ddb62f6b2fbcb463a2697bb2b05c2.pdf 1beeb730af792f559c8323279d90fe8d PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Turkish Economy on its Sustainable Growth Path to the EU Nguyen Mai Lan Thanh Fatih University, İstanbul, Turkey lan.thanh@fatih.edu.tr During the past decade, the world has come to be aware more of Turkey as a result of her ever-growing economy. Turkey is, to some extent, perceived as a rising economic power in the international arena. Turkey further also belongs to the group of upper middle-income countries as categorized by the World Bank classification with 10,410 USD GNI per capita in 2011 in current prices. With the same manner, in the most recent document called the European Commission 2012 Progress Report for Turkey, Turkish economic performance was evaluated as progressive towards the economic convergence with the EU with macroeconomic stabilization. This paper endeavors to examine whether a high degree of sustainable economic convergence has been achieved, whether the national legislation is compatible with the Treaty and whether Turkey has fulfilled the economic requirements to become an integral part of the Euro-zone. Sustainable growth path in Turkey is pursued in the sense that Turkish institutions and economic policies have sustainably improved and effective enough in order for the economy of the nation to cope with those of the EU’s member states. In other words, this paper seeks to answer the question whether Turkish economy is ready to join the EU providing that there have been some reforms and changes in the institutions so far in addition to the capability to response to external shocks such as global financial crisis. This study is an attempt to focus extensively on the economic imperatives of Turkey-EU relations under the circumstances created along with the aftermath of the European sovereign debt crisis since 2008. In line with the framework of the Maastricht criteria for a fruitful economic performance in lieu of competitive EU single market, this paper argues that recent economic development in Turkey has proved its success in meeting with those criteria. Moreover, with the evidence of the less severe impacts of global financial and economic crisis on Turkish economy, especially on the banking sector, Turkish institutions proved their effective precautionary policies ahead of the crisis. This paper, hence, also endeavors to evaluate Turkish monetary and fiscal policy responses to the global crisis to further conclude that Turkish economy is on its sustainable development path to be a comparable and competitive member in the European Union. Keywords: European Union, Turkish Economy, Maastricht Criteria, Sustainable Growth, Monetary Policy, Fiscal Policy, Global Crisis. 226 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1677 Title A name given to the resource Turkish Economy on its Sustainable Growth Path to the EU Author Author NGUYEN MAI, Lan Thanh Abstract A summary of the resource. During the past decade, the world has come to be aware more of Turkey as a result of her ever-growing economy. Turkey is, to some extent, perceived as a rising economic power in the international arena. Turkey further also belongs to the group of upper middle-income countries as categorized by the World Bank classification with 10,410 USD GNI per capita in 2011 in current prices. With the same manner, in the most recent document called the European Commission 2012 Progress Report for Turkey, Turkish economic performance was evaluated as progressive towards the economic convergence with the EU with macroeconomic stabilization. This paper endeavors to examine whether a high degree of sustainable economic convergence has been achieved, whether the national legislation is compatible with the Treaty and whether Turkey has fulfilled the economic requirements to become an integral part of the Euro-zone. Sustainable growth path in Turkey is pursued in the sense that Turkish institutions and economic policies have sustainably improved and effective enough in order for the economy of the nation to cope with those of the EU’s member states. In other words, this paper seeks to answer the question whether Turkish economy is ready to join the EU providing that there have been some reforms and changes in the institutions so far in addition to the capability to response to external shocks such as global financial crisis. This study is an attempt to focus extensively on the economic imperatives of Turkey-EU relations under the circumstances created along with the aftermath of the European sovereign debt crisis since 2008. In line with the framework of the Maastricht criteria for a fruitful economic performance in lieu of competitive EU single market, this paper argues that recent economic development in Turkey has proved its success in meeting with those criteria. Moreover, with the evidence of the less severe impacts of global financial and economic crisis on Turkish economy, especially on the banking sector, Turkish institutions proved their effective precautionary policies ahead of the crisis. This paper, hence, also endeavors to evaluate Turkish monetary and fiscal policy responses to the global crisis to further conclude that Turkish economy is on its sustainable development path to be a comparable and competitive member in the European Union. Keywords: European Union, Turkish Economy, Maastricht Criteria, Sustainable Growth, Monetary Policy, Fiscal Policy, Global Crisis. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/97f3bf56de67c884c3e4096a1faeaa1f.pdf 1fbb90cab5ea830b6189dce6c1874d10 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo The Dynamics of Knowledge Society Transformation in Sustainable Economic Development Process Osman Nuri Demirel Akdeniz University, Antalya, Turkey onuridemirel@mynet.com Muhammed Karataş Akdeniz University, Antalya, Turkey mkaratas@akdeniz.edu.tr M.Zihni Tunca Süleyman Demirel University, Isparta, Turkey mustafatunca@sdu.edu.tr Life-time welfare improvement is one of the objectives of humankind. Therefore, primary objectives of economic development focus on solving problems about accommodation, nutrition, education, health, clean water, energy, working conditions, etc. to provide a better life for humans. In this century, information and communication technologies are rapidly developing. One of the most significant impacts of information technologies is making countries dependent to each other. For that reason, most of the countries are continuously interacting with all or some countries in economic, political, social, cultural, military, etc. fields. In this context, this paper will discuss the dynamics of knowledge society transformation in sustainable economic development process, in details. Keywords: Sustainable Economic Development, Knowledge Society, Information and Communication Technologies, Economic Development, Economy. 