5 10 3494 https://omeka.ibu.edu.ba/files/original/daa29dfe95f0aae7036b21a7e540bbd4.pdf e84d390c46b9570c80d1af57ce5c4bca PDF Text Text Effects of Reward System on Motivation of Employees in Small and Medium Enterprises (sme) in Federation of Bosnia and Herzegovina Adna Idrizović International Burch University Faculty of Bosnia and Herzegovina adnaid@gmail.com Abstract: In this project, we will research impact of rewards on motivation of employees. Outcome of the organization is profoundly dependable on the achievement of their workers. Aim of this paper is to show how rewards impact motivation keeping in mind the goal to improve the general performance of the organization. It is crucial for the organization to comprehend what drive the employees and how to expand their employment fulfillment. It may however be hard for an organization to discover what motivates employees, particularly on the grounds that distinctive individuals are motivated by various things. Well composed and useful reward system is an effective approach to build employee work motivation. This paper embarks to investigate obviously what factors exist in ascribing the right reward structure to an individual representative or group. Reward management is both perplexing and involved and exceptionally exposed to outside impacts, for example, financial situations, culture and individual worker inclinations and recognition. Keywords: motivation, employee motivation, reward system, employee satisfaction. JEL Classification: M5, J28. Introduction In this project, we will research impact of rewards on motivation of employees. Outcome of the organization is profoundly dependable on the achievement of their workers. Aim of this paper is to show how rewards impact motivation keeping in mind the goal to improve the general performance of the organization. There are many ways in which job satisfaction is defined. This is complex topic, and many theorists and authors gave their contribution to further develop and broad this area. To research this topic, we need to adequately explore all influencing factors which are related to the job satisfaction. Those include environmental factors psychological factors and individual factors. It is crucial for the organization to comprehend what drive the employees and how to expand their employment fulfillment. It may however be hard for an organization to discover what motivates employees, particularly on the grounds that distinctive individuals are motivated by various things. Well composed and useful reward system is an effective approach to build employee work motivation. This paper embarks to investigate obviously what factors exist in ascribing the right 138 �reward structure to an individual representative or group. Reward management is both perplexing and involved and exceptionally exposed to outside impacts, for example, financial situations, culture and individual worker inclinations and recognition. Motivating the workforce of a company to work all the more viably towards the company's objectives is maybe the most crucial assignment of management. Companies persuade their workforce to perform adequately by offering those rewards for agreeable execution and maybe rebuffing them for unacceptable work. Over the past hundred years there has been a development in the perspective of what the expression "rewards" really implies in an authoritative setting. Literature review In this study, we will present different ideas about job satisfaction and motivation techniques. Job satisfaction is one of the most researched topic regarding job environment and among the most broadly investigated subjects in Industrial/Organizational Psychology (Judge & Church, 2000). Intrinsic and extrinsic sorts of motivation have been generally contemplated, and the qualification between them has revealed vital insight into both formative and instructive practices. Extrinsic motivation is a build that relates at whatever point a movement is done keeping in mind the end goal to achieve some detachable result. Extrinsic motivation consequently diverges from intrinsic motivation, which alludes to doing an activity basically for the happiness regarding the action itself, instead of its instrumental esteem (Ryan & Deci, 2000). Managers can motivate employees through strategies, for example, pay, advancement and acclaim. Employees can likewise rouse themselves by looking for work where singular objectives, needs furthermore will be achieved. Intrinsic motivation alludes to the motivation that originates from inside a person. The motivation is created trough fulfillment or satisfaction that one gets in finishing or notwithstanding at an errand. Extrinsic motivation is something that is done for individuals to persuade them. It emerges from elements outside an individual, for example, cash, evaluations, feedback or disciplines (Armstrong and Taylor, 2014). Job satisfaction is a perspective achieved from employees' impression of their job or environment in which they work and alludes to the degree to which an employee likes the actual job (Arokiasamy & Abdullah, 2013). Payment systems are effective but they cannot ultimately achieve satisfaction of employees. Managers needs to weigh up the most favorable circumstances and disservices of every reward 139 �systems and choose which system to put the priority on and give it the most attention (Torrington, Hall, Taylor & Atkinson, 2009). Armstrong and Taylor (2014) insists that there are also other types of incentives such as reward by the result. Incentive by Result is one of the most broadly utilized motivating force, which compensate representatives as per the quantity of things or units they deliver or the time they take to deliver them. This plan has been condemned because of its inclination to reward amount of yield as opposed to quality which can prompt diminished nature of the item or administration. There is an awesome need to alter and assess the adequacy of this plan in the event that it is to hold the effect of profitability (Daley, 2012). The subjects presented to the associates who made positive remarks evaluated the employment errands as more charming than the subjects presented to the negative remarks by the associates. This further approves social data handling hypothesis (Aamodt, 2009). Medina (2012) highlights that job fulfillment was firmly contrarily connected with turnover expectation and this relationship was intervened by fulfillment in work environment culture. The review gives prove that ought to be additionally investigated to help in the comprehension of worker turnover and occupation fulfillment; especially in how job fulfillment and representative turnover identify with work environment culture. Decker (2010) insists that motivation is a persons' inward inclination to be worried with and approach constructive impetuses and keep away from adverse stimulation. To further this, a motivator is the expected reward or unpleasant occasion accessible in the environment. Reward is the benefit achieved for performing expected assignment. It is a positive boost or motivating force that can be displayed during the time spent fortifying conduct. As per Decenzo and Robbins (2002), today's specialists expect something other than a time-based compensation or pay from their boss; they need extra contemplation that will advance their lives. This contemplation in a business setting is called employee benefits. Benefits are the program a business uses to supplement money compensation that employee gets (Pinder, 2014). Methodology In the theoretical part of this study, we will present different ideas from various researchers and present collected literature. In the beginning, we will introduce reward systems and motivation and describe it thoroughly. Different systems of the motivation will be explored and presented. Speaking of instruments for data collection in this study, we will use quantitative research survey. We decided to use survey because of costs and structured technique with large number of samples. This survey will be constructed in order to get feedback from employees from 140 �different Small and Medium Enterprises in Federation of Bosnia and Herzegovina. We will analyze different reward systems and methods used to motivate the employees. Statistical data will be analyzed using IBM SPSS software. In the end of the questionnaire we would make one question open where respondents of this survey can express their own opinion and say in own words, what would they do to improve satisfaction of employees and how to motivate them properly. For purpose of hypothesis testing, linear regression method will be used. Other important conclusions will be generated after descriptive statistics analysis. Figure 1 Research model Data & Results For every organization, it is important to keep their employees satisfied, because the result is dependent on their performance. Therefore, we plan to find results what drives motivation of employees. What positively influence their performance and what negatively reduce their performance. Primary data would be collected from the survey distributed online via e-mail to the respondents. A typical hypothesis inside the exploration has been that, to a degree, the emotional condition of an individual is influenced by associations with their workplace. Individuals distinguish themselves by their calling, for example, a specialist, legal counselor, or instructor. Consequently, an individual's close to home prosperity at work is a critical part of research (Judge & Klinger, 2007). We want to find which areas of motivation of employees function well and which areas needs to be improved. With collected data and personal opinions of employees from different organizations and companies, we want to build a solid study. Feedback of employees will give 141 �us necessary data which will be analyzed and commented in this study. Positive linear relationship is expected to be gathered for all hypotheses. This thesis was directed in order to contribute to the examination of the attitudes of the employees towards the reward systems of the organization. Particularly, it will help the organizations to explore which of the reward systems is most favored and what different benefits motivate the employees. Figure 2 Age of respondents In this figure, we can see the age of respondents. The biggest number of respondents belongs to the first category variable. That means those employees have age range 18-24 years. The next biggest proportion is the range group with the employees having age 35-54 years. Than we have a group of employees having 25-34 years. In the end, we have employees with the 55 years and more. Those are seniors, managers and owners of the respected companies taken into consideration for this survey. Figure 3 Gender In this figure, we have taken into account gender of the respondents. In this survey 59,2 % of women are respondents, and 40,8% of men are respondents. This is interesting for the country of Bosnia and Herzegovina, since the majority of the working forces are male. 142 �Figure 4 Marital status In this figure, we can see marital status of the respondents. We asked this question since it is important for this research to evaluate what impact marriage have on the motivation of the respondents and what effects can it cause. Figure 5 Area of profession In this question, we asked respondents what is there area of profession. We have found out that the most of respondents have Economical and Administrative background or 34,4% of them. Other areas of profession are covered respectively as shown on the figure. 143 �Figure 6 Education level In this figure, we analyzed education level of the respondents since it is very important for the motivation of employees. We can see that the biggest number of respondents have a faculty degree or bachelor with the number of 39,8% of overall. Figure 7 Reward system In this question number 7 in our questionnaire we wanted to analyze does current reward system in the respected companies motivates their employees. The given options were from 1 strongly disagree to 5 strongly agree. According to our respondents, we can see that more than half of them, precisely 50,5% thinks that reward system is motivating in their companies. 144 �Figure 8 Wages In the figure 8. We have analyzed whether if wages are connected with the motivation of employees. The given options were from 1 strongly disagree to 5 strongly agree. The biggest number of respondents 47,3% of them thinks that wages are positively related with the motivation of employees. Figure 9 Responsibilities In the figure 9 we can see how employees have answered on our question whether responsibilities are positively related with the motivation of employees. We can see that the 43,1% of the respondents thinks that responsibilities are positively related with the motivation of employees. Conclusion Employees want to be recognized for their work and they want to be appreciated. It usually doesn’t take an extra effort to achieve satisfied employees. This study tried to emphasize the importance of the individual needs of the employees. 145 �There are many ways in which job satisfaction is defined. This is complex topic, and many theorists and authors gave their contribution to further develop and broad this area. To research this topic, we need to adequately explore all influencing factors which are related to the job satisfaction. Those include environmental factors psychological factors and individual factors. This paper was directed in order to contribute to the examination of the attitudes of the employees towards the reward systems of the organization. Particularly, it will help the organizations to explore which of the reward systems is most favored and what different benefits motivate the employees. Well composed and useful reward system is an effective approach to build employee work motivation. This paper embarks to investigate obviously what factors exist in ascribing the right reward structure to an individual representative or group. Reward management is both perplexing and involved and exceptionally exposed to outside impacts, for example, financial situations, culture and individual worker inclinations and recognition. Further researches would include developing new model which will include analyzing of motivation regarding the sociographical and demographical environments. Also, what should be considered in the future are cultural differences and its impact on the motivation of employees. References Aamodt, M. (2009). Industrial/Organizational Psychology. Belmont, CA. Cengage Learning. Armstrong, M., & Taylor, S. (2014). Armstrong's handbook of human resource management practice. Kogan Page Publishers. Arokiasamy, A. R. A., Tat, H. H., & Abdullah, A. (2013). The Effects of Reward System and Motivation on Job Satisfaction: Evidence from the Education Industry in Malaysia. World Applied Sciences Journal, 24(12), 1597-1604. Ayyagari, M., Beck, T., & Demirgüç-Kunt, A. (2003). Small and Medium Enterprises Across the Globe: A New Database. World Bank Policy Research Working Paper 3127. Daley, D. M. (2012). Strategic human resource management. Public Personnel Management, 120-125. DeCenzo, D. A., & Robbins, S. P. (2002). Human resource management (John Wiley & Sons, Inc., New York. Deckers, L. (2010). Motivation; Biological, Psychological and Environmental. 3rd ed. MA: Pearson, Boston. 2-3. Dyson, K. (2005). Small and medium sized enterprises. Routledge. Fisher D. (2000). Mood and emotions while working: missing pieces of job satisfaction? Journal of Organizational Behavior 21, 185-202. Gupta, N., & Shaw, J. D. (2014). Employee compensation: The neglected area of HRM research. Human Resource Management Review, 24(1), 1-4. 146 �Judge, T. A., & Church, A. H. (2000). Job satisfaction: Research and practice. In C. L. Cooper & E. A. Locke (Eds.), Industrial and organizational psychology: Linking theory with practice (pp. 166-198). Oxford, UK: Blackwell. Judge, T. A., & Klinger, R. (2007) Job satisfaction: Subjective well-being at work. In M. Eid,& R. Larsen (Eds.), The science of subjective well-being (pp. 393-413). New York, NY: Guilford Publications. Lau, C. M., & Roopnarain, K. (2014). The effects of nonfinancial and financial measures on employee motivation to participate in target setting. The British Accounting Review, 46(3), 228- 247. Medina, E. (2012). Job satisfaction and employee turnover intention: what does organizational culture have to do with it?. Columbia University. Pinder, C. C. (2014). Work motivation in organizational behavior. Psychology Press. Presslee, A., Vance, T. W., & Webb, R. A. (2013). The effects of reward type on employee goal setting, goal commitment, and performance. The Accounting Review, 88(5), 1805-1831. Ryan, R. M., & Deci, E. L. (2000). Intrinsic and extrinsic motivations: Classic definitions and new directions. Contemporary educational psychology, 25(1), 54-67. Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., ... & Plimmer, G. (2015). Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press. Torrington, D. Hall, Laura. Taylor, Stephen & Atkinson Carol (2009). Fundamentals of Human Resource Management, 1. Zhou, J., & George, J. (2001). When job dissatisfaction leads to creativity: Encouraging the expression of voice. The Academy of Management Journal, 44(4), 682. 147 � 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. 