236 � https://omeka.ibu.edu.ba/files/original/0316998a76975e2fde40a840b3d4a929.docx af42214bf173b8400a1903d0cebdb1a8 https://omeka.ibu.edu.ba/files/original/2d7c12807208ac4ea74d89f3213bbd9c.pdf 1b900fc18ee6eb3449af87113f649062 PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo The Dynamics of Knowledge Society Transformation in Sustainable Economic Development Process Osman Nuri Demirel Akdeniz University, Antalya, Turkey onuridemirel@mynet.com Muhammed Karataş Akdeniz University, Antalya, Turkey mkaratas@akdeniz.edu.tr M.Zihni TUNCA Süleyman Demirel University, Isparta, Turkey mustafatunca@sdu.edu.tr Abstract Ensuring theenhancement ofwell-beingthroughoutthe lifeofhuman beingsisthe most importantwithin the objectives.Therefore,the primaryobjectivesof economic development are to overcome theproblemsthat may occur, in order to pursuea better life forhumanity,housing,nutrition, education,health care, clean water, energy, working conditions etc. Inthe era, technologies of information and communicationare quite rapidly developing. One ofthemost important impacts ofinformation technologies is to make thecountries mutuallydependent on each other in the World in today'ssocieties. For this reason, an importantpart of thecountryis inconstant interaction with a portion or whole of theother countries inthe economic, political, social, cultural, military, etc.areas. In this context, dynamics providing transformation to information society during sustainableeconomic developmentwill be discussed morein detailed. Keywords: sustainable economic development, knowledge society, information and communication technologies, economic development, economy Introduction At the beginning of the primary motivations for people's is economic prosperity and to achieve enhancement of well-being throughout his life according to changing environmental conditions. In the historical process, the increase in income for the welfare was thought to be sufficient, in which most economists were also agree with this concept until the Second World War years. However, the wealth-poverty decomposition in the aftermath of the industrial revolution caused a positive change and played a central role in the subsequent developments. As a reality separation of developed and undeveloped countries stands in front of us, which has been connected to the different reasons by many scientists. Before this divergence the monotony of life was present and there were basically sufficient revenue growth and prosperity in different regions of World geography. As a result of a positive change in the socio-economic development, the decomposition of the rich-poor income growth have become inevitable in the wellbeing and income began to no longer be sufficient. Within the priority objectives of development, humanity shelter, nutrition, education, health care, clean water, energy, and working conditions, and eliminate problems occuring on these fields to be economic development in order to pursue a better life in our era. The traditional areas are correcting the problems. Locomotive of 1 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo economic activities is trade. If there is no trade in a country, wording on the stability of economic activity becomes difficult. An effective health care system and high-quality educational institutions cannot be found in a country having no prompting of trade. Therefore, strong and independent forms of government and good governance are not present. Since it has no such a strong army, which will inevitably be dependent on foreign powers. Due to the diversity of geography of the world with many different natural resources, climate, culture, religion, etc... to create a uniform economic development model means to escape reality. To become a center of attraction depends on the specific location and conditions for local and foreign investors beside the development of country. The total infrastructural factors primarily constitute the dynamics of economic development of the country's. Today, natural infrastructure consisted of underground and surface resources perhaps constitute a starting point of development in the World. As understood from this statement the natural infrastructure can provide a great advantage for development of country. However, the effects of natural infrastructure might be limited on economic development. For that reason, natural infrastructure must be completed in accordance with institutional infrastructure, financial infrastructure, staff, infrastructure and IT infrastructure in particular and sustainable economic development process by the co-ordination in order to catch economic development. Population of social transformation IT infrastructure, superstructure and substructure of equipment provide awareness of information and interaction with the network. Moreover, it provides fitness and gives rise to the emergence and maintenance of positive change in society. Transforming of society layers to whole new adorned society kneading with the traditional values of for thousands of years is very difficult in a very short period, as well as not healthy. Positive change must be realized by ingesting in order to be the transformation of economic development and social well-being in knowledge-based society. Otherwise, the technical, institutional innovation and technological developments, positive change based on the material and personnel infrastructure, large segments of society may be perceived as interference in social life, mainly will face with withstand and interventions due to the traditional culture. Mainly benefiting from the opportunities provided by the traditional culture of social life, especially state power and business communities would not like to give up their rants. Therefore, it should be noted that the best and most consistent positive changes occur in difficulty without enforcement, which are the socio-cultural and economic values to protect based on fundamentals. Analysis of economic development should be based on life expectancy to humanity point of yesterday and today, but tomorrow might be a better comparison in the process of transition to knowledge society. Experiences on Knowledge Society Based on Economic Development in the Process of Transformation The desire of every human being is to maintain a comfortable lifestyle. Viability of this demand firstly depends on the resources of the society. Moreover, there is no an isolated human society living alone around the world and they dispersed to different parts of the World geography. World are shared by the two hundred formal or non-countries with different characteristics as underground and above natural resources, population, religion, language, culture, social, political and economic structures and historical background. Technological development and innovation mutually lead to becoming more dependent to each other and intensifying on relationships of countries. The traditional technological 2 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo innovation constantly, in every sector in society, including in particular the economic activities carried out by integrating social transformation. Transformation into information society radically becomes innovation-based economic activities by a high added value. Trade in goods and trade in services covers knowledge-intensive goods and services with the transfer of information. Thus, mutual trade based on socio-cultural differences through the countries of the world primarily continues existing. In fact, the increase in international trade becomes closer to each country, in terms of infrastructure and socio-economic development. The geography of World consists of less developed countries as a major part outside the remaining regions of Western Europe, North America, Oceania, and Japan. In this country, priority given to industrialization in their economic policies in order to recover budget gap within developed countries has been observed. On account of emerging of internal and external economies in the process of industrialization and technological innovations, they can find a media to show rapidly effect of spreading. However, economic development is a process having high back-and-forth connection, which has economic as well as social, cultural, political and historical aspects. Trade manifesting international economic and financial conjuncture are effective besides political and socio-cultural developments even the country's own internal dynamics of the globalized world. For this reason, economic growth providing only welfare on real per capita income is not enough in terms of economic growth. Environment faced by the countries of the Arabian Peninsula constitutes such an example. In the current era, only developing countries carrying out an integrated