3639 Title A name given to the resource Effects of Reward System on Motivation of Employees in Small and Medium Enterprises (sme) in Federation of Bosnia and Herzegovina (doi: 10.14706/icesos172) Author Author Idrizovic, Adna Abstract A summary of the resource. Abstract: In this project, we will research impact of rewards on motivation of employees. Outcome of the organization is profoundly dependable on the achievement of their workers. Aim of this paper is to show how rewards impact motivation keeping in mind the goal to improve the general performance of the organization. It is crucial for the organization to comprehend what drive the employees and how to expand their employment fulfillment. It may however be hard for an organization to discover what motivates employees, particularly on the grounds that distinctive individuals are motivated by various things. Well composed and useful reward system is an effective approach to build employee work motivation. This paper embarks to investigate obviously what factors exist in ascribing the right reward structure to an individual representative or group. Reward management is both perplexing and involved and exceptionally exposed to outside impacts, for example, financial situations, culture and individual worker inclinations and recognition. Keywords: motivation, employee motivation, reward system, employee satisfaction. JEL Classification: M5, J28. Date A point or period of time associated with an event in the lifecycle of the resource 2017 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/1f86f0803bbe457a4e1d0b59edf09155.pdf 3611f073d92ccda0698ee930ce1baa16 PDF Text Text Impact of Agricultural Policies on Rural Development and Increase of Competitiveness of Agriculture of Bosnia and Herzegovina with a Special Emphasis on Achievement of Reform Goals Sanja Kavaz Hukic Bosnia and Herzegovina sanja_kavaz@bih.net.ba Abstarct: For the Balkan countries, the agricultural sector and rural development are of great importance, primarily because they are ensuring food security of the population, and then, also, because they have effects on employment, the creation of total gross value as well as on the foreign trade. Having in mind open processes of joining the European Union in these countries, with a special focus on Bosnia and Herzegovina, the implementation of the EU policies and practices will represent both a challenge and an opportunity for the development of the state and the improvement of its position in the single European market. Bosnia and Herzegovina is a country with a distinct rural character, with over 50% of the rural population, where every third household acquires some kind of income from agriculture, and which is currently facing a number of problems when rural development is concerned (from insufficient investments, uncompetitive production, inefficient administration, abandonment of rural areas, failure to use EU funds, etc.). Nevertheless, with adequate policies and dynamic approach to the agricultural sector, and strategy for increasing competitiveness and attracting investment, the potential of Bosnia and Herzegovina's agriculture could be used and exploited, and the country could go towards progress and success. Therefore, this paper explores and analyzes the European Union's common policies, as well as the ways and means of their implementation in the Balkan region countries, especially in Bosnia and Herzegovina. Then, the paper points the importance and necessity of investing in rural development (infrastructure, mechanization, marketing, agro-environmental measures, etc.), and provides guidelines on how to modernize and reconstruct the agricultural sector, in order to increase the country's competitiveness and reduce the long-standing trade deficit in this area, and, at last, how to effectively approach to the European Union with harmonization of legislation and the use of development plan. The agricultural sector and the overall modernization of rural communities, with a clear vision, and with increasing employment, economic growth and competitiveness, can become the cornerstone of the development of Bosnia and Herzegovina and a key factor of its inclusion in the European and the world trends. Keywords: EU common agricultural policy, agriculture, rural development, competitiveness. JEL Classification: Q17, Q18, O13, 018 Introduction The Common Agricultural Policy (further: CAP) is one of the oldest polices of the European Union (further: EU) and represents set of measures and programs for subsidizing agriculture in the European Union. It was created in 1962, so the application of common agricultural policy 111 �began in early 1960s. Until then, countries have greatly intervened in their agricultures, particularly in the choice of what to produce, under which conditions, and what will be the price of agricultural products. Such individual interventions jeopardized the free exchange of goods within the Community. Since some countries, France in particular, advocated the continuation of strong intervention, the only solution was to transfer intervention measures at the level of the Community and to harmonize them. The Rome Treaty stipulated the general framework of the CAP10, the principles of CAP were defined at a Conference in Stresi (Italy) in 1958, and CAP came into force in 1962s, after it was accepted by all six of the founders of the Community. In late 1950s societies and states in Europe were damaged by Second World War, and in that conditions agriculture had been crippled, there were no rural development and food supplies could not be guaranteed. Since then, common agricultural policy had been changed adapting the policy to a changing world. Major reforms shaped the CAP in 1992, 2003 and 2013, the main goals evolved from securing enough food and agricultural products, securing free movement of agricultural product and removal of the trade barriers in 60s, 70s, etc., to today's main objectives which are providing a stable, sustainably produced supply of safe food at affordable prices for all Europeans, while also ensuring a decent standard of living for farmers and agricultural workers. Other objectives are sustainable management of natural resources, the preservation of rural economies, the redistribution of aid between countries and between farmers, and the climate change. As an oldest EU policy, in general, it is a partnership between Europe and its farmers, agriculture and society. The CAP is based on three fundamental principles: single market, advantage of the Union and financial solidarity. The single market has two meanings, first the application (on agricultural products) of the rules on free movement of goods between Member States, and determining common prices and assistance, regardless of headquarter of an economic entity. Correct application of this principle requires common price regulation, aid payments and competition rules, harmonization of health insurance regulations and administrative procedures as well as common foreign trade policy. The advantage of the Union provides two levels of activity, giving preference to agricultural products from the Union before importing products and internal market protection against disturbances caused by the uncontrolled import of low-priced agricultural products as well as from disturbances in the world market. In the end financial solidarity means that costs resulting from the application of the CAP must be shared among all Member States (further: MS), regardless of their national interest.11 Agriculture is a key sector for sustainable economic development, so from the early beginning until today the common agricultural policy is managed and funded from the resources of the EU 10 The objectives of the CAP were defined under Article 39, and those were: (a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour; (b) thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture; (c) to stabilise markets; (d) to assure the availability of supplies; (e) to ensure that supplies reach consumers at reasonable prices. Treaty of Rome, 25 March 1957, Agriculture, p. 16 11 Kesner-Škreb, M., Common Agricultural Policy of the European Union, Financial theory and practice, 2008., 32 (4), p. 543-545 112 �annual budget, and it consumes almost half of the budget of the Union. Common Agriculture is a sector that is supported almost exclusively at the European level, unlike most other sectors of the economies which are the responsibility of their national governments. It is important to have a public policy for a sector responsible for ensuring food security and sector which plays a key role in the use of natural resources and the economic development of rural areas. The recent enlargements of the EU have almost doubled the labor force and the cultivable area, and the internal market added more than 100 million consumers. The new Member States can immediately start using the mechanism of subsidizing the prices of agricultural products, while the direct subsidies to farmers are arranged for a period of ten years. However, the member states must fulfill many conditions regarding restructuration and modernization of the agricultural sector. All Member States agreed that by 2013 there will be no real growth of the agricultural budget, the subsidies to the "old" Member States will be reduced in order to finance aid to new members. Today, farmers provide a stable food supply, produced in a sustainable way at affordable prices for more than 500 million Europeans. The European Union's farm policy ensures a decent standard of living for farmers, at the same time as setting requirements for animal health and welfare, environmental protection and food safety. Sustainable rural development completes the picture of the EU's common agricultural policy. There is one big European market for agricultural products, in which a common approach towards supporting agriculture ensures fair conditions for farmers competing in the internal European market and globally.12 For Western Balkan countries13 accession to the European Union is undoubtedly a political goal, process of great importance both for countries and their population, in which the adaptation and the modernization of agriculture play important role. They are directed by national decisionmakers, who use pre-accession instruments, changes in legislation, institution-building and agricultural policy reform to promote the development of the agricultural sector and of rural areas. So, if policy is to serve as a means to achieve certain goals, reforms must be planned, steered and executed according to the principles of evidence-based policymaking. This means that a modern government must produce policies that are based on hard facts, not on ideology, that are proactive rather than reactive, and address causes rather than symptoms. All Western Balkan countries have made significant progress in the last few years in aligning their long-term programming documents and administrative infrastructures with EU requirements. Between 2013 and 2015, new strategic documents for agriculture and rural development were adopted, which mainly cover the period to 2020, up to 2019 for the Federation of Bosnia and Herzegovina and up to 2024 for Serbia. The medium- and long-term agricultural policy 12 22 million farmers and agricultural workers are at heart of one of the biggest economic sectors in the European Union, the agri-food sector. Around 44 million jobs in food processing, food retail and food services depend on agriculture. The EU is also a net exporter of food and drink, exporting goods for more than €130 billion per year. More data on EU agri-food in "Monitoring EU Agri-Food Trade" which provides monthly data on EU agri-food exports and imports, available on https://ec.europa.eu/agriculture/trade-analysis/monitoring-agri-foodtrade_en 13 In this sense the term „Western Balkan countries“ encompasses countries of the region such as Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia. 113 �objectives and priorities set out in these documents vary slightly by country, but all address to enhancing farm viability and the competitiveness of the agro-food sector; to sustainable management of natural resources and mitigation of the effects of climate change; and improving the quality of life and balanced territorial and economic development of rural areas. In most countries, the main strategic document has been supplemented by a multi-annual implementation programs. In parallel, the Instrument for Pre-Accession Assistance for Rural Development (further: IPARD) programs were also prepared to provide key documents regarding EU preaccession support in the field of agriculture, mostly aimed at institution-building and improvement of the agricultural sector.14 In Bosnia and Herzegovina (further: BH), having in mind that country has a rural character, with over 50% of the rural population, agriculture is both an economically and politically important sector. This sector is characterized by underused natural resources and production potentials, low productivity, poor technical and technological capacities of farms, underdeveloped agricultural and food chain value, low competitiveness and considerable dependence on foreign trade. Added to that, the growing socio-economic marginalization of rural areas, which is accompanied by depopulation, makes it is apparent that the agricultural policy of Bosnia and Herzegovina faces numerous challenges that must be tackled to address these problems in the agricultural sector and rural areas. With the entry into force of the Stabilization and Association Agreement between Bosnia and Herzegovina and the European Union15, with 135 clearly defined articles of the agreement, in particular chapter II, which regulates relations in agriculture and fisheries, an opportunity is created for an adequately economically and legally regulated country to enter the market competition in European union and to achieve significant results. But, at the moment, since Bosnia and Herzegovina does not have organized and planned agricultural and food production, a functional production and system based on quantity - continuity - quality, established international systems and standards for food safety, cooperative system of redemption stations, common agricultural policy, laws and Ministry on a state level, agriculture and rural 14 In some countries, key priorities also include farmer income stabilisation (Bosnia and Herzegovina, Kosovo and Serbia), food chain organisation (FYR Macedonia and Kosovo), promotion of food quality and safety standards (FYR Macedonia) and investment in human capital, transfer of knowledge and innovation (Albania, FYR Macedonia and Kosovo). The basic goals of agricultural policy thus match those of the EU CAP for the same period. Monitoring of agricultural policy developments in the Western Balkans countries, European Commission, Luxembourg: Publications Office of the European Union, European Union, 2017. p. 14. 15 The agreement expressly refers to the possibility of BH to become a candidate country for membership of the EU. The agreement is to open political dialogue with BH and for enhanced regional cooperation, including provisions on free trade areas between the countries of the region, the free trade area for within 5 years of entry into force of the agreement. BH is committed to approximate its legislation to that of the EC, notably in the key areas of the internal market. The agreement is an important step in the establishment of a stable order based on cooperation within the framework of the EU’s stabilization and association process with the countries of south-eastern Europe, as well as within that of the stability pact for south-eastern Europe. The Stabilization and Association Agreement between the European Communities and their Member States, of the one part, and Bosnia and Herzegovina, on the other part. 114 �development can easily become a stumbling rock of the development of whole country, of course if country does not, in near future, implement necessary reforms and improvements. The Common Agricultural Policy – modernization and reform in European Union Introduced in 1962, Common Agricultural Policy, had undergone several waves of reforms, with the latest reform decided in 2013. and implemented in 2015. Since then, the context in which that reform was forged has shifted significantly. Agricultural prices have fallen substantially and market uncertainty has increased, due amongst others to macroeconomic factors, geopolitical tensions, inhibiting a clear long-term planning of the sector. Also, the emphasis of trade negotiations has moved more visibly from multilateral to bilateral deals, requiring a careful balancing of offensive and defensive interests, with due attention paid to certain sensitive sectors. The EU has signed up to new international commitments, especially those concerning climate change and broad aspects of sustainable development (through the UN's Sustainable Development Goals – SDGs), and is also exposed to other geopolitical developments such as new large-scale migration.16 So in these circumstances CAP continues to be adapted to respond the challenges of its time. The main aims of the policy nowadays are to improve agricultural productivity so that consumers have a stable supply of affordable food, and to ensure that EU farmers can make a reasonable living. Now, more than fifty years after the introduction of the CAP, with more than 500 million consumers needing a reliable source of affordable, healthy and nutritious food, the EU has had to address a number of current and future challenges, which include global competition, economic and financial crises, climate change and sustainable management of the natural resources, food security, rising costs such as fuel and fertilizer. Significant reforms have been made in recent years, to modernize the sector and make it more market oriented. Most notably, in 2013, after three years of intensive discussion and negotiations, the policy was reshaped to meet the challenges of the future, 2014-2020.17 The new 16 The above prompted a vigorous public debate about whether the 2013 reform went far enough to meet broader challenges related to the balance of support, the economic prospects for agriculture and rural areas, care for the environment (e.g. greening), action over climate change, sustainable and safe food production. Emerging opportunities in the areas of health, trade, the bioeconomy, the circular economy and the digital economy also need to be further considered. Against this background, as part of its working programme for 2017, the Commission will take forward work and consult widely on simplification and modernisation of the CAP to maximise its contribution to the Commission's ten priorities and to the Sustainable Development Goals (SDGs). This will focus on specific policy priorities for the future, taking into account the opinion of the REFIT Platform and without prejudice to the next Multiannual Financial Framework. The starting point must be will be a well-founded assessment of the performance of the current policy. More about Consultation on modernising and simplifying the common agricultural policy, European Commission, Directorate-General for Agriculture and Rural Development on https://ec.europa.eu/agriculture/consultations/cap-modernising/2017_en, 10.06.2017. 17 After an elaborate process, a decision on the CAP for the 2014-2020 period was reached in 2013. The process involved the main European institutions: the European Commission (Commission), the Council of the European Union (Council), the European Council and the European Parliament (EP). It involved consultations with European citizens and „stakeholders“ and intense lobbying activities on the part of various interest groups. The process started 115 �CAP is designed to ensure direct support will become fairer and greener, strengthen the position of the farmers in the food chain and the policy as a whole will become more efficient and more transparent. For majority of Europeans, agriculture and rural areas are important for the future. They consider the main responsibilities of farmers to be supplying the population with a diversity of quality products and ensuring the welfare of farmed animals. For them agriculture and rural development policy should be ensuring agricultural products are of good quality, healthy and safe, and ensuring reasonable food prices for consumers.18 In Western Balkan countries, particularly in Bosnia and Herzegovina, both the population and the government still do not understand the significance of agricultural policy and the importance of improvement of rural areas. The CAP is a complex policy involving many different components and issues. The new CAP design and the next steps All past reforms have led to step changes in the CAP and this, the latest one, is no exception. It represents another milestone in the CAP's history placing the joint provision of public and private goods at the core of policy. Farmers should be rewarded for the services they deliver to the wider public, such as landscapes, farmland biodiversity, climate stability even though they have no market value. Therefore, a new policy instrument of the first pillar (greening) is directed to the provision of environmental public goods, which constitutes a major change in the policy framework. The new CAP design is also more efficient, targeted and coherent. It is based on a more holistic approach to policy support through the maintenance of the existing two pillar structure but in a more targeted, integrated and complementary way. Both pillars of the CAP are aimed at meeting all three CAP objectives more effectively, with better targeted instruments of the first pillar complemented by regionally tailor-made and voluntary measures of the second pillar. There is new flexibility for Member States in the budgeting and implementation of first Pillar instruments, acknowledging the wide diversity of agriculture, agronomic production potential and climatic, environmental as well as socio-economic conditions and needs across the EU. This flexibility will however be framed by well-defined regulatory and budgetary limits in order to ensure a level-playing field at European level and that common objectives are met. In informally as early as 2008 and more formally in April 2010, when the Commission launched a public debate on the CAP’s future. In June 2013, a political agreement was reached between the Commission, the EP and the Council under the Irish Presidency. In the last months of 2013, the regulations were formally adopted by the Council and the EP. Delegated Acts to clarify technical implementation details were approved in April 2014. Afterwards member states went to work on how they would implement various policy areas where they had flexibility in implementing the regulations. The length and complexity of the process are not indicative of the reform outcome. More about CAP in book Swinnen, J., The Political Economy of the 2014-2020 Common Agricultural Policy An Imperfect Storm, Centre for European Policy Studies, Brussels, 2015., p. 1-3. 18 The majority of Europeans consider all of the listed priorities of the CAP to be important, with two priorities mentioned more often as being “very important”: investing in rural areas to stimulate economic growth and job creation (47%), and strengthening the farmer’s role in the food chain (45%). More statistical data about the CAP and Europeans in Europeans, Agriculture and the CAP, Report, European Commission, EU, 2016., p. 5-6 116 �this area Member States share the responsibility to strike the right balance between possible benefits and the burdens of red tape for producers as well as for administration and controls.19 There is one more important thing when it comes to the reforms of the CAP, and also reason why the those reforms of the CAP were so needed, and that is increasement of competitiveness of the EU agriculture. Europe needed to retain and enhance competitiveness in the world characterized by increasing globalization and rising price volatility. The growing world population and expansion of the global markets means this is a time of opportunity of EU farmers, but also a challenges, not least the need to be competitive on a global level while managing the increasing costs of inputs, such as oil, fertilizers and water. Not only in the EU, but also in other countries, especially those with rural character such as countries of Western Balkans, it is necessary to build up and to have more innovative, self-reliant, profitable agriculture and farming industry with the ability to mitigate or withstand shocks and to recover quickly from them. So for Bosnia and Herzegovina finding ways to increase competitiveness and viability of agriculture will be the obligation of great priority and importance for the government, in order to provide better future for whole country, successful coping with competitive pressure in the EU market and to provide prosperity for all the inhabitants. The objective of past reforms to enhance the market orientation of EU agriculture is continued by adapting the policy instruments to further encourage farmers to base their production decisions on market signals. Competitiveness is addressed directly by changes to market mechanisms, particularly the removal of production constraints. All of the existing restrictions on production volumes for sugar, dairy and the wine sector will end, allowing farmers to respond to growing world demand.20 Some outdated commodity aid schemes will also be abolished, and other schemes modernized. Measures to facilitate producer cooperation under both pillars of the CAP should also boost the competitiveness of farming by reducing costs, improving access to credit and adding value to the primary sector. The reinforced legal framework for Producer Organizations is backed by financial incentives under the second pillar.21 Together all these instruments are expected to encourage producer cooperation and to improve the functioning of the food chain. Product differentiation, quality programs, promotion and onfarm processing should also add value. Other instruments under the second pillar which enhance competiveness at farm level include restructuring and modernization measures as well as startup aid for young farmers. Furthermore, there is a focus on bridging the gap between science and practice via the Farm Advisory System, as well as training and innovation program. These instruments are aimed at helping the farm sector to adapt to new trends and technologies, thus 19 More about CAP reforms in Overview of CAP Reform 2014-2020, European Commission, 2013., p. 5. 20 It was already decided in the Health Check that dairy quotas will expire in 2015 and the 2007 reform of the wine sector laid down the end to the planting rights system for 2018 at the latest. Sugar quotas will be abolished in 2017. 21 The Common Agricultural Policy after 2013, House of Commons, Environment, Food and Rural Affairs Commitee, Fifth Report of the Sesion 2010-11, Volume 1, 2011., p. 61. 117 �becoming more resource efficient, cost effective and capable of adapting to emerging challenges. At the same time the new CAP also offers more responsive safety net measures and strengthens the EU's capacity for crisis management. This will be achieved by more efficient market measures to deal with potential threats of market disturbances and more flexible exceptional measures. A new crisis reserve (of EUR 400 million per year in 2011 prices) is established to secure the financial resources needed in case of crisis, through deductions from direct payments, with unused amounts reimbursed to farmers in the consecutive budget years. In addition, the second pillar offers a new risk-management toolkit including insurance schemes for crops, animals and plants, as well as mutual funds and an income stabilization tool.22 Implementation in Western Balkan Countries The political economy of agricultural and food policies remains a fascinating and important topic. This holds in general with many poor countries in the world taxing their farmers while many rich countries subsidies agriculture. It also holds for the European Union. Since the start of the CAP, the EU has spent a large share of its budget on supporting European agriculture. In 2013, it was decided to spend more than €400 billion over the remainder of the decade on the CAP. The 2013 decision ended years of discussion and negotiations on the future of the EU’s agricultural policies. It not only had major implications for the EU’s budget and farmers’ incomes, but also for Europe’s environment, its contribution to global climate change and to food security in the EU and elsewhere in the world. The theoretical principles of modern agricultural policy state that evidence-based policy is founded on rigorously established objective evidence, good data, the use and development of empirical tools, policy analysis, benchmarking and impact assessments. Thus, the Western Balkans (further: WB) countries’ governments are not only working towards harmonizing their agriculture in view of their potential EU membership, but are also cooperating to build the foundations of a modern, efficient agricultural policy. The WB countries are at different stages of forming this kind of policymaking. While the development and quality of policy monitoring is only at an initial stage in some countries, others already make regular annual reports regarding the status of the agricultural sector. However, the reporting of budgetary transfers to agriculture is mostly less transparent, while policy impact assessments and evaluations are practically nonexistent, resulting in low-quality policy planning and decision-making that is not evidence based. The previous research shown that the new regional agriculture-related strategic documents adopted by WB countries are relatively modern and are oriented towards EU integration. The question remains whether or not these documents have brought about real changes in the WB countries’ policies in the first years of their implementation. Also, the central analytical issue is the assessment of direct production support, which is the main agricultural policy instrument in most WB countries (as well as the CAP). For the first time, the types of support, their associated eligibility criteria and the amounts involved are presented in a transparent fashion. All the countries have adopted key medium-term agricultural policy 22 Overview of CAP Reform 2014-2020, op.cit. p. 5-6. 118 �programming documents and these documents are solidly written and have a strong strategic logic. They describe positive changes in the policy framework and a more extensive orientation towards the EU, which are reflected in the definitions of goals and specific policy measures, especially regarding rural development. However, most countries lack a clear intent to reform their direct support policy in accordance with the EU CAP and this also applies to agroenvironmental measures and support. There is also a lack of resolution to establish evidencebased policy in the sense of introducing mandatory monitoring and other elements to achieve efficient policy reform. The more modern and well-conceived programming documents that have been drawn up are not yet leading to any marked changes in the scope and structure of policy instruments and measures, especially in their adaptation to CAP-like support systems. The size of the agricultural policy budgets fluctuate significantly from year to year and has increased since 2010 only in Kosovo and Albania, the two countries that started with the lowest relative amounts of the agricultural support. Kosovo also benefits from significant donor funds, helping it to achieve the largest relative budget size in 2015. Certain countries, in contrast, have reduced their agricultural budgets as a result of the economic crisis (e.g. Bosnia and Herzegovina since 2010 and Serbia in 2015). The structure of the total support for agriculture varies significantly. The proportions of funding for various groups of measures in the total agricultural budget cannot be compared without taking account of the size of the total budget itself. The proportion of direct producer support is high in Bosnia and Herzegovina, FYR Macedonia and Serbia (over 70 % on average). The funds for structural and rural development measures are mainly intended to improve competitiveness and have the highest proportions in Albania, Kosovo and Montenegro. However, these funds are limited and their real impact on the development of agriculture is therefore not to be overestimated. Support for agricultural public goods (agro-environmental measures and support) and quality of life in rural areas is almost negligible in all WB countries. Rural development policy is not really taking root in the region, despite the occasional adoption of beneficial projects or programs. This is a problem not only of modest levels of funding, but also of the programming of measures: they have a narrow orientation towards farm investment. The low absorption of IPARD pre-accession support funds is a significant problem. The causes vary, ranging from human capacity deficiencies in administration and political priorities at the country level to the lack of adaptation of support to real conditions. Similarly, levels of funding for general services are low in absolute terms and fall short of satisfying the countries’ developmental needs, especially in the sense of achieving efficient creation and transfer of knowledge.23 When evaluating the outcome of cross-comparative analysis of WB countries, it must be taken into account the fact that a clearer picture of agriculture and agricultural policy in this region require a lot of data and information, which are not yet available, or they are not 100% reliable. In all these countries, except Croatia, which is already a member of the EU, the process of improvement and harmonization of agricultural statistics with EU requirements is still ongoing. In this context, in all WB countries, one of the basic questions and priorities on which states 23 Monitoring of agricultural policy developments in the Western Balkan countries, Group of authors, Publications Office of the European Union, Luxembourg, 2017., p.14-33. 119 �need to focus is attention to improve agricultural statistics and database on policy implementation. Reliable and harmonized data are a prerequisite for a strong agriculture, and analysis and monitoring of agricultural policy, as well as for the successful programming and implementation of the agricultural policy. The biggest challenges of agricultural development in Western Balkan countries Agriculture is still among the most important sectors of the national economy in the WB countries, and provides a significant contribution to economic and social stability. However, its role is not so large in economic development, as it represents a social amortization during the economic crisis which exists in the region. Factor productivity in the region is considerably lower than the EU average, mainly due to slow process of consolidating agriculture and inefficient use agricultural resources. Depopulation in certain regions and acceptance of surplus labor from the agricultural sector in other sectors is the biggest problem in the development of agriculture and rural areas in most WB countries. Agricultural-food chain faces problems in creation of market institutions, establishment of marketing and distribution chains, and fulfillment of EU Standards in quality, veterinary, health and hygiene, and also phytosanitary standards. In general, it can be said that in the last few years in the WB counties, some progress has been made in the development of agriculture. However, much more still needs to be done to prepare the agricultural sector for the pressures of the competition of the modern global economy and also, to prepare these countries to join the EU. Main challenges for development of agriculture are, first of all, the resources, especially natural limitations and unused land potential, restrictions on human and capital factors, fragmentation of land and bimodal structure of agricultural holdings. Then, those are also production and productivity, particularly low productivity and technological gaps, low concentration and specialization of production and relatively weak production effect. The third are related to agricultural-food supply chain, specifically poor agro-business and low horizontal and vertical integration. At the end we have prices and trade, especially low prices and quality competitiveness and extreme trade dependency, as well as the last one related to the rural and regional characteristics which is depopulation, poor social situation and the presence of rural poverty. All this indicates that the agricultural sector and rural areas of the WB countries have significant developmental needs. Modernization and development of agriculture, and related with that the development of economic activities in rural areas, have the potential to significantly improve the prospects of these areas, and they must become the core of all strategic plans for the development of agriculture and rural areas in the region. Therefore, the key goals of the future policy of agriculture and rural development in all Western Balkan countries should be the improvement of the general legal and institutional framework, reform of land management, enhancement and stabilization of incomes, innovation and efficient transfer of knowledge, modernization of agriculture and agri-food sectors, better horizontal and vertical integration of 120 �manufacturers and processors, more efficient use and protection of natural resources, Elimination of rural poverty and the problems of small farmers, and territorial balanced approach.24 Agricultural policy in Bosnia and Herzegovina Agriculture in Bosnia and Herzegovina is an economically and politically important sector. The significance of the agricultural sector in B&H is reflected in the share of total gross domestic product (GDP), employment of the population and food security, as well as in a foreign trade. Although Bosnia and Herzegovina is aiming for European integration and harmonization of its agricultural policy with the EU CAP, the slow progress of the EU integration process is caused by numerous factors, especially the on-going economic crisis and the lack of political will to implement the necessary reforms. This is reinforced by the fact that Bosnia and Herzegovina has not made progress in establishing the necessary institutional structures, so the state ministry for agriculture, at the state level, does not exist (by the Constitution of Bosnia and Herzegovina, all levels of government have certain powers to govern agricultural policy), and also at the state level there is only the Law on Agriculture, Nutrition and Rural Development which has been in force since 2008., with the aim of structuring sectoral policies and helping in harmonization with the EU agricultural policies. Because the lack of adequate institutional and legal framework, BH is losing considerable financial resources that could contribute to institutional building and agricultural sector improvement in Bosnia and Herzegovina. Agricultural policy in Bosnia and Herzegovina shows large inconsistencies with its outlined objectives and it has changed frequently over time without being guided by clearly defined development objectives and the elements of modern public policymaking, and also as a result of the lack of a clear established funding mechanism for agricultural policy, annual budgetary transfers depend largely on the governing political structures and lobbying of various interest groups. New frameworks for medium-term policy action in the agricultural sector and rural areas have been established in two Bosnia and Herzegovina administrative units. Both strategic documents emphasize their determination for European integration and the concepts of modern public policymaking. However, the preliminary evidence regarding their implementation in these two administrative units reveals no significant changes in the process of policymaking and shows limited application of a modern approach to addressing the development needs of the agricultural sector and rural areas. BD did not adopt a similar framework to those of the other two administrative units and relies on short-term (annual) planning of agricultural policy (i.e. annual rulebooks). Regarding rural development, it is important to note that the FBH still does not have a valid legally adopted programming document that would allow a detailed implementation of the rural development measures. The proposal for the rural development program for 2015-2020 (FBH 2014b) has still not been approved by parliament. The proposal 24 More about this topic in Volk, T., Erjavec, E, Mortesen, K., Agricultural policy and European integration in Southeastern Europe, Food and Agriculture Organization of the United Nations, Budapest, 2015., p. 46-52. 