economic policy with the outside world can find the opportunity to development. Because the volume of foreign trade provides environment in these countries for expanding the market and enabling media creation on economies of scale and division of labor, innovation, new knowledge, dissemination of ideas, and methods, increasing competition and eliminating monopolies, developments obtaining domestic demand in the country (Karatas and Deviren, 2008a: 171- 204). There could be many reasons for recession in stable economic development of developing countries. However, many noteworthy economic, social, cultural and political-borne factors leading, in particular, prohibiting on development take attention. In the process of economic development, "education" and "technology" factors are of importance due to their momentum effects. Because the engine of economic development is increasing of productivity. The most important elements of productivity are the educational level of community and of workforce. Another determination for developing countries was that they missed “the effect of industrialization revolution” and a move called "big breakthrough" realized by Far Eastern countries after the Second World War. Therefore, "globalization dynamics," equiped with today's technological innovations and advancements form the last segment in the process of the probability to close the gap between these countries and developed countries (Karatas 2003:9-38). Knowledge of social change has been realized by technological innovations and values. However, the elements such as geographic factors, thoughts and ideologies, demographics, charismatic leaders, armies and revolutions, wars, discoveries, diversification of mass media, immigration, religion, and education have extremely effects on the rate and positive direction of change. For example, economic and military constraints mostly promote social change. These factors cause changes in the structure, social institutions and society can contribute to quickly development of the country. The changes in the following areas occur in the process of positive development and growth of a country (Karatas, 2003:169-186): 3 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo         Changes in economic structure, Changes in relations of production and consumption, Technological innovations in the area, Changes in educational institutions, Changes in customs and traditions, Arts and artistic activities, changes Changes in forms of child-rearing, Declines in population growth rate and changes in feelings of parents to ask children Thus, socio-economic structure of the country changes and elevates to advanced level in process of development. The transformation into knowledge society can be realized with healthy transformation and prosperity growth. If a country more possess to the following items in the process of growth and development it has more the solid foundation and longterm sustainable economic development and political stability. These factors include:  The amount of savings that of the country,  The country's capacity to development technology and provide productivity  The social capital of the country. Change of social structure very closely affects the economic field at what happened in other areas. Because advances often occur together in the field of economic changes in economic and social life. The first serious and the most important problem living in structural change in the process of socio-economic development, a sine qua non, is to jump to perform transition to community-based structure of the country. As a result of a shift on available resources and factors of production from one sector to various sectors changes the contribution on GDP ratios. In the transformation into industrial society especially, labor productivity is important. At the beginning of factors are quality education that enables the workforce and gaining more experience and skills on high-tech knowledge (Karatas and Bekmez, 2007: 15-18). Transformation into Knowledge Society in the Process of Sustainable Economic Development Only addressing of developing countries is not sufficient to stable forecasting for the realization of sustainable economic growth. At the same developed countries of long period and regions in which changes with large-scale socio-economic and political issues should be included. Powerful states played a key role in economic development and change in the economic structure during historical process in the World. Today, advancements continue in this direction. Structure of the state, the state-economy connection, perform the change of industrial autonomy in developed countries, the strategy and the capacity of the differences shaping the relations between the countries form a media to transformation. This is why a sign of the capacity of state resources is whether used to transformation into knowledge society for the evolution of sustainable economic development and the constant differences between countries. Active role in providing social welfare increases the developed and industrialized countries, the economy, politics and relationships stranded fulfill the rights and freedoms of life (Karatas and Cevik, 2010: 24). Non-economic, especially in the political institutions have the main determinant strength of establishing modern market economy, organization, continuity and their change. On the 4 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo other hand, a strong synergy between the state organs, the potential sources of state capacity in developed and industrialized world today show to increase in well-being as it used to in the past. Yet it is very difficult make such a resolution for developing countries. Even today how much this real situation is the initiator dynamics of the emergence of the developing countries, it has also been important in the past with equally grade in terms of the developed countries peeling from the same position. Strong economies today as in the past leads to powerful states to create a powerful army for their own safety. "A strong economy and strong state" phenomenon possessing of changing face in a globalized world state power gives rise to take action on markets by cocoordinating their capacity. In addition, the states that make up the powerful nature of power in every period of human history, and that period has a strong position in the state introduced as an element taking brings to the fore. This power emerges through, in today's world that makes up the knowledge society innovation, technology and socio-economic transformation. Country transformed into the knowledge society is a part of the dominant economy in the World. Globalization prevents producing competitive products, innovations in these countries with high added value, and investment in technology. Since import economy is encouraged social life and society in the political sphere are directed to one side the dominant culture of the foreign products. This inadequate situationcannot be obtained social capital, socio-cultural elements of primitive-based development. Since there is no opportunity for the knowledge society to realize positive change in a country, the society lives difficulties to create their own dynamics. Because, the structure of the world economy, the nature of change and progress in the developing countries' economic changes are mainly depending on the circumstances. Transformations into knowledge society in developing countries can be started through trade with the developed countries. Thus, the essences of identity and community values for centuries arise multi-faceted challenges since they could not be ready for this change. Community must be ready with elements such as cultural, political and religious, which should be supported by high-quality education and health sectors to economically-based response to the social transformation (Karatas and Deviren, 2005: 69-74). Today, now largely integrated international markets consisting of national states, which are showing continuously changes, are available. Those will become a pioneer in the transformation of society in other countries, which have the capacity to influence industrial change in nation-states that can have the opportunity to penetrate. In this process, at the beginning of the elements coming firstly is to strengthen a country penetration to the domestic market and international market. However, creating a strong property rights within the country as well as outside the world the presence of the rule of law, social and stable in political life is given continuity opportunity. Transformation into knowledge society are not realized only meeting the necessary human and material resources opportunities of the country`s community but also it needs ability to penetrate the outsiders. Because economic activities, a continuous social activities and cultural values are able to coordinate and control throughout human history (Gündoğdu and Karatas, 2007:3-13). Sustainable economic growth and development should be ensured in order to achieve the transformation into knowledge society of societies without seamlessly realization. Knowledge society has more advanced level of civilization and modern features compared 5 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo to traditional society. How sustainable economic growth and development program is regularly implemented, to the extent that; the information society is formed. A developed country has an active community with the level of advanced civilization. Social transformation is started directing to this goal. Then, the necessity of primarily acquisition of social welfare development in a country can be accepted to individuals in evey layer of community by targeting the development in every segment of society (Karatas and Bekmez, 2005:112-114). For example, it can make the city plan and realizes infrastructure projects. Then effective participation of citizens in the decisions of the socio-economic development can be achieved if necessary community awareness of well-being is created. Thus, transformation into knowledge society can be realized in the country. following include primarily needs to healthy and stable realization of knowledge society transformation in a long-term:  Rising levels of education and social welfare of the individuals and the improvement of health status,  to increase purchasing power of Low-income people, reducing the proportion of the total population of this class of society,  Formation awareness of the human-environment-natural habitats, spreading to base in community and noticing that human is no single creature there in the World,  The observance of the needs of future generations in current use of natural resources.  To give emphasis on investments in human capital to effective sanctioning of labor force in all aspects of economic and social life. To development of globally economic activities in production technologies the innovations in transportation, communication and rising and variations on human necessities make significant contributions. In fact, it also includes cultivable finding of new sources. Industrialization is a measure of the transformation into knowledge society. Industrialization leads to the emergence of strong countries since it provides largely infrastructural competencies of states. Therefore, commercialization and industrialization have insurance function in the transformation into knowledge society. while socio-cultural activity is a necessary condition, the international variables are mandatory conditions in the process of transformation into knowledge society. Country must definitely be in formations of the institutions of international community, and of values. Because as a living being civil or Bedouin people roughly are of same habit and feelings (Karatas, 2001: 82-89). Conclusion Economic development in less developed countries, which makes it impossible conditions, eliminates opportunities to make savings of individuals. In economic development, there are vicious cycles of dynamic poverty obstructing the development of communities of which roots based on social and cultural backgrounds. Adverse climatic conditions of the country's political environment fed with a vicious cycle of dynamic poverty are the biggest obstacle to the transformation into knowledge society. On the other hand, economic development has cultural, sociological, geographical and climate conditions. These necessary conditions play a role in the transformation of society to knowledge society since they are the fact of world geography for economic development. While off-economic structure, limited communication and transportation 6 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo facilities, poor cultural and social activities, low productivity and high rates of selfconsumption are making the transformation into knowledge society more difficult, whereas developed trade, the market economy, high efficiency, advanced exchange, advanced communications and transportation networks, high-level social facilitates, cultural activities make transformation more easily (Karatas and Tunca, 2010: 1-19). In the era communication and information technology is evolving very fast. Each of the 200 countries around the world, which declared independence in the world are constant interaction a large majority of with other countries on economic, political, social, cultural and military fields. The most important impact of information technology in today's societies, is to make the countries of the world are mutually dependent on each other. Positive change resulting in reaching of societies to higher level of welfare is realized through information technology. Owned high rate of growth of human capital and economic development of the countries involved provides efficient use of natural resources by the amount of capital equipment, production equipment, technical knowledge and technological level factors. Therefore, how much a country has human capital, to the extent that a country may facilitate the passage of information society. There are priority activities needed to do in order to realize stable economic growth in developing countries. Providing that these priority actions result in true positive results, the conversion process into knowledge society can be commenced in the country. These are summarized as follows: Artificial sources, such as printing of new money debt-based growth and intensive interventions should be left to perform,    Taxation and mindset on reform should be done in order to ensure a stable source of a strong financial sector, reforming training programs according to the development in the world to increase the efficiency of investments, adequate budget for public resources should be allocated to primarily increasing the share of technological initiatives Investments should be encouraged in the field of innovation and technology Private sector initiatives should be carefully monitored and any kind of assistance should be supplied by the state. A stable political environment is needed for the realization of all of them. In fact, human beings should avoid jeopardize developments to the future of the World while realizing the transformation of knowledge society. Because in ecosystem each species supporter of other species. Under these circumstances, industrialization has reached a significant level of environmental pollution in the World. Taking into no account climatic conditions in the selection of the established industrial areas lead to significant problems in life of surrounding human, plant and animal, waste releasing through atmosphere and water has a negative