121 �considers six areas of support: competitiveness of agricultural production; agro-environment; climate change mitigation and organic production; diversification of farm activities and entrepreneurship development; LEADER method of local development strategies and technical assistance and measures in the field of forestry (FBH 2014b). The Republic of Srpska (RS) adopted a new strategic plan for the development of agriculture and rural areas in 2015 for 20162020 (RS 2015a) before the expiry of the previous two strategic documents (i.e. the strategic document for 2010-2015 and the strategic document for 2010-2015). Unlike the previous two strategies, the new strategic document simultaneously covers both the agricultural sector and rural development. Overall, the new strategy contains six strategic goals and 16 specific goals that are proposed to be implemented using 52 different measures. As for BD, the current agricultural policy is implemented on the basis of a general strategic document that addresses the overall economy of this administrative unit. However, the development strategy for the agricultural sector that was in place until 2013 was without a legal basis. It is important to note that regular monitoring and evaluation of agricultural policy as part of a modern public policy cycle is not carried out in Bosnia and Herzegovina.25 Mid-term Strategy of Agricultural Sector Development in the Federation of Bosnia and Herzegovina for the period 2015 – 2019 Although there are many stories about the importance of the agricultural sector, its true significance for the quality of economic development, political stability and the development of the whole society, poverty reduction and improvement of quality of life, security a wide range of "public services" (preserving the uniqueness of the landscape, biodiversity, quality and accessibility water and soil, etc..), and for the preservation of cultural and gastronomic identity of the country (entities) is not sufficiently recognized. Having in mind vitality of this sector, the two worrying fact are the slight downturn of available ornamental surface area (3%, period 2003-2011), and also the fact that only about 50% of the surface area is used. The agricultural sector has not yet capitalized its potential and all significant opportunities for its further development. However, in the other hand, development of this sector is limited by the natural characteristics of land in the FBH (40% of the land is shallower then 30 cm, 84% of the territory is with a gradient higher than 13%, and there are dominant precipitation area, around 61.2%) which means that the sector has relatively small 25 For example, the parliament of the FBH receives an annual green report with a detailed description of the agro-food sector and the implemented agricultural policy. An important deficiency of these reports is their insufficient level of objectivity, as it does not provide a serious evaluation and analysis of the agricultural sector or of the effectiveness of the agricultural policies. The reports are prepared by the administration of the responsible ministry for agriculture without the involvement of the academic community or relevant research institutions. In the case of the RSR, there is neither an available annual report on the situation in agriculture nor an evaluation of the effectiveness of the implemented policy measures. Instead, the responsible ministry produces some information for the government and parliament. The academic community also makes some occasional analyses of the effects of agricultural and rural policy in Bosnia and Herzegovina, but this is mostly for academic purposes. More in Bajramović, S., Vaško, Ž., Ognjenović, D., Butković, J, Bosnia and Herzegovina: agricultural policy development and assessment, Monitoring of agricultural policy developments in the Western Balkan countries, Publications Office of the European Union, Luxembourg, 2017., p. 47.-50. 122 �available areas of high quality land. Also, the processes of integration and memberships of BH in different kind of organizations, such as the WTO, the EU and CEFTA allow BH access to international and new and very attractive markets as Russia, Turkey, Arab countries etc. At the same time, these processes lead to stronger competition which makes business more difficult, and also what is important is the negative economic trend in other countries which have significant influence on the export performance of the sector. Long-term drought, increased demand for products of animal origin (China and India), food price instability, increase of land price (due to breeding crops for energy production), energy and other inputs, and food-related scandals again raised all these issues and questions high on a scale of global political agenda. In Bosnia and Herzegovina, in period of 2015-2019., the solid foundation will be built for a faster and more efficient development, especially in the sense of establishing a modern, productive, technologically advanced and environmentally and socially sensitive economic sector, ready to respond to global socio-economic and climate changes and challenges, and capable of being “ready” for an adequate and prosperous position, above all in the region, and then on an international scene. This implies a strong strengthening of the capabilities of all business and administrative subjects to improve product recognition, by exploiting opportunities offered by a rich cultural heritage as well as the diversity of agro ecological conditions. Therefore, the focus of development will be on strengthening communication, co-operation, horizontal and vertical connection of all sector entities, as well as building efficient business alliances that will enable effective and efficient exchange of information, innovative ideas, but above all strengthen all forms of technology transfer and good business practices. Also, research and scientific institutions must become recognized by the all actors. On this way, the competitive, market-adjusted sector, will be built, and it will be the foundation for improving the quality of life of all citizens, especially residents in rural areas. This vision will be realized through the realization of the following strategic goals: development of agriculture and related sectors by raising technical-technological level, more efficiently use of available resources, and appreciation of requires of modern markets. Also, by providing the conditions for a more stable income within the agricultural sector and improving the quality of life in rural environments. Sustainable management of natural resources and adaptation of agriculture to climate change is one more strategic goal, and adjustment of the institutional and legislative framework and FBH agricultural policy, with the EU CAP, acknowledging the level of development of the FBH agricultural sector.26 26 More about agricultural sector in FBH and its development strategy in Mid-term Strategy of Agricultural Sector Development in the Federation of Bosnia and Herzegovina for the period 2015 – 2019, Federation of Bosnia and Herzegovina, Federal Ministry of Agriculture, Water supply and Forestry, Sarajevo, 2015. 123 �Therefore, in Federation of Bosnia and Herzegovina, this new strategic document emphasizes the need to adopt new technologies and innovation in the agricultural sector, more effective utilization of available resources and the improvement of quality of life in rural areas. Regarding European integration, this document clearly states the need to harmonize the institutional and legal framework of the FBH with the EU legislation and the CAP acquis. In the context of institution-building, this means putting in place a modern system of information, administrative management and monitoring of agricultural policies. The new strategic document outlines the need for a gradual alignment of the policy instruments of the FBH agricultural policy with those implemented within the EU CAP. Furthermore, the new strategic document envisages, for the first time, the application of the principles and elements of modern public policymaking in designing, adopting and implementing the agricultural policy, including detailed baseline analysis, definition of objectives, establishment of policy programming, definition of a clear financial framework (i.e. budgetary transfers based on the principles of consistency, transparency and traceability) and a system of monitoring and evaluation. The new strategy envisages the implementation of 37 measures distributed within the three pillars of the agricultural policy: 10 measures in the first pillar related to market intervention and direct producer support, 17 measures in the second pillar related to sector restructuring and rural development and 10 measures in the third pillar related to general services support. The most important changes introduced by the new strategy cover direct producer support (i.e. direct payments). The reduction of several pre-existing direct payments coupled to production (e.g. output subsidies) is proposed, while it is proposed that area and animal payments are increased. The equalization of area payments for most crops is envisaged as the first step towards the decoupling of direct payments, in line with the EU CAP. Conclusion This paper analyses the development of Common agricultural policy in European Union and also agricultural policy in Bosnia and Herzegovina in 2010-2015. The EU recognizes the importance of rural areas and places great emphasis on rural development, and in this direction BH should also go and exploit potential in its full capacity. For now, the results presented in this paper reveal that agricultural policy in Bosnia and Herzegovina shows a high level of instability and is inconsistent with the medium-term policy objectives outlined. This unstable policy development generates an uncertain policy environment for the agents operating in the agricultural sector, which may have adverse implications for its future growth and development. Bosnia and Herzegovina implements a very heterogeneous agricultural policy across its three administrative units (FBH, RS and BD) because they have the authority to design, adopt and implement their own policy measures. The agricultural policies differ between the units in terms of type of measures implemented and sectors supported. The priority on a state level is organisation of a Ministry for agriculture on a state level, and then to improve other aspects of institutional and legal frame work of agriculture and rural development in Bosnia and Herzegovina. Both the FBH and the RS have adopted new strategic frameworks for future 124 �actions in the agricultural sector and rural areas, but the first years of the implementation of the adopted strategic documents have shown that the governing political structures in the FBH and the RS have not shown sufficient determination and readiness for major reforms to put into practice the priorities outlined in the strategic documents. So, when it comes to implementation, the agricultural policy reforms have failed to put into practice the proposals that were adopted in the strategic documents, at least for now. Bosnia and Herzegovina needs a dynamic reconstruction and modernization in agricultural sector and rural development, with an effective approach to EU integration and the CAP by harmonizing legislation. With adequate policies and the dynamic access to the agricultural sector, the agriculture can become the cornerstone for the development of all other activities such as rural development, rural tourism, ecotourism, connecting producers and processors, etc., and the entire economy also, and not to be a stumbling rock on its own development path. Literature: Agriculture and the CAP, Report, European Commission, EU, 2016., Bajramović, S., Vaško, Ž., Ognjenović, D., Butković, J, Bosnia and Herzegovina: agricultural policy development and assessment, Monitoring of agricultural policy developments in the Western Balkan countries, Publications Office of the European Union, Luxembourg, 2017., Consultation on modernising and simplifying the common agricultural policy, European Commission, Directorate-General for Agriculture and Rural Development, https://ec.europa.eu/agriculture/consultations/cap-modernising/2017_en, 10.06.2017. Kesner-Škreb, M., Common Agricultural Policy of the European Union, Financial theory and practice, 2008., 32 (4), Mid-term Strategy of Agricultural Sector Development in the Federation of Bosnia and Herzegovina for the period 2015 – 2019, Federation of Bosnia and Herzegovina, Federal Ministry of Agriculture, Water supply and Forestry, Sarajevo, 2015., Monitoring of agricultural policy developments in the Western Balkans countries, Group of authors, Luxembourg: Publications Office of the European Union, Luxembourg, 2017., Overview of CAP Reform 2014-2020, European Commission, 2013., Swinnen, J., The Political Economy of the 2014-2020 Common Agricultural Policy An Imperfect Storm, Centre for European Policy Studies, Brussels, 2015., The Common Agricultural Policy after 2013, House of Commons, Environment, Food and Rural Affairs Commitee, Fifth Report of the Sesion 2010-11, Volume 1, 2011., The Stabilization and Association Agreement between the European Communities and their Member States, of the one part, and Bosnia and Herzegovina, on the other part, Treaty of Rome, 25 March 1957, Agriculture, Volk, T., Erjavec, E, Mortesen, K., Agricultural policy and European integration in Southeastern Europe, Food and Agriculture Organization of the United Nations, Budapest, 2015. 125 � 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. 3659 Title A name given to the resource Impact of Agricultural Policies on Rural Development and Increase of Competitiveness of Agriculture of Bosnia and Herzegovina with a Special Emphasis on Achievement of Reform Goals (doi: 10.14706/icesos1722) Author Author KAVAZ HUKIĆ, Sanja Abstract A summary of the resource. Abstarct: For the Balkan countries, the agricultural sector and rural development are of great importance, primarily because they are ensuring food security of the population, and then, also, because they have effects on employment, the creation of total gross value as well as on the foreign trade. Having in mind open processes of joining the European Union in these countries, with a special focus on Bosnia and Herzegovina, the implementation of the EU policies and practices will represent both a challenge and an opportunity for the development of the state and the improvement of its position in the single European market. Bosnia and Herzegovina is a country with a distinct rural character, with over 50% of the rural population, where every third household acquires some kind of income from agriculture, and which is currently facing a number of problems when rural development is concerned (from insufficient investments, uncompetitive production, inefficient administration, abandonment of rural areas, failure to use EU funds, etc.). Nevertheless, with adequate policies and dynamic approach to the agricultural sector, and strategy for increasing competitiveness and attracting investment, the potential of Bosnia and Herzegovina's agriculture could be used and exploited, and the country could go towards progress and success. Therefore, this paper explores and analyzes the European Union's common policies, as well as the ways and means of their implementation in the Balkan region countries, especially in Bosnia and Herzegovina. Then, the paper points the importance and necessity of investing in rural development (infrastructure, mechanization, marketing, agro-environmental measures, etc.), and provides guidelines on how to modernize and reconstruct the agricultural sector, in order to increase the country's competitiveness and reduce the long-standing trade deficit in this area, and, at last, how to effectively approach to the European Union with harmonization of legislation and the use of development plan. The agricultural sector and the overall modernization of rural communities, with a clear vision, and with increasing employment, economic growth and competitiveness, can become the cornerstone of the development of Bosnia and Herzegovina and a key factor of its inclusion in the European and the world trends. Keywords: EU common agricultural policy, agriculture, rural development, competitiveness. JEL Classification: Q17, Q18, O13, 018 Date A point or period of time associated with an event in the lifecycle of the resource 2017 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/f8472b8b7b1881fbcbaea21b956f811e.pdf aae69327bc5a08977748904d45d4e79d PDF Text Text     Journal of Economic and Social Studies Financial Monitoring of Medication Consumption in Bosnia and Herzegovina Emira Kozarević, PhD Faculty of Economics, University of Tuzla Bosnia and Herzegovina emira.kozarevic@untz.ba Sabina Đonlagić Alibegović, PhD Faculty of Economics, University of Tuzla Bosnia and Herzegovina sabina.djonlagic@untz.ba   Tatjana Krdžalić, MA Institute for Public Health of Tuzla Canton Bosnia and Herzegovina tatjana.krdzalic@zjztk.ba   Abstract: Healthcare spending is nowadays one of the key issues of healthcare system practice as its share in GDP has constantly increased during past decades, which is now above 10% of GDP in developed countries. However, very often it is more of an issue related to the current political and socio-economic situation in a country rather than the one managed by experts. Although one might expect that the increase in healthcare spending contributes to better health of the population, relevant indicators show that high healthcare spending in Bosnia and Herzegovina (BiH) does not result in better health of its population. Due to this reason, special attention needs to be paid to the economic analysis of healthcare spending. Irrational use of medications is just one of many problems associated with an inefficient health system, but one that heavily impacts on the health economics. In situations where it may not be easy to change the existing financing models, we should explore how to be more effective in spending within the existing structure. Better control of medication consumption could be one of the actions that helps improve the effectiveness of the available budget. Therefore, the general aim of the paper is to determine the effect that financial monitoring of medication consumption has on the control of increase in healthcare spending, which in turn might help establishing a financially sustainable healthcare system. Bearing in mind that irrational usage of medications influences the access to healthcare services, destabilizes country’s budget, and endangers the margin of social sustainability (endurance), the constant financial monitoring of medication consumption is important as it can help us recognize those segments where consumption deviates from standard and where prevention activities are needed. All this can result in the limitation of further increase in medication consumption.   