impact on soil chemistry. Even waste spreading through air current results in accumulation on plants in large areas found in nature, which directly affects the structure of flora that indirectly prevents normal development of fauna structure. Industrial chimney contaminants prevent the soil micro-organisms and their activities (Karatas and Tunca, 2010: 38-61). Developing countries are forced to make decisions under intense pressure both within the country as well as from outside the country. Founded and operated by the manufacturing industries in the advanced industrial countries confine to one country against another in view of economic, political and sociological for the sake of interests. Thus, they constitute uncontrolled and irresponsible production areas by having statutory 7 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo provisions disregarding eco-system. In this process, achieving technological superiority come to the fore on the production of goods and services in a competitive environment of inevitably forced international efforts. The intensive R & D activities to be carried out to have High-tech. As a result, globally warming and arising of living species extinction are being confronted. In process of transformation into information society, these negative effects should also not be ignored. 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Karataş, M. ve Deviren Vatansever N., (2005).“Türkiye’nin İktisadi Gelişmesinin Beşeri Sermaye İçerikli Solow Modeli Açısından Bir Değerlendirmesi”, 2005, İktisat İşletme ve Finans Dergisi, Ağustos Sayı:233, 68-87ss. 8 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Karataş, M. ve Bekmez, S. (2003).“1990-2002 Arası Türkiye Ekonomisinin Performans Değerlendirmesi Sonuçları: Sermaye Birikimi ve Teknolojik İlerlemenin Büyüme Üzerindeki Rolü” EYS 2003 2.Ulusal Ekonomi Yaz Semineri, Pamukkale Üniversitesi. Karataş, M. ve Deviren Vatansever N., (2008). “Muğla ve Yöresinin İktisadi Gelişmesinde Mermer Sektörünün Rolü”, Tunca, Mustafa Z.(Edit.), Türkiye’de Mermercilik Sektörünün Mevcut Durumu, Sorunlar ve Öneriler, Ankara: Asil Yayıncılık, 107-121. Kozlu, Cem, (2003).Öfkeden Çözüme, Türkiye İş Bankası Kültür Yayınları, 2.b., Weiss Linda and John M. Hobson,(1995). States and Economic Development: Comparative Historical Analysis, Cambridge: Polity Press. 9 A � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1645 Title A name given to the resource The Dynamics of Knowledge Society Transformation in Sustainable Economic Development Process Author Author NURI DEMIREL, Osman KARATAS, Muhammed M. TUNCA, Zihni Abstract A summary of the resource. Life-time welfare improvement is one of the objectives of humankind. Therefore, primary objectives of economic development focus on solving problems about accommodation, nutrition, education, health, clean water, energy, working conditions, etc. to provide a better life for humans. In this century, information and communication technologies are rapidly developing. One of the most significant impacts of information technologies is making countries dependent to each other. For that reason, most of the countries are continuously interacting with all or some countries in economic, political, social, cultural, military, etc. fields. In this context, this paper will discuss the dynamics of knowledge society transformation in sustainable economic development process, in details. Keywords: Sustainable Economic Development, Knowledge Society, Information and Communication Technologies, Economic Development, Economy. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/e827d5dc6c5c0b98fc350e40c1568775.pdf b132ec4834178710bd398786c6f1f3cf PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Investment in Human Capital and Economic Growth and the Development of Basic Literacy as the Basic Units of Educational Effects (External aims of education) Hanifa Obralid University of Travnik, Travnik, Bosnia and Herzegovina obralich@hotmail.com Tarik Obralid University of Travnik, Travnik, Bosnia and Herzegovina obralict@hotmail.com Human factor as an essential part of all ongoing in the educational, economic, political, social, cultural, environmental and other plans (external aims of education) directly affects the process of the economic and social development which is directly implied by the educational effects, mainly through the labor productivity growth in a global sense. Education, as a process of socially beneficial and personally applicable knowledge of work in terms of occupation and professions in achieving social communication and social status, is the focus of many scientific disciplines especially pedagogy, psychology and sociology. It is a very complex multitasking, dispersive and variable process with lasting social roles and the basic form of human capital formation. Education recognizes the concept of human capital in its economic aspect through the investment in human capital, and on the other, through the educational production measured by the monetary system. Meanwhile, it is the product of the educational production behavior in the labor market. Therefore, the need of investment in education is required as the mainestablishment of human capital investment and economic growth and development of initial literacy as important determinants of educational effects (external aims of education). Education is one of the main factors for the human capital quality, which is crucial for the international competitiveness of the national economy and sustainable development (Education Policy Analysis, 2002). Thus, in this case, the investment in human capital is concerned. This investment in human capital provides long-term and stable economic growth and the development of basic literacy as determinants of educational effects (external aims in education). Keywords: Human Capital, Educational Effects, Academic Mobility. 146 � https://omeka.ibu.edu.ba/files/original/20775e1406b52763c34ab242bf79388f.docx b4fc8d4b600b11673a4334ab06d619ff https://omeka.ibu.edu.ba/files/original/f3fda2fafb69daebe9532ec31c1e9bf9.pdf 7e1ec79cd42e7db5a2509f529a94a00b PDF Text Text International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Investment in HumanCapital and EconomicGrowthand the Development of BasicLiteracyas the Basic Unitsof EducationalEffects (External aims of education) HanifaObralić Travnik University, Travnik, Bosnia and Herzegovina obralich@hotmail.com TarikObralić Travnik University, Travnik, Bosnia and Herzegovina obralict@hotmail.com Abstract Human factor asan essentialpartof allongoing in theeducational, economic,political, social,cultural, environmental andother plans(externalaims of education)directlyaffects theprocess of the economicandsocial developmentwhich is directly implied by theeducational effects, mainly through thelabor productivity growth in a global sense.Education, as a processof socially beneficial and personally applicableknowledgeof workin terms of occupation and professions inachievingsocial communication andsocial status, isthe focus ofmany scientificdisciplines especiallypedagogy,psychology and sociology. It is avery complexmultitasking,dispersiveand variable process with lasting social roles andthe basicformof human capital formation. Education recognizestheconcept of humancapital in its economicaspectthrough the investmentin human capital,and on the other, through the educationalproductionmeasured bythe monetary system. Meanwhile, it is the product of theeducational productionbehaviorin the labor market.Therefore, the needof investment in educationis required as the main-establishment of human capitalinvestment and economicgrowth anddevelopment of initialliteracyas importantdeterminants ofeducational effects(external aims of education). Education is oneofthe main factors forthe humancapital quality,which is crucialfor the internationalcompetitivenessof the national economyand sustainabledevelopment (EducationPolicy Analysis, 2002).Thus, in this case,the investmentin human capitalis concerned.This investmentin humancapital provideslong-term andstable economicgrowth andthe development ofbasicliteracyas determinantsof educationaleffects (external aims in education). Keywords: human capital, educational effects, academic mobility. Introduction In the overall structural policy, the policy of human factors is dominant in a leading economic and social development. It is a fundamental factor towards achieving the global goals. Qualitative strengthening of human factors is directly related to the widespread educational efforts for quality in education in terms of high-quality construction, equipment of educational institutions and a growing number of academics. Education is one of the main factors of the quality of human capital, which is crucial for the international competitiveness of the national economy and sustainable development 1 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo (Education Policy Analysis, 2002). Thus, human (as it is the part of a human being) capital (because it is a source of income and wealth) in one of its forms includes the education as well. As an irreplaceable factor especially in educational production, it stands for a fundamental factor in the implementation of macro-economic, macro-social and macro-political and other objectives. Therefore, the politics of human factors are more and more taken into consideration in the terms of regional as well as inter-sectorial structural policy. So, we pay more attention to the policy of human factors, which ultimately results in its quality-improvement and that manifests itself in various ways, for example, construction of educational institutions, the requirement of compulsory education in secondary schools, as well as significant increase of students’ number who graduated from secondary schools and higher education institutions, which will lead to the increase of academic citizens in general. The human factor as an indispensable factor of all events in the educational, economic, political, social, cultural, and environmental and other plans directly affect the process of the economic and social development. The development is directly reflected by the educational effects, mainly through the work productivity growth at the global level. Therefore, a human with all his/her characteristics including the education affects the changes in the educational environment (effective environment) applying the acquired knowledge and behavior. Educational effects define an individual, a man, the human factor that is the creator of change and the fundamental indicator of economic, social, cultural and other changes in the educational environment. For example, educational events are manifested through increased mobility of the human factor in a variety of forms, which are determined by the level of completed education, the successful work, years of service, etc. Educational effects and human capital One of the basic elements of the Bologna Process implies transfer of students and tutors, in another word - their mobility. The mobility and the international market of educational services provide suitable opportunities for a different approach. Students' needs for extended knowledge and education in other country at the most prestigious universities are related to the poor facilities and opportunities in their own country. International student exchange programme even before the Bologna Declaration provided and enabled students to complete their studies in another country, or at another more prestigious university. Bologna process has been providing better educational services, greater opportunities to use information and communication technologies and the establishment of compatible curricula that are a new qualitative form of advanced integration. Within the international education, besides social implications (exchange of cultures, acquiring linguistic competence), there are obvious economic benefits which particularly imply the increase of employment and job opportunities. The evaluation of economic benefits, for instance, through employment and job opportunities is a complex process. Educational effects in terms of mobility, therefore, may be clarified in the case of academic mobility, because the Bologna process provides a temporary (a semester) or a permanent residency of university professors, assistants and students at another higher education institution in the home or a foreign country for the purpose of study or employment (academic mobility) to all members of the academic community (professors, assistants and students) 2 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo When it comes to effects, the positive effects of academic mobility, they are reachable at three levels: 1 positive effects of academic mobility at the level of the individual, 2 positive effects of academic mobility at the level of institution and 3 positive effects of academic mobility at the level of society and the state. Positive effects of academic mobility at the level of the individual, or the individual level, are visible from a content that the academic community can offer to individuals. It is so called a new life in the second and different academic environment with its all economic, social and cultural differences, and work experience which an individual will acquire in a different academic environment. Professors, researchers and students are carriers of new ideas; they are the protagonists of creation and development of connections in the academic community at the institutional level. They are directly involved in the creation of international cooperation between institutions of higher education. Academic mobility of teachers, assistants and students can affect the social changes because it is a form of cultural heritage in the development of dialogue and tolerance, understanding and encouraging dialogue and cooperation of different social (especially ethnic) groups creating a great European academic world. Starting with the economic, social and other criteria, the phenomenon of mobility is particularly interesting, and it emerges as the product of long-term changes in the structure of employment in some sectors of the economy. The negative implications of this phenomenon are noticeable in the case of transfers of human for becoming more profitable and conspicuous private education at the micro level (in Bosnia and Herzegovina). It also happens at the macro level in terms of the complex consequences of inter-regional mobility of the human factors of varying intensity. This last mobility of human factors (at the macro level) implies a well-known phenomenon of a 'brain drain' or an 'experts leaving home country'. Both phenomena are consequences of a huge desire for a higher income and overall well-being. On the other hand, it brings the uncertainty caused by economic, technological, social and political development in the region (effective environment). All these are elements that significantly affect the quality of educational outputs with negative characteristics 'clarified' by those who have left the education process, the unemployed, graduates who left the country, etc. Actually, human capital is human characteristics that directly depend on the effectiveness of individuals and institutions. So, it is all about a human, his character, his health, physical and cognitive ability, his education and motivation for any type of activity. Therefore, the relations are the educational effects (external educational and educational goals) which are contained in the theory of human capital. The relations are based on education as a human activity and economic development, as a part of several important components