Volume 7 | Issue 1 | Keywords:  healthcare spending, healthcare spending control, (irrational) medication consumption, financial monitoring JEL Classification: I-11, I-15, I-18 Article History Submitted:  22.1.2018 Resubmitted: 12.2.2018 Accepted: 26.2.2018 http://dx.doi.org/10.14706/JE COSS17718 5 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   Introduction Health is an economic potential, a segment of human capital that increases productivity and reduces treatment costs. However, in no way is health a free resource and it cannot be maintained without incurring costs. High quality healthcare protection is the most cost effective investment into human capital. The need for healthcare is unpredictable, sudden and unexpected, and it is in society’s interest to recognize the real need for healthcare services. The characteristic of healthcare spending is that the consumer of healthcare goods, as a rule, is incapable of assessing their value. Unlike other goods, healthcare protection is specific, primarily due to the basic economic laws acting in the field of healthcare. The laws of demand and supply of healthcare services function in a specific market that includes several mutually related markets such as the market for various types of insurance (compulsory, additional) or different levels of treatment (outpatient clinics, polyclinics, hospitals), labor market for healthcare workers, market for medications, medical equipment, and so on. On the demand side, there are indicators of population health while on the supply side there are indicators of healthcare resources. When establishing the efficiency of healthcare market aimed at providing efficient healthcare protection for every citizen, the key role is given to the economic effects of deciding on the rational usage of ever limited financial resources. From the macroeconomic point of view, the healthcare system creates a significant burden on any economy – rich or poor, so limiting the increase in healthcare spending is very important for everyone. Growing costs, irrational behavior, and dissatisfaction in the healthcare system are self-evident, with the main reasons for increased spending being: increased share of the elderly persons in the entire population, increased number of patients with chronic diseases, introduction of new medications (which, as a rule, are more expensive), influence of the pharmaceutical industry, growing pressure exerted by patients, and easy access to medications. Establishing the financial sustainability of healthcare system is by no means an easy task, which is why the healthcare system needs to be perceived from the economic perspective (the so called health economics). On the one side, some authors believe that the financing of healthcare needs to be changed so that the system becomes sustainable in the long run, while others think that the reduction of healthcare costs is needed. When it comes to the efficient functioning of the healthcare system, the economic analysis is given prominence over other types of analysis specific for the market of healthcare services. 6 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     Health economics always starts with the assumption that healthcare services can be analyzed as any other market activity. However, the process often ends in the explanation why the market activity fails to lead to the efficient resource allocation in healthcare. Economic analyses of healthcare spending in BiH are poorly represented partly due to the lack of full scale data and their transparency and partly due to a relative lack of economic experts’ interest in the research on health economics. The increase of financial resources in the healthcare sector cannot be expected and the room for savings which will not negatively affect the quality of healthcare protection needs to be identified. The starting point of discussion in BiH is the aspiration that the access to healthcare is universal, just, equal for all, and basically “free”. However, healthcare costs are constantly on the increase and in the last ten years they have been growing at an unsustainable rate. For example, in 2003, the total per capita healthcare spending in BiH Federation was BAM 345 while the amount per an insured person was BAM 417.1 According to the latest available data, in 2012 the total per capita healthcare spending reached the level of BAM 714 while the amount per an insured person was BAM 825 (Health Insurance and Reinsurance Fund of BiH Federation, 2013). The average spending per an insured person in Republic of Srpska in 2012 was BAM 714 (Health Insurance Fund of Republika Srpska, 2013). The problem of monitoring healthcare spending in BiH is rather serious as there is no centralized system of monitoring spending on the state level. Monitoring is additionally complicated by the current administrative organization of the healthcare system. The data on healthcare are scarce and they are not systematized and unified. This is supported by the fact that BiH was first included in the European Health Consumer Index in 2014 and was positioned last due to an enormous lack of data on its healthcare protection, receiving 420 out of 1,000 points, less than Albania, Serbia, and Montenegro (Björnberg, 2015). Medications are one of important items in the total healthcare spending. With limited financial resources, increasing medication consumption directly influences the access to healthcare services, destabilizes country’s budget, and endangers the margin of social sustainability (endurance). Medication consumption in world’s total healthcare spending is placed third, with 17%. This paper brings the analysis of potential control of medication consumption and the financial aspect of medication consumption monitoring aimed at the reduction of healthcare spending. The main research hypothesis is postulated as follows: “Financial monitoring of medication consumption can contribute to the                                                                                                                         1 The International Banking Code for BiH currency is BAM. Volume 7 | Issue 1 | 7 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   rationalization of medication consumption, reduction of healthcare spending, and the efficiency of the entire healthcare system.” Although the paper focuses on the healthcare system in BiH, some results and recommendations can be generalized and are potentially universal, taking into consideration the recent global socio-economic events (increased share of the elderly persons in the entire population, increased number of patients with chronic diseases, increased public expenditure following the crisis in 2008, slow economic growth, and so on). Review of Previous Research on Health-Related Spending Medications are third most common cause of mortality in the USA and Europe, following heart diseases and cancer. Patients trust their physicians and physicians trust the pharmaceutical industry although these relations are not free from difficulties (medication testing is sometimes inadequately conducted, for example). It is expected that medication allocations are to increase in the comming years. The USA data indicate that direct costs of cardiovascular diseases would triple between 2010 and 2030, from USD 273 billion to 818 billion, while indirect costs would increase in the same period by 61%, from USD 172 billion to 276 billion (Vitezić, 2013, p. 246-251). The annual number of deaths in the European Union (EU) resulting from patients’ not taking medication correctly or not cooperating with their physicians was 194,500, which costs the EU the amount of EUR 125 billion a year (Pharmaceutical Group of the European Union, 2012). Decreased spending in healthcare requires the checks and controls of executed interventions and diagnostic and therapeutic services as well as the checks of whether they are really needed. That is why a unified system of expense list needs to be made that would include five important categories: hospitals, prescription-only medicines, diagnostic procedures, treatment costs, and home treatment costs (Ott et al., 2000). Polić-Vižintin, Tripković, Štrban-Štok, Štimac, and Čulig (2006) analyzed healthcare indicators and non-hospital medication consumption by using the data gathered from the vital statistics and healthcare-statistics research. They concluded that in order to rationalize medication consumption, treatment should be focused on primary healthcare protection, which is why constant education of family doctors needs to be made regarding proper therapy based on professional guidelines. As specified by the EU/WHO Working Group (2008), the primary healthcare protection, as a rule, should be able to solve at least 80% of all health problems. Gajski (2009), for example, stated that most medications prescribed for the treatment of cardiovascular diseases in Croatia are actually unnecessary and serve for the medicalization of the society and the profit of pharmaceutical company with 8 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     pharmaceutical therapy costs in Croatia amounting to some HRK 7 billion, which is a waste of money. Vlahović-Palčevski (2000) stated that the analysis of medication consumption gives us the data on the rationality of their use, indicates the segments where efforts should be made so as to improve the current situation, and tells us about therapy tradition, irrationalities, and abuse. Monitoring and analyzing medication consumption was the main reason for the development of the so called ATC (Anatomical, Therapeutic, and Chemical)/DDD (Defined Daily Dose) methodology. It was proved useful for the comparison of medication consumption at a national and international level as well as for long-term evaluation of consumption. A study conducted some 20 years ago by the Drug Utilization Research Group (DURG) showed the lack of universal methodology of medication consumption monitoring, which preceded the establishment of a unique Anatomical Therapeutic Chemical (ATC) classification system. This resulted in the introduction of defined daily dose as a statistical unit for medication consumption monitoring instead of packages, prescriptions, and financial units, which allowed for a detailed analysis of medication consumption (Čulig, 2004). Polypragmasy (i.e. parallel application of three or more medications) is recognized as an increasingly serious problem in the existing systems of healthcare protection. It can increase the complexity of healthcare protection and its costs. Apart from the elderly persons, some groups of patients have a higher risk of polypragmasy, such as psychiatric patients and patients who constantly take five or more types of medications, patients treated by several physicians, recently hospitalized patients, patients with concurrent comorbidity, patients with lower education, visually impaired patients or those with decreased physical activity and ability in daily activities. Polypragmasy is indicated as one of the main problems in modern world pharmacotherapy and its solutions require the education of both physicians and patients.2 Regular analysis of prescription issuance practice proved to be efficient in reducing unnecessary medications. A study in which the patients brought all the medications they use, with their physicians being given directions on polypragmasy, resulted in 42% of the patients being under the risk of polypragmasy, for 20% of them the medication use was suspended and for 30% of them the medication dose was changed. In addition, pharmacists sent the list of medications to the physicians whose patients use potentially harmful medications, which reduced the issuance of prescriptions by 12.5%. Furthermore, consulting a clinical pharmacologist reduced                                                                                                                         2 http://www.genera.hr/hr/36/propisivanje-lijekova/#.VbN3Z8vsZdg Volume 7 | Issue 1 | 9 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   polypragmasy and the number of medications from 7.9 to 4.1/1000 cases (Kašuba Lazić, 2015). Monitoring and control of medication consumption is also important from the aspect of environment protection as medication residues are often found in the environment in small concentrations. During the procedure of authorization of a medication, most regulatory agencies specify the assessment of potential risk that a medication can make on the environment (Čogelja Čajo et al., 2010). The amount pharmaceutical companies spend on physicians is still not precisely known. However, according to the financial reports of nine leading US medication manufacturers, this amount is estimated to be dozens of billions of US dollars a year. This actually means that the pharmaceutical industry strictly regulates the ways their medications are prescribed and this includes not only physicians but also university professors that affect research results, medical practices, and even disease definition (Angell, 2009). The research conducted by Consumers International, the international organization for consumer protection, showed that pharmaceutical companies spend twice as much on persuading physicians to prescribe their medications than on researching new medications (Republic of Serbia AntiCorruption Agency, 2012). In 2011, with the assistance of the World Bank (WB), aimed at increasing transparent prices of medications in BiH, a survey was made into the retail sale prices at pharmacies for 36 frequently used medications. The selected medications included essential medications used for frequent diseases (cardiovascular diseases, nerve diseases, diabetes, and respiratory diseases). The data were collected from 82 pharmacies randomly selected in eight cantons/regions in the entire BiH. It became evident that brand name medications are not common in BiH as they were registered in only 27% of the cases, which is why the data refer primarily to generic medications (WB, 2012). Good practice in creating and managing sustainable healthcare system is evidenced by Singapore with excellent results in high quality of its healthcare system and in control of healthcare protection costs. The per capita cost of healthcare protection in that country or the cost of healthcare protection presented as the GDP percentage is lower than in all high income countries in the world. There are three crucial reasons for achieving available excellence − first of all, long-term political unity, then the ability to recognize and establish national priorities, and finally constant aspiration for collective welfare and social harmony in the country (Haseltine, 2013). 10 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     The importance of reliable data and information is confirmed by Benković (2009), who aimed at checking whether the results of the research conducted by the Croatian Health Interview Survey (CHIS) were used in planning the resources at the level of country’s public health institutes. The usage of reliable data and information that serve as the basis for making fiscal and strategic decisions is the main support in healthcare management. It is also the key to strategic management that uses necessary information needed for setting the focus, selecting priorities, and establishing good “macro policy at the micro level”. The results showed that only 32% of the subjects used the results of the CHIS in their plans, which led to the conclusion that such a percentage would make efficient local level planning and planned budget savings difficult to achieve. Recognizing the importance of using data such as those collected by the CHIS is an extremely important factor in local and national healthcare planning and the factor that enables significant budget savings in healthcare. Ott, Kesner-Škreb, Bajo, Bejaković, and Bubaš (2000) underlined that even though healthcare and health insurance reform is not easy to implement, potential changes aimed at the improvement of health and healthcare are multiple while costs would be significantly lower than potential savings. The reform of the existing health insurance system directed towards higher reliance on private insurance and strengthening market elements is required for the long-term sustainability of the system. Consequently, it might reduce the excessive role of the state, limit its paternal behavior, and create the conditions for income increase. Theoretical Framework of Medication Consumption Monitoring and its Financial Aspect, with the Focus on Bosnia and Herzegovina Healthcare is one of the most complex systems in every country and it is a sub system of the entire socio-economic system. Its organization functionally consists of (Salihbašić, 2009): • Primary healthcare that includes outpatient clinics; • Polyclinics, general and specialized hospitals, specialized institutes, medical centers; • Other institutions including public health institutes, emergency rescue teams, and pharmacies. The main problem in this field is financing. Several models of financing are used in the world, the most known being (Salihbašić, 2009): • The Bismarck model, which functions on the principle of solidarity and reciprocity, as is the case with BiH; Volume 7 | Issue 1 | 11 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   • The Beveridge model by which healthcare is financed through taxes paid by citizens (for example, Great Britain, Norway, Sweden, Ireland); • The Semaškov model emerged in the Soviet Union and was provided for the entire population. Insurance is financed from the central state budget whereby the government is responsible for making decision on the rights and obligations of the insured persons. As a rule, this means that healthcare protection is free although there is the problem of users having excessive expectations without additional payments. Nowadays, this model is present is some Asian countries (China, Mongolia, North Korea, Vietnam) and in Cuba; • Private financing that includes the basic insurance with the payment of additional insurance according to individual needs and purchasing power. The cost assocated with the healthcare sector is significant from the macroeconomic point of view, so the limitation of