of the educational environment (efficient environment) in which the changes of the environment (efficient environments) have been evident by an acquired knowledge and behavior. Required outcomes and educational outputs from the education system contribute to 3 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo overall social changes in the environment, so that the acquired skills and the competence enable successful action and changes in some part of the educational environment. In our case, the economic is changing. These changes in the economy, as a part of educational environment created by scientific behavior, are actually the economic effects of education. This educational and economic theory can contribute to more a quality understanding of education impact on the economic changes. This economic, technological, social and political uncertainty becomes a part of daily live and the integral part of human life in which the individual does not feel safe in the labor market. Getting used to such a situation creates a lethargy that necessarily needs to be forestalled by well-designed programs that can be very useful both for the individual and for the environment (state). By investing in education, we invest in human capital at all levels, from the individual level to the level of the community (state). In the beginning of this paper, we mentioned human capital and human characteristics that are directly related to the effectiveness. The health condition of humans is clarified as an important issue. It has been invested a lot in the human capital by investing in health institutions in order to ensure good health (and longer service life), strength, resilience, energy and the vitality of each individual, as Schultz (1971) stated. Nominated questions in many ways clearly indicate the educational effects both at the micro level, as well as at the macro level. These cultural effects are defined by Weisbrod (1964) and Jašić(1975) as: 1 increasing the income of educated people in contrary to those with no education, 2 increasing the income of future generations for better education of the present generation, 3 ensuring an efficient mechanism for discovering and cultivating potential talent, 4 the fact that education is the tool that provides flexibility in the employment of work force, 5 creating an intellectual environment that stimulates research in science and technology, 6 encouraging such behavior that respects the legal norms and leads to an increase of responsibility in social activities, and both reduce demand for financing social services from tax, and 7 fact that education leads to the tendency of strengthening political stability by developing informed voters and competent political leadership, 8 leading to the emergence of "social cohesion" by performing the transfer of a common cultural heritage, and 9 expanding intellectual horizons of educated contribution to the increase of entrainment and leisure. This is all about the educational effects at the micro and macro level, therefore the decision to support and make investment in education are simultaneously made at the micro and macro level. Investment expenses in education (inputs) and the expected benefits of investment in education (outputs) appear at two levels, at the level of an individual and social level. The investment in education often has the connotation of infrastructure (investment with a strong external economy and the use of education as a public service that is a subject of the market changes). Overall effects of invested funds in education occur through its impact on 4 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo economic development of society (the state) and the development, and the welfare of an individual. The development of the individual or the individual development planning involves the care of society, the help and support of the founder and the state according to its position in the process of providing knowledge and skills which guarantee a career progress. It provides receiving a sense of support in the workplace, encouragement and guidance. Investing in human capital necessarily implies the support and assistance to economic development in two directions: 1. Investing in human capital leads to a more educated population, therefore, it increases the number of educated and creative people who are able to develop new technological solutions and provide valuable achievements at the market, and 2. Educated population strongly affects the overall economic growth and development of basic literacy as a basic determinant of educational effects, which will ultimately enable the understanding, use and transfer of necessary information. 'Knowledge society' has been expanding. It is expected to provide a quality response to European challenges that are in the process of change and the labor market (the enlargement of EU and labor migration, the consequences of the recession, etc.). Education must be better and more efficient, whereas, the transfer of knowledge needs to be more effective (Council, 2002:161-163). In such a constellation (migration, unemployment, recession), the changes are more obvious with no guarantees for the workplace. Workers are in a constant risk of social exclusion (Beck, 2004: 147). Investment in human capital and the changes in the educational environment Our consideration is particularly the issue of investment in human capital including investment in education and improving the education itself. It is, therefore, all about the importance of investing at the level of the individual, institution level and the level of society (the state) and the investment in various forms of education. Many studies and researches indicate the importance of human capital. Investment in human capital is considered to be the most dynamic and creative factor in every educational institution which might improve the ability of individuals in order to contribute to the quality in education production. It stands for the creation of modern knowledgebased economy. An investment in educational inputs (facilities, technology) necessarily comes right after the investments in undoubtedly the most important part of educational inputs - human capital that can evolve and improve education. Development and improvement of human capital as a key element of educational inputs in the educational institution, or system, improves the quality of educational production or strengthen management and other skills. Recent studies and researches support the hypothesis that investment in education of human capital creates greater effects in educational investment than the investment in other elements of educational inputs (facilities, technology). It is very important to mention that the investment and encouragement in order to improve human resources (personnel) strengthens the motivation of the staff. What's more, the quality of human capital (excluding other values of human capital such as health issues, etc.) is determined by the quality of the educational system, the investment in education and participation in education. In order to prepare and successfully implement a long-term education strategy 5 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo at the national level it is necessarily required improving the system in order not to lag behind. The investment in human capital formation needs to be proportional to the needs of individuals, institutions and society, and the community. Boosting investment in education and human capital is a priority in all developed countries. The quality of human capital that is used in the transformation processes in educational institutions is largely determined by the quality of the education system. It is thanks to the investment and participation in education which is related to the interrelationship between education and the labor market. That's why; we claim that the role of education in economic part of the educational environment is very important. It is well known that individuals with higher levels of education generally have better paid jobs, a higher activity, longer working life, easier employment. The employment services significantly record a smaller number of these workers than those who have completed less education. Investing in human capital or in education as the part of its capital creates other intangible effects such as the ability to access to information much easier, the ability to participate in social life, more responsible behavior in society, the democratic choice of government, the law, etc. Conclusion From the above mentioned, there is a statement that human capital is the biggest capital of institutions. Therefore, the investments in its development are a priority. Acquired knowledge together with its application strengthens the institution and makes it more competitive in the labor market. Investing in human capital encourages qualitative changes in all aspects of the educational environment, especially those in the field of economics (the problem of poverty, unemployment, etc.). The impact of investment in human capital achieves the most visible changes in the field of economics (economic growth) as one of the major aspects of a social return on investment in human capital. In the field of economic development (and social development), education has a significant role. The link between increased levels of education and economic development is more visible in developed countries than in the countries in transition. The clarification of economic growth in terms of the quality of education is more important than the quantity of education in developed countries as well as in developing countries. The problems of unemployment and poverty are particularly visible in countries in transition (such as Bosnia and Herzegovina). Therefore, the increase in investment in human capital is required. When it comes to investing in human capital, it generally refers to the basic determinant of human capital theory which requires the return on investment in human capital at the level of the individual, institution level and the level of society (state). The last level is particularly our concern. Therefore, the return on investment in human capital, which is manifested at the level of society (state), or as a part of educational environments (education), plays a significant role. Most visible changes of investment in human capital are achieved in the field of economics as the main social aspect. Education stands for the top priority in all economic policies. Meanwhile, positive outcomes for the unemployed, the poor and the excluded are expected. Education, as the main priority of economic policy, is supported by the Europe (European Employment Strategy) encouraging investment in human capital and lifelong learning (learning society, knowledge society). Investing in education at first seems to 6 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo support knowledge in terms of achieving the expected results that are visible in the increased production of education (number of graduates). Human capital theory, no matter how clearly is formulated implies important following issues: a. human capital measurement, and b. measurement of the return on investment in human capital. a) When it comes to the human capital measuring, we can observe the two methods of measurement. The first method of measuring human capital takes into account the results of achieved population's educational level. These educational achievements are observed through a formal education (average schooling), and the educational structure of the working population. Since human capital unquestionably includes the knowledge, abilities and skills acquired through informal and experiential learning (whereas knowledge about them is rarely available), it incompletes the total quality of measuring methods of the results of the achieved population's education level. The issue of measuring the quality of education and its impact at the level of human capital is a matter of measuring educational achievement, which is achieved by international measuring principles (PISA, TIMSS). b) The issue of measuring the return on investment in human capital simply provides opportunities for multiple measurements. Measuring return on investment in human capital is applicable at the level of: - Individual - Institutions and - Society (state). Our concern includes particularly important measurement of return on investment in human capital by the company (the state). It might be recognized through all the subsidies for education, through other support (income taxes) that are not taken into the consideration by individuals who measure the return to education. Return on investment can be measured from the microeconomic point of view (the increasing years of education affects productivity and earnings of the individual), and on the other, it can be measured at the macro level (a rise in education impacts the level of GDP and productivity). References Beck, U., (2004), Moćprotivmoći u dobaglobalizacije. Zagreb, Školskaknjiga Jašić,Z. ( 1975.): Novetendencije u tržišnimprivredamaEkonomskiinstitut Zagreb razvitkuekonomskepolitike u Obralić, H. (2011) vrednovanjeobrazovnihefekata, Sarajevo Weisbrod,B.A.( 1994.): External Benefits of Public Education – An Economic Analysis Princeton University http://www.consilium.europa.eu/ 7 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo http://www.oecd.org/pisa/ http://timss.bc.edu/ 8 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1539 Title A name given to the resource Investment in Human Capital and Economic Growth and the Development of Basic Literacy as the Basic Units of Educational Effects (External aims of education) Author Author OBRALIĆ, Hanifa OBRALIĆ, Tarik Abstract A summary of the resource. Human factor as an essential part of all ongoing in the educational, economic, political, social, cultural, environmental and other plans (external aims of education) directly affects the process of the economic and social development which is directly implied by the educational effects, mainly through the labor productivity growth in a global sense. Education, as a process of socially beneficial and personally applicable knowledge of work in terms of occupation and professions in achieving social communication and social status, is the focus of many scientific disciplines especially pedagogy, psychology and sociology. It is a very complex multitasking, dispersive and variable process with lasting social roles and the basic form of human capital formation. Education recognizes the concept of human capital in its economic aspect through the investment in human capital, and on the other, through the educational production measured by the monetary system. Meanwhile, it is the product of the educational production behavior in the labor market. Therefore, the need of investment in education is required as the mainestablishment of human capital investment and economic growth and development of initial literacy as important determinants of educational effects (external aims of education). Education is one of the main factors for the human capital quality, which is crucial for the international competitiveness of the national economy and sustainable development (Education Policy Analysis, 2002). Thus, in this case, the investment in human capital is concerned. This investment in human capital provides long-term and stable economic growth and the development of basic literacy as determinants of educational effects (external aims in education). Keywords: Human Capital, Educational Effects, Academic Mobility. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3