increase in healthcare spending is particularly important as the increasing healthcare spending is a burden to both developing and developed countries. Growing costs, irrational behaviour, and dissatisfaction within the healthcare system are self-evident and the main reasons for increased spending are: increased share of the elderly persons in the entire population, increased number of patients with chronic diseases, introduction of new medications (which, as a rule, are more expensive), influence of the pharmaceutical industry, growing pressure exerted by patients and easy access to medications. It is important to note that, while medication consumption is one of the main generators of healthcare spending, it is also the item that could be more easily controlled and rationalized. The increase in pharmaceutical costs raises the issue of possibile need for financing healthcare systems in the future. Every country should be be interested in protecting itself against uncontrolled increase of medication spending, aiming to reduce it and make it more rational. Providing the population with high quality, safe, and efficient medications that would be rationally used is only one of the basic goals of every healthcare system. Hence, one of the measures for rational spending on medications is a systematic (national) policy of medication consumption monitoring as well as creation of a unique information system that would integrate all the data relevant for medication consumption, from both hospitals and non-hospital institutions, including the data on individual medication consumption. However, BiH has a fragmented internal organization with centralized Republic of Srpska (RS), decentralized BiH Federation (F BiH), and Brčko District, which further complicates successful conduct of fiscal policy. This leads to an unsatisfactory level of efficiency in improving country’s economic growth. As reported by the WB 12 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     (2014), the potentials of BiH economy for mid-term growth are limited by poor business environment that still requires essential reforms and prevents investment and growth, with the fiscal policy still focused on the distribution of revenue rather than growth. Healthcare and health insurance system in F BiH is, pursuant to the Constitution and legal regulations, based on the principles of shared competence between the federal and cantonal authorities. Pursuant to the provisions of Law on Healthcare3, Law on Health Insurance 4 , and other acts based on these laws, the federal government is in charge of creating the policy and adopting laws while the cantonal government implements laws and establishes and adapts cantonal healthcare policy with the policy at the level of F BiH. Cantonal public health institutes function with difficulties, healthcare spending increases while the structure of the insured persons is unfavorable. Similar to other South East European countries, BiH has the model of social insurance with employees and employers paying contributions to the public health funds which finance the majority of healthcare services. That is why healthcare financing heavily relies on salary taxation and the capacities of tax authorities to collect payments5. The existing model of healthcare financing in BiH is based on the past times as the remnants of the Bismarck model. Healthcare insurance contributions were never a part of the state budget but were directly paid to health insurance funds. The contributions for compulsory health insurance are based on the taxation of the amounts registered in the pay sheet rather than by health insurance premium or general taxation. The healthcare sector in BiH does not function on economic prices but on the solidarity system that implies that the rich show their solidarity with the poor, the young with the old, the healthy with the sick, and individuals with the family. This is what makes the total income of the Health Insurance and Reinsurance Funds which stand for the main source of funding for healthcare protection in both BiH entities. What is evident in the healthcare system is a rather non-transparent flow of resources between different non-budget funds that are supposed to pay contributions on behalf of their users (pensioners, registered unemployed persons) and the limited government contributions on behalf of some users exempt from paying contributions. Consequently, the state invests, or is supposed to invest, extreme efforts to provide as efficient healthcare protection as possible for its users with the                                                                                                                         3 Official Gazette of BiH Federation No. 46/10 Official Gazette of BiH Federation No. 30/97, 07/02, and 70/08 5 http://www.fmoh.gov.ba/index.php/projekt-jacanja-zdravstvenog-sektora 4 Volume 7 | Issue 1 | 13 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   available resources. Even though it sounds easy, it is very difficult to implement this in practice. Looking at the data on some financial indicators in BiH, one can notice a very high share of healthcare spending in GDP when observed in the context of the economic development of the state. Healthcare-related public spending is constantly on the increase; in 2002 it was 62.5% while in 2012 it was 71.1% of the total healthcare spending. On the other hand, social health insurance has a downward trend while private health insurance, present since 2009, has a very low percentage of 0.8% to 1% of the total health insurance. The very fact that some ten years ago, per capita spending was USD 122 and that the number increased to USD 447 in 2012 indicates that healthcare system becomes more expensive year after year. From the traditional aspect of efficiency, safety, and quality as well as from the aspect of financial cost effectiveness, medication consumption monitoring in developed countries started 40 years ago, mainly due to the fact that the funds for these purposes are always limited and the needs are increasingly higher. A constant lack in financial resources is registered in all spheres of life and in the healthcare protection system in particular. New medications, development of medical technology, new methods of treatment, constant education and training of healthcare workers, introduction of information systems, and so on, all require additional resources that are almost always limited. The country is given a serious task – to provide additional resources when the current ones are insufficient even for the present costs of healthcare protection. In addition, increased number of patients suffering from various diseases of modern times (such as cardiovascular diseases, cancer, diabetes) results in increased need for medications. Medication consumption has been rapidly growing for years, which is a problem threatening sustainable and stable financing of the healthcare system. A systemic approach to this problem is not evident in practice since mentioning finances in the context of health and treatment is considered inappropriate and unethical. Besides, the issue of pharmacotherapy has escalated recently, when it reached the level the society cannot bear. Moreover, medication manufacturers that are highly influential in the medical science, education, politics along with the media have no interest in putting this topic in the discussion focus (Gajski, 2009). Prescribed medications cover 10% to 20% of the total healthcare costs and are the fastest growing segment of the total spending, which raises concerns over medication consumption. In order to resolve this issue, we must first discuss the potential causes of the increase in medication consumption. 14 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     One of the reasons of increased medication consumption is definitely medication abuse which can cause various side effects, resulting in the need for additional treatment and reflecting on the increase in healthcare spending. According to the World Health Organization (WHO, 2008), in some countries the costs of medication side effects, including hospitalization, surgeries, and lost productivity, are higher than medication costs. Also, the studies conducted on the territory of the EU showed that some 200,000 people die every year due to nonadherence (not taking the prescribed therapy or taking it inappropriately). Annual nonadherence costs in the EU amount to EUR 125 billion and they include the treatment of chronic disease complications as a consequence of not taking medications. Low adherence for the patients suffering from hypertension correlates to the increased risk of vascular diseases, hospitalization, and increased costs of healthcare protection, while a higher level of adherence for the patients suffering from hypertension results in better health of individuals and net economic profit (Dragomir, 2010). Adherence reduces the total annual healthcare spending for the patients with chronic vascular diseases by the lower number of hospital days and lower hospital costs. The effects of adherence are more evident for the patients over the age of 65 (Roebuck et al., 2011). Very often, influenced by marketing activities of the pharmaceutical industry, patients purchase medications on their own and increasingly use alternative medicine. Consequently, medication becomes a merchandise article and medication prescription becomes a routine activity made in silence with very little written or oral information provided (Stević et al., 2011). Besides, inappropriate package of certain medications can result in increased financial spending, mainly due to the package content which does not correlate with the length of treatment. This could be easily overcome if physicians prescribed the exact quantity needed for therapy treatment and if pharmacies would supply medications per piece. One of the specific features of BiH medication market is related to the conditions under which pharmacies function. The legal regulations, among other things, cover pharmacy margins – maximum up to 8% for wholesale and up to 25% in retail sale6. Very often, retail sale margins go above the highest limit and are as much as 30%. It seems that this is still not enough for pharmacists as they mainly dealt with this issue at the meeting held at the beginning of 2016. One of the suggestions was that the margin increases to the record high 40%, which is not in accordance to the legal regulations.                                                                                                                         6 Rulebook on Medication Wholesale and Retail Sale Margin, Official Gazette of BiH Federation No. 40/02, 50/02, 15/06, and 9/08 Volume 7 | Issue 1 | 15 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   The Rulebook on Price Monitoring, Calculating Medication Prices and Reporting on Medication Prices in BiH 7 would be an excellent instrument for monitoring medications in BiH, which seems to be inoperative in practice. As recommended by the WB, the new rulebook on regulating medication prices is under preparation, which, if strictly followed, could lead to significant savings. Medications are cheaper in RS than in F BiH, mainly due to the centralized system of medication procurement, which allows for lower prices. Although the F BiH Government is under pressure to reduce medication costs, pharmacists are of the opinion that the government should “cut the costs” in other segments, such as waiving the valueadded tax (VAT) on medications instead of reducing pharmacy margins. It was stated that some reductions would amount from 25% to 30%, which, as claimed by the pharmaceutical chambers, pharmacies would not be able to bear. Major dissatisfaction was expressed as the representatives of professional associations were not given the opportunity to comment the proposed wording of the rulebook. They clearly rejected to support the proposal that Serbia be the reference country for establishing the prices of pharmaceutical services as the prices in that country are specified through administrative procedures. The representatives of professional pharmaceutical associations agree that the medication market needs to be regulated but not by replicating the experiences of other countries without taking into consideration the specific characteristics of the medication market in BiH.8 Many European countries introduced a series of measures to combat the growth of pharmaceutical spending. Some of these measures include reduction of prices of pharmaceutical products, which can be achieved through negotiations with pharmaceutical manufacturers, reduction of pharmaceutical margins, introduction of quotation price, application of obligatory discount, reduction of VAT on pharmaceutical products, centralized public procurement of pharmaceutical products, promotion of usage of generic medications, increase of obligatory contribution for households, and so on. For example, as of 2010 Spain has introduced a general discount applicable to all the medications prescribed, after which it introduced the mandate for the reduction of generic medication prices, which is certainly one of the factors that explains the increase in the consumption of generic medications in that country. In Germany, the obligatory discounts for manufacturers were raised in 2011 and the prices were frozen until 2013. As of 2011, pharmaceutical companies are obliged to negotiate with health insurance                                                                                                                         7 Official Gazette of BiH No. 82/11 The minutes of the meeting of the presidents of cantonal pharmaceutical chambers, the Pharmaceutical Association in BiH Federation, and general managers of larger pharmaceutical healthcare institutions in BiH Federation. Retrieved from http://www.farmaceutisarajevo.ba/index.php/25-obavijesti/89-sastanak-farmaceuta-usarajevu dan posjete 8 16 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     funds about innovative medications, which ended the former free pricing regime. The reduction of consumption in Italy can be attributed to a rather reduced budget for pharmaceutical products per Italian regions as well as to the reduced pharmaceutical wholesale margins and lower prices of generic medications based on quotation prices. The introduction of new obligatory public offer procedures for medication procurement in Hungary resulted in reduced costs, while in Denmark, as in many other countries, the negative trend can be explained partly due to the expiration of patents for large scale protected medications and very expensive medications (OECD & the European Commission, 2014). Methodology of the Empirical Research: The Case of Tuzla Canton, Bosnia and Herzegovina The sources used for this paper include the publications and statistical data of the relevant international and domestic organizations (WHO, WB, EUROSTAT, OECD, Agency for Medicinal Products and Medical Devices of BiH, Agency for Statistics of BiH, Health Insurance and Reinsurance Fund of F BiH, Health Insurance Fund of RS, Health Insurance Fund of Brčko District, Institute for Public Health of F BiH, Institute for Public Health of RS, and Health Insurance Fund of Tuzla Canton). Based on these sources, the paper presents selective and relevant macroeconomic and healthcare indicators for BiH as well as the basic indicators of healthcare financing and healthcare spending in BiH. More specifically, the focus is made on the elaboration of detailed parameters of medication related spending in the most populated BiH canton – Tuzla Canton – so as to obtain a clear view of medication consumption and its potentially influential factors. In order to achieve this, we opted for using the ten year period data (2004-2013), which allowed for the summary of the data and their comparison with the previous periods. Results and Discussion The medication market in BiH is worth over BAM 500 million, out of which 18% belongs to domestic medication manufacturers. The data on the leading medications in the total turnover cannot be regarded as relevant as it is known that medication consumption in BiH is not monitored by the standardized ATC/DDD methodology. Since medication prices vary and are rather different when compared to the neighboring countries, we do not have the appropriate data on the actual consumption of medications but rather the amount specified in the budget. Medication consumption in RS is monitored by the ATC/DDD methodology, which is not the case in F BiH. For example, “Pantoprazol” is the leading medication in the total turnover in BiH (some BAM 11 million) and its price in F BiH is Volume 7 | Issue 1 | 17 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   around BAM 15 while at the same time its price in the neighboring Serbia is BAM 3.5. The similar situation is with the frequently prescribed medications such as those for the treatment of cardiovascular diseases. The WB (2014) also pointed to the unbalanced prices of medications in BiH in comparison to the neighboring countries, which is particularly evident for the medications for frequent diseases (see Table 1). For example, the medications for cardiovascular diseases are up to 200% more expensive than in Croatia and even more than in Serbia. The main reasons for such situation are the inefficient system of pricing and purchasing medications, a non-transparent system of pricing for individual medications as well as rather fragmented system of medication procurement which results in different prices in cantons. As stated in the report, the Ministry of Health of F BiH is not able to force the cantons to follow the regulations when they create the positive lists of medications.   Table 1. Prices of Sampled Medications in FBiH and Serbia in 2016 Price in BAM Ordinal number Medication Manufacturer Package 1 Vesicare - symptomatic treatment of immediate incontinence Astelles Pharma Europe B.V Holland 2 Nimulid – painkiller 3 Letrox -thyroid hormone 4 5 6 7 8 9 10 Atoris -cholesterol lowering medicine Pantoprazol - gastric distress treatment Tritace - ACE inhibitor Lorista – hypertension treatment Roswera - cholesterol lowering medicine Truspot eye drops - ocular hypertension treatment Plavix – prevention of atherothrombotic events 9 10 Price higher by % Serbia F BiH 5 g (30 pills) 59 79 33.90 100 mg (20 pcs) 3.3 7 112.12 100 mg (100 pcs) 5.2 8.5 63.46 20 mg (30 pills) 8.5 14.6 71.76 40 mg (28 pcs) 3.6 15.5 330.56 5 mg (28 pills) 3.4 10.5 208.82 KRKA dd Slovenia 50 mg (28 pills) 5 11 120.00 KRKA dd Slovenia 40 mg (28 pills) 16 35 118,75 2% (5 ml) 12 20 66.67 75 mg (28 pills) 10.5 32.5 209.52 PANACEA BIOTEC LTD. India BERLIN-CHEMIE AG Germany KRKA dd Slovenia Hemofarm doo Banjaluka Sanofi-Aventis S.p.A. Italy Laboratories Merck Sharp&Dohme-France Sanofi Winthrop Industrie France                                                                                                                         9 Prices as indicated in the price list of the pharmacy “Zdravlje 2ˮ, Mali Zvornik, Serbia, May 15-June 15, 2016 Prices as indicated in the price list of the pharmacy “Ibn Sinaˮ, Tuzla, on June 16, 2016 10 18 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     11 Trimetakor –prevention of angina pectoris attacks Cipla Limited India 35 mg (60 pcs) 4.5 19.8 340.00 12 Byol – hypertension treatment Lek dd Slovenia 5 mg (30 pills) 3.5 13.2 277.14 Source: Authors' research based on selected BiH and Serbian pharmacies price lists There is no unique, state-level system of medication consumption monitoring (including commercial medications as well as those prescribed in the compulsory health insurance), except for the health spending data created by the national health accounts methodology. It is known that in 2013, the costs of medicinal devices for non-hospital patients (including medications) were BAM 711,221 million, of which public expenses amount to 43.2% and private expenses amount to 56.68%, which indicates rather high payments made by citizens for this type of medicinal devices. Analytically speaking, it is not known how much of this amount is spent on medications charged to health insurance, be they commercial or those given on prescription. Healthcare spending of F BiH makes 10.2% of GDP, out of which a quarter, somewhat over BAM 416 million, is used for medications. Over BAM 182 million was spent on medications charged to health insurance, which makes around 11% of the total healthcare spending. On average, a citizen of F BiH spends around BAM 178, while the insured person spends BAM 90 on prescribed medications, somewhat less than in RS where an insured person spends BAM 99. The average consumption of prescribed medications per cantons in F BiH in 2013 ranged from BAM 46 in Posavina Canton to BAM 167 in Sarajevo Canton, which implies huge cantonal differences in the rights of insured persons to prescribed medications. The average consumption of prescribed medications is a relative indicator for F BiH as it is highly influenced by a huge average consumption in Sarajevo and Tuzla Cantons. Although the prices of most prescribed medications show a downward trend, the increased consumption of prescribed medications is partly caused by the facts that cantonal medication lists are harmonized with the federal essential list of medications and that some cantons have more medications on their lists than on the one made by F BiH. Although Sarajevo Canton has by 78% higher consumption of medications per insured person than Tuzla Canton, when the total healthcare spending per cantons is observed, consumption of medications as a part of healthcare spending is the highest in Tuzla Canton as it is the most populated one. The leading cause of death in Tuzla Canton is essential hypertension (86/100,000 people). Stroke, cardiomyopathy, acute myocardial infarction, essential hypertension, cardiac arrest, and chronic heart ischemic disease make 71% of the ten leading causes of death in Tuzla Canton. In total, the population in 2013 suffered Volume 7 | Issue 1 | 19 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   from acute infections of upper respiratory tract, hypertension, acute bronchitis and bronchiolitis, diabetes, and spinal diseases. Diseases in the primary healthcare follow hospital treatment data in Tuzla Canton, where five leading diseases make for 56.79% of the total number of hospital days. Some of the most often prescribed medications by the ATC classification are those for cardiovascular diseases, digestive tract and metabolism, nervous system, and medications for the treatment of system infections and respiratory system, which indicates that cardiovascular diseases, metabolic disorders, and respiratory diseases are the major health problems in Tuzla Canton. In the last ten years, there has been an increase in the number of patients suffering from circulatory system diseases, diabetes, cancer, and mental disorders (Table 2). This increased number of patients causes higher healthcare costs and consequently increased medication consumption. The treatment of these diseases, except for cardiovascular diseases, requires the medications that belong to a group of more expensive medications, which is why the growth of financial spending does not come as a surprise. Table 2. Types of Diseases and Number of Patients in Tuzla Canton Year Number of patients in Tuzla Canton since Increase in % 2004 2013 Circulatory system diseases 47,705 75,234 57.7 Diabetes 7,488 16,952 126.4 Malignant neoplasms 1,947 4,194 115.4 Mental disorders 11,552 19,207 66.3 Source: Authors' research based on Institute for Public Health of Tuzla Canton database Generally speaking, medication consumption increases year after year, including both commercial as well as prescribed medications charged to health insurance. The increased costs of commercial medications point to the fact that citizens invest more of their personal resources to purchase medications, even though essential lists of medications for cantons have been expanded. Medication consumption monitoring in Tuzla Canton is administered by the Health Insurance Fund and it includes the data basis that includes the information on insured person (national ID number), medication, authorized physician, outpatient clinic where the prescription was issued, prescription, contracting pharmacy where medication was taken, date of prescription issuance and individual invoice for 20 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     medication/prescription issued by the number and date of invoice,11 but not the ATC/DDD methodology, as recommended by the WHO. In the period 2004-2013, health insurance expenditures constantly increased. By analogy, expenditures grew in all segments of healthcare protection, especially for the program of medications charged to the Health Insurance Fund of Tuzla Canton (HIF TC), as it is shown in Table 3. The total health insurance expenditures grew over the period of ten years by 85.55%, from BAM 244 to BAM 439 per insured person. Table 3. Review of Financial Expenditures for the Program of Medications in Compulsory Health Insurance in the Period 2004-2013 Year Total expenditures of HIF TC Number of prescriptions Expenditures for the Program of medications charged to the HIF TC Expenditures for the Program of other medications 12 Expenditures for the Program of prescribed medications (positive list+other medications) Total medication expenditures (including those paid by citizens) 2004 105,790,488 1,731,657 13,393,726 355,890 13,749,616 16,664,912 2005 112,669,255 1,852,401 15,095,216 309,165 15,404,381 18,924,608 2006 126,318,607 2,328,082 22,212,764 476,627 22,689,391 28,292,882 2007 148,000,043 2,389,473 24,524,035 789,677 25,313,712 31,712,336 2008 174,941,709 2,521,478 28,227,413 955,415 29,182,828 36,078,863 2009 178,171,804 2,226,677 32,888,217 1,339,930 34,228,146 35,663,778 2010 184,048,334 2,363,402 32,881,082 1,219,381 34,100,463 37,650,112 2011 192,099,520 2,556,079 37,137,026 633,554 37,770,580 44,845,199 2012 195,954,753 2,359,443 37,863,086 869,901 38,732,987 42,403,147 2013 196,299,420 2,377,010 38,768,888 1,109,749 39,878,637 40,150,397 Source: Authors’ research based on HIF TC database Over the ten year period observed, it is evident that the largest financial expenditures refer to the medications for cardiovascular diseases (35%), digestive tract and metabolism medications (26%), and medications affecting the nervous system (16%). As specified by the second level of the ATC classification, almost 84% of the                                                                                                                         11 Report on the Realization of Medication Program for the period January-June 2015 (p. 4), Health Insurance Fund of Tuzla Canton 12 Program of other medications includes: medications applied within or under the control of hospital, ampoule medications, special food for children, and priority medication program for pain relief therapy. Volume 7 | Issue 1 | 21 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   total expenditures on medications cover the ten leading groups of medications (Table 4), including those for the treatment of hypertension, diabetes, asthma, and so on. Table 4. Financial Costs for Medications in the 10 Leading Groups by ATC Classification in 2013 Year 2013 ATC Group of medications C09 A10 R03 N06 A02 Agents acting on the rennin-angiotensin system Drugs used in diabetes Drugs for obstructive airway diseases Psychoanaleptics Drugs for acid related disorders J01 C07 N05 C08 N03 Antibacterial drugs Beta blocking agents Psycholeptics Calcium channel blockers Antiepileptics Ten leading groups of medications in total Year total Amount in BAM % 8,766,544 7,328,994 3,407,972 3,051,384 2,209,906 22.61 18.90 8.79 7.87 5.70 2,178,272 2,091,092 1,326,363 1,118,142 1,053,397 32,532,066 38,768,888 5.62 5.39 3.42 2.88 2.72 83.91 100.00 Source: Authors' research based on HIF TC database The ten leading medications in terms of the resources charged to HIF TC make 42% of the total value and 27% of the total number of prescriptions. The most frequent medication prescribed by family doctors in Tuzla Canton is “Enalapril” for hypertension treatment with the average value per prescription of BAM 18 (Table 5). Out of ten leading medications in terms of financial expenditure, the most expensive is “Insulin glargin” (BAM 126 per prescription), which is prescribed for all types of diabetes. Within all the medications in the positive list, the medication with the highest financial value per prescription is “Ciklosporin”, prescribed to patients for the prevention of transplant rejection (BAM 283 per prescription on average). These facts depend primarily on medication prices which is why the real consumption cannot be specified.             22 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     Table 5. Ten Leading Medications in 2013 Per Their Total Value Charged to HIF TC Group C09 C10 R03 Medication Enalaprilhidrohlortiazid Lizinoprilhidrohlortiazid Salmeterol+flutika zon Disease BAM charged to HIF TC % Number of prescriptions % BAM /prescription Hypertension 2,574,774 6.64 140,153 5.90 18 Hypertension 2,076,581 5.36 112,219 4.72 19 1,842,592 4.75 21,715 0.91 85 1,822,633 4.70 18,286 0.77 100 1,402,931 3.62 60,428 2.54 23 1,382,965 3.57 11,011 0.46 126 Obstructive airway diseases All types of diabetes Gastric and duodenal ulcers All types of diabetes A10 Inzulin aspart A02 Pantoprazol A10 Inzulin glargin N06 Paroksetin Depression 1,346,954 3.47 46,563 1.96 29 C07 Karvedilol Hypertension 1,295,488 3.34 100,546 4.23 13 A10 Inzulin humani All types of diabetes 1,214,310 3.13 18,606 0.78 65 A10 Metformin Diabetes 1,176,392 3.03 119,034 5.01 10 16,135,618 41.62 648,561 27.28 25 38,768,888 100.00 2,377,010 100.00 16 Ten leading medications TOTAL Source: Authors' research based on HIF TC database In 2013, the medications for the cardiovascular system made somewhat less than a half (46.81%) of all the prescriptions issued during that year and they cost almost BAM 14 million. The increased consumption is further confirmed by the fact that the expenditures for these medications in 2013 were by BAM 400,000 higher that the expenditures for the entire program of medications charged to HIF TC ten years ago. Among the ten most often prescribed medications there are seven of them for the treatment of hypertension. Some 40% of all the prescriptions realized in 2013 were for these medications, which makes 34% of the total value charged to HIF TC. Medications for the treatment of diabetes are also an important segment of the financial consumption of medications charged to HIF TC. This is confirmed by the fact that the value of these medications grew on average by 15.5% in the period 2004-2013. These medications make 10% of the total amount charged to HIF TC and 19% of the total number of prescriptions realized in 2013. On average, every patient uses 15 prescriptions a year, with the average value of BAM 470 per patient, which is significantly higher than in 2004 when this amount was BAM 267 per patient. On the whole, medication consumption matches the morbidity data for the territory of Tuzla Canton. Volume 7 | Issue 1 | 23 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   Concluding Remarks Besides a number of problems evident in the inefficient healthcare system and public spending control, irrational use of medications that directly reflects on the financial burden of healthcare system economy is one of the burning issues if not the most important one. When health spending reaches a certain level, it is difficult to return it to the previous values as it increases year after year. It is difficult to reduce health spending but it can be constantly monitored and gradually controlled. The analysis of the data presented in the paper leads to the conclusion that the key problem of the healthcare sector in BiH is its sustainable financing which is primarily evident in the lack of appropriate system of collection of financial resources and in the lack of a transparent system for monitoring health spending. The core of the problem might be found in the way BiH is organized as a state and in its fragmentation to centralized RS, decentralized F BiH, and Brčko District, with various legal regulations that complicate successful conduct of fiscal policy. The situation is even more complicated by the fact that every entity has its own health insurance fund that operates with difficulties due to the finance-related problems but also due to accumulated arrears. In addition, serious problems of BiH healthcare system are certain inequalities in terms of exercising the right to healthcare. In the long term, the healthcare system organized in this way shall not survive; the collected resources are almost always limited while the demand for healthcare services surpasses the available funds. There are no new sources of financing and the collection of regular revenue is problematic, which means that the time has come to implement whole scale reforms aimed at improving the conditions under which the healthcare system functions. It is not yet known when these changes might happen but something can be done regardless of the fact that there is no political will at the moment for any changes. In the situations when we cannot change the existing financing models, we can start with a better control of the ways in which the collected resources are spent and medication consumption is precisely the segment of health spending which can be controlled and rationalized in a simple way. The rational consumption of medications means giving a patient the appropriate medication in the dosage defined by the clinical and individual needs so that the patient and the society as a whole pay the lowest possible price. It is not known to what extent these principles are followed in terms of dosage specification based on patient’s clinical and individual needs but the research results indicate that in BiH both the society and the patients pay medications at a too high price. Sometimes, the state itself contributes to over consumption of medications through its inactive and bad decisions in legislation and executive power. Instead of serving solely to limit the 24 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     unnecessary consumption, the laws regulating manufacture, trade and price of medications, their additions on health insurance lists, sales regime, patients’ participation in the price, and marketing often stimulate consumption. The pharmaceutical industry might be seen as one of the main drives of medication consumption and its constant growth. The role of pharmaceutical industry has changed over history − while in the past the cure was sought for as many diseases as possible, it seems as if today the goal is to find as many diseases as possible for the cure. Primary healthcare is also the segment where increased medication consumption emerges. Although the concept of primary healthcare is as a rule devised so as to unburden secondary healthcare, this seems not to be the case. Physicians in primary healthcare face crowd at their practices, work under pressure, and so on. Also, consulting clinical pharmacologists reduces over issuance of medication prescription, which consequently results in reduced expenditure for medications. Drug abuse seems to be one of the reasons for the increased medication consumption. Nowadays every home obviously has certain medications in stock, which are used at one’s own opinion. Increased financial expenditure on medication is affected by medication selling prices. While some of the surrounding countries have zero VAT rate on medications, with 17% VAT rate BiH is one of the most expensive countries in terms of medication prices. This is caused by a small market, many levies, rigid law on medicinal products and medical devices, and high pharmacy margins which directly affect patients’ budgets. The Rulebook on Price Monitoring, Calculating Medication Prices and Reporting on Medication Prices in BiH would be an excellent instrument of medication control in BiH. The VAT rate is not the only reason for expensive medications in the country as medication prices generally vary in the entities, which is probably caused by the decentralized system of medication procurement. However, some medications are as much as 400% more expensive than in the neighboring Serbia, where many BiH citizens buy medications, which confirms the allocation of financial resources outside BiH borders and the potential grey market (medication smuggling). What is equally important is the need for the establishment of the unique system of medication consumption monitoring on a state level based on the ATC/DDD methodology, with the aim of gaining the real insight into medication consumption so as to identify the causes and consequences of irrational consumption. Also, constant education in the field of health economics is needed as raising awareness of the budget limitations in the healthcare system is an extremely long and difficult process for both patients and healthcare workers. This can only be Volume 7 | Issue 1 | 25 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   done by appropriate education of the general public, healthcare workers, creators of healthcare policies, and so on. The presented theoretical elaboration of the problem as well as the empirical research conducted in BiH and Tuzla Canton, as the most populated BiH canton, indicate that the central research hypothesis is accepted. Future research interest might focus of monitoring medication consumption within hospital capacities, since it is not monitored analytically, in order to establish the real consumption and define potential causes of (non)increase in the use of medications charged to health insurance. Besides, it would be interesting to conduct a research into the usage of medications from the aspect of physician habits related to medication prescription, with a particular emphasis on the problems they face in their practice. One might find useful to investigate the perception and habits of the patients as those who consume medications, in order to detect important factors that influence increased demand for medications and establish the actual financial burden imposed on citizens by healthcare costs, and so on. References Agencija za borbu protiv korupcije Republike Srbije. (2012). Izveštaj o oblicima, uzrocima i rizicima korupcije u sistemu zdravstva. Retrieved from http://www.pravonazdravlje.com/documents/dokumenta/Izvestaj_o_zdravstvu.pdf Angell, M. (2009). Drug Companies & Doctors: A Story of Corruption. New York Review of Books. Retrieved from http://www.nybooks.com/articles/2009/01/15/drug-companies-doctorsa-story-ofcorruption/ Benković, V. (2009). Informiranost prestavnika lokalne vlasti o instrumentima kvalitetnog upravljanja javnim zdravstvom i socijalnom skrbi. Soc. ekol. Zagreb, 18(2), 157-168 Björnberg, A. (2015). Euro Health Consumer Index 2015. Report, Health Consumer Powerhouse. Retrieved from http://www.healthpowerhouse.com/files/EHCI_2015/EHCI_2015_report.pdf Čogelja Čajo, G., Osrečki, V. & Tomić, S. (2010). Uticaj lijekova na okoliš. Kem. Ind., 59(7-8), 351-354 Čulig, J. (2004). Racionalna farmakoterapija. Medix, 53, 126-128 26 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     Dragomir, A., Côté, R., Roy, L., Blais, L., Lalonde, L., Bérard, A. & Perreault, S. (2010). Impact of adherence to antihypertensive agents on clinical outcomes and hospitalization costs. Med Care, 48(5), 418-425. DOI: 10.1097/MLR.0b013e3181d567bd Farmaceutska grupacija Evropske unije. 2012. Europsko javno ljekarništvo: Strategija za optimizaciju zdravstvenih ishoda svakog pacijenta i povećanje vrijednosti zdravstvenih sustava diljem Europe. Retrieved from http://www.hljk.hr/Portals/0/BLUEPRINT-HR-final-10-07-2013.pdf Gajski, L. (2009). Lijekovi ili priča o obmani. Zagreb: Pergamena Haseltine, W. A. (2013). Affordable Excellence: The Singapore Healthcare Story. Washington, D. C: Brookings Institution Press Kašuba Lazić, Đ. (2015). Polifarmacija u obiteljskoj medicini – rastući problem u 21. Stoljeću. XXII Kongres obiteljske medicine „Metabolički sindrom polipragmazija“, zbornik radova, 28-46 OECD & the European Commission. 2014. Health at Glance: Europe 2014. OECD Publishing. DOI: 101787/health_glance_eur-2014-en Ott, K., Kesner-Škreb, M., Bajo, A., Bejaković, Z., & Bubaš, Z. (2000). Ekonomika javnog sektora: stanje, problemi i moguća rješenja. Newsletter: povremeno glasilo Instituta za javne financije, 4, 1-35 Polić-Vižintin, M., Tripković, I. Štrban-Štok, Z., Štimac, D., & Čulig, J. (2006). Analiza indikatora morbiditeta, mortaliteta i potrošnje lijekova u Zagrebu. Med Jad, 36(1-2), 31-40 Radna grupa projekta EU/WHO. 2008. Podrška reformi zdravstvene zaštite u Bosni i Hercegovini 2004-2006. Strategija primarne zdravstvene zaštite. Banja Luka: Ministarstvo zdravlja i socijalne zaštite Republike Srpske Roebuck, M. C., Liberman, J. N., Gemmill-Toyama, M., & Brennan, T. A. (2011). Medication adherence leads to lower health care use and costs despite increased drug spending. Health Affairs, 30(1), 91-99. DOI: 10.1377/hlthaff.2009.1087 Salihbašić, Š. (2009). Sistem finansiranja zdravstvene zaštite. Gračanica: Grin Volume 7 | Issue 1 | 27 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   Stević, E., Jatić, Z., Salihefendić, E., & Kadić, A. (2011). Dobra praksa propisivanja i izdavanja lijekova. Terapijski vodič, Sarajevo: Ministarstvo zdravstva Kantona Sarajevo. Retrieved from http://www.kzzosa.ba/files/pages/Dobra%20praksa%20propisivanja%20i%20izdava nja%20lijekova.pdf Vitezić, D. (2013). Važnost smjernica i farmakoekonomike u liječenju arterijske hipertenzije. Medix, 104/105, 246-251 Vlahović-Palčevski, V. (2000). Važnost praćenja potrošnje antimikrobnih lijekova. Medicus, 9(2), 155-159 World Bank (WB). (2012). Bosna i Hercegovina: Izazovi i preporuke za reforme. Pregled javnih rashoda i institucija. Izvještaj br. 66253-BA. Retrieved from http://www.skolegijum.ba/static/biblioteka/5460fd899193e_03Pregledjavnihrashoda ,izazoviipreporukezareforme.pdf World Bank (WB). (2014). Bosna i Hercegovina: Ocjena javnih rashoda i finansijske odgovornosti. Izvještaj br. 82646-BA. Retrieved from http://documents.worldbank.org/curated/en/909191468013742908/pdf/826460W P0P13180Report0Sept020140eng.pdf World Health Organization (WHO). 2008. Medicines: safety of medicines – adverse drug reactions. Fact sheet No. 293. Retrieved from: http://www.wiredhealthresources.net/resources/NA/WHOFS_MedicinesSafetyAdverseReactions.pdf   28 Journal of Economic and Social Studies � 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. 3725 Title A name given to the resource Financial Monitoring of Medication Consumption in Bosnia and Herzegovina Author Author KOZAREVIĆ, Emira Đonlagić Alibegović, Sabina Krdzalic, Tatjana Abstract A summary of the resource. healthcare system practice as its share in GDP has constantly increased during past decades, which is now above 10% of GDP in developed countries. However, very often it is more of an issue related to the current political and socio-economic situation in a country rather than the one managed by experts. Although one might expect that the increase in healthcare spending contributes to better health of the population, relevant indicators show that high healthcare spending in Bosnia and Herzegovina (BiH) does not result in better health of its population. Due to this reason, special attention needs to be paid to the economic analysis of healthcare spending. Irrational use of medications is just one of many problems associated with an inefficient health system, but one that heavily impacts on the health economics. In situations where it may not be easy to change the existing financing models, we should explore how to be more effective in spending within the existing structure. Better control of medication consumption could be one of the actions that helps improve the effectiveness of the available budget. Therefore, the general aim of the paper is to determine the effect that financial monitoring of medication consumption has on the control of increase in healthcare spending, which in turn might help establishing a financially sustainable healthcare system. Bearing in mind that irrational usage of medications influences the access to healthcare services, destabilizes country’s budget, and endangers the margin of social sustainability (endurance), the constant financial monitoring of medication consumption is important as it can help us recognize those segments where consumption deviates from standard and where prevention activities are needed. All this can result in the limitation of further increase in medication consumption. 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 2017 Keywords Keywords. Article PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/6745184c706eaf40b6d013e869fb447f.pdf 7af892ca277a16243482916fdd5a7af0 PDF Text Text An Analysis of the Factors Determining the Working Capital Requirement for Non-Financial Companies Seyda Kadayifci International Burch University Bosnia and Herzegovina seydakadayifci@gmail.com Ali Coskun International Burch University Bosnia and Herzegovina alicoskun@hotmail.com The main purpose of this study is to investigate the factors determining the working capital requirement of firms. Companies require working capital to improve the capacity, expand the business volume, reduce the risk of failing to meet their financial obligations, and become profitable and efficient. An inadequacy of the working capital causes interruptions in the business operations. This study investigates the determining factors of the working capital requirements of non-financial companies. The research analysis was done on publicly traded firms, and the data was collected from BIST-100 in Turkey for the years between 2011 and 2016. In this study, working capital requirement was used as the dependent variable. Factors such as profitability, leverage, growth, firm size, age and industry were tested as determining factors. PLS-SEM technique is employed in the research. Results reveal that two explanatory variables- company's leverage, and profitability- are significant factors that determine the companies’ working capital requirements for the period under study. Key words: Working Capital Requirement, Profitability, Leverage, Growth, Size, Age, Industry Introduction Managing the financial needs and operations of any business is very important to the management of the company, as it has an effect on both the company's profits and liquid assets. The literature on business finance focuses on three key areas. These are capital budgeting, capital structure, and working capital management. Capital budgeting and capital structure concerns long-term investment and financing decisions. Working capital management can be expressed as the short-term investments of firms and the selection and management of financial strategies in these investment decisions. If there is not enough working capital to fulfill the obligations of a company, it may cause financial insolvency, legal problems, and liquidation of assets (Hawley, 2015). For this reason, it is very important for all enterprises to have sufficient management of their working capital. 225 �The amount of financing an entity needs to carry out its day-to-day business activities is a working capital requirement, and it is the minimum amount of resources that a company needs to effectually meet the usual costs of business operations. There are several factors in determining working capital requirement and some studies such as Nazir and Afza (2009), Gill (2011), and Saarani and Shahadan (2012) have examined these factors. The purpose of these studies was to designate the determinants of the working capital requirement. On the other hand, many studies that have been conducted in the area of working capital (Deloof, 2003; Raheman & Nasr, 2007; Perkovic, 2012) have examined the relationship between firm profitability and working capital. Nazir and Afza (2009) and Gill (2011) have focused on determining the factors of working capital requirements. Since the identification of working capital requirements is of great importance in businesses, the purpose of this study is to investigate the working capital requirements and determining factors in non-financial companies in BIST 100 by using the Partial Least Squares – Structural Equation Model (PLS-SEM) technique. Literature Review The working capital management as the management of current assets such as cash, marketable securities, trade receivables and inventories that a firm has and the financing (specially, current liabilities) necessity to support current assets (Van Horne and Wachowicz, 2005). According to Palombini and Nakamura (2012), any researcher who conducts an overview of the corporate finance literature will find no robust, widely accepted theory about working capital management. Saarani and Shahadan (2012) put forward that for working capital management, the closest relevant theory is the Pecking Order Theory, popularized by Myers and Majluf (1984). According to the theory, companies should first use the funds necessary for financing their investments from internal sources. If internal resources are inadequate, firms tend to use debt to meet their funding needs. If the companies cannot meet their funding requirements with the use of debt, the issue of shares should cover the fund requirement in the company. In theory, internal resources are prioritized over external resources. So, this theory explains why the most profitable firms use less debt because these companies are highly profitable and do not need external sources. Enterprises with lower profitability rates export debt (Yakar, 2011). Several aspects of such working capital practices around the world been discussed in the literature. Some of these studies attempted to determine the effect of the working capital on the factors, while some others examined many factors that determined the working capital and its requirements. 226 �Nazir and Afza (2009) used panel data to study 132 firms from 2004 to 2007 in Pakistan, and used the OLS (ordinary least squares) regression model to find the determinants of working capital. Authors designated working capital as a dependent variable, operating cycle, level of economic activity, operating cash flow, sales growth, return on assets, Tobin’s q, leverage, size and industry as a determinants of working capital. According to the results, operating cycle, leverage, ROA, and Tobin’s q are internal factors that significantly affect working capital requirements. BintiMohamad and MohdSaad (2010) investigated the impact of market valuation and profitability on working capital management during the period 2003–2007 with a sample of 172 firms in Malaysia. The authors applied the Tobin Q, return on asset, and return on invested capital as dependent variables, and used cash conversion cycle, current asset to current liability ratio, current asset to total asset ratio, current liability to total asset ratio, and total debt to total asset ratio as independent values. Correlation and multiple regression analysis results proved that working capital variables and the firm’s performance have a negative relationship. Another study that is effective in this regard was performed by Saarani and Sahadan (2012). The authors used a sample of 285 firms for the period 2006–2008 in Malaysia. To determine the factors of working capital requirements, the authors used working capital for a dependent value, assets tangibility, profitability, debt, growth, non-debt tax shield, size, industry type, and age as independent values. According to the results of the analysis of the structural equation model, working capital requirement factors were found to be debt, profitability, non-debt tax shield, and tangibility of assets. Perković (2012) investigated the 131 manufacturing companies listed in Bosnia and Herzegovina in 2005–2009 by using Pearson’s correlation test and regression analysis. According to his findings, while the cash conversion cycle and financial leverage have a significant negative impact on the profitability of the company, the impact of the size of the firm (sales) is significant and positive. Since the implementation of this thesis will be on the publicly traded non-financial companies in Turkey, studies about working capital management conducted in Turkey were reviewed in detail. The studies conducted in Turkey are summarized below. Uyar (2009) obtained data from the Istanbul Stock Exchange for the year 2007. The cash conversion cycle is employed as a measure of the working capital. Return on assets and return on equity are used for profitability. The results showed that the cash conversion cycle has a significant negative relation with the firm size and the profitability. 227 �Akbulut (2011) explored the profitability relation between the working capital management from 2000 to 2008, in the ISE manufacturing sector. In the study, working capital management is measured by cash conversion cycle and profitability is measured by the return on assets. Regression analysis has shown that there is a negative relationship between working capital management and profitability. The other study done in Turkey was done by Khajeh (2014), who examined the effect of 18 firms belonging to the textile and leather sector from 2007 to 2012, regarding firm profitability of working capital management, using panel data analysis. According to the results of the study, there is a significant relationship between stock turnover, debt turnover, and gross profit. Methodology Data source Data for this study were sourced from the annual financial reports of the companies, BIST 100. In all, this study utilizes data from 70 non-financial firms for the 6- year period 2011-2016. So, the total of 426 observations are included in the analysis. Variable description and expectations Dependent Variable: The working capital requirement is the minimum amount of resources that a company needs to effectively cover the costs and expenses essential to operate the business (Gill, 2011). As seen in some of the studies examined earlier, CCC was used to gauge the efficiency of working capital, such as Sharma and Kumar (2011), Saarani and Shahadan (2012), Palombini and Nakamura (2012), and Goel and Sharma (2015). The working capital to total assets ratio gauge the ability of a company to cover its short-term financial obligations by comparing its total current assets to its total assets. Qurashi and Zahoor (2017) and Abbadi and Abbadi (2013) used this formula to try to find the determinants of working capital requirements. Other measures used to measure working capital requirement are working capital to expenses and working capital to revenue Saarani & Shahadan, 2012). Independent variables: Profitability, leverage, growth, firm size, age and industry are employed as independent variables. Wang, Feng, and Lawton (2015) indicated that a multi-dimensional perspective reflects firm performance more comprehensively than a single measure of profitability. There are many different ways and indicators to analyze profitability such as; return on equity, return on asset and gross operating profit.Nazir and Afza (2009), Sharma (2011), Gill (2011), Saarani and Shahadan (2012), Abbadi and Abbadi (2013), Agha (2014), Keskin and Gökalp (2016) used 228 �ROA to measure profitability. The return on equity ratio is a profitability ratio that measures how much profit each equity shareholder's capital generates. To gauge the profitability Saarani and Shahadan (2012), Naser, Nesuibeh and Al-Hedaya (2013) used return on equity. Lazaridis and Tryfonidis (2006), Perković (2012), Dong and Su (2010) employed gross operating profit to measure profitability. Leverage is the financial debt ratio, which is used in order to bring into connection with the external financing of the company and total assets (Abbadi & Abbadi, 2013). Deloof (2003), Raheman and Nasr (2007), Nazir and Afza (2009), Gill (2011), Sharma and Kumar (2011) used the total debt divided by total assets to calculate the leverage. Studies show that more growth opportunities will increase the cash hold and short-term investment of a firm (Abuzayed, 2012). Two different indicators (sales growth and growth rate of GDP) were used to measure growth in this study.Deloof (2003), Appuhami (2008), Nazir and Afza (2009), Sharma and Kumar (2010), Palombini and Nakamura (2011), Gill (2011), Naser, Nuseibeh and Al-Hadeya (2013), Goel and Sharma (2015) used sales growth to measure growth. Nazir and Afza (2009), Abbadi and Abbadi (2013) used growth rate of GDP to measure growth. Uyar (2009), Nazir and Afza (2009), Gill (2011), Sharma and Kumar (2011), Abbadi and Abbadi (2013), used natural log of total assets to measure of firm size. Abor and Biekpe (2009) and to Goel and Sharma (2015) used firm age in their researches as an independent variable. Firms in diversified sectors have different capital structures, different transactions, different products, different credit policies, different customers and different markets. The elements as a whole, affect working capital management. For this reason, it can be said that the type of industry influences the working capital management (Naser, Nuseibeh, & Al-Hadeya, 2013). Gill (2011) and Naser, Nuseibeh and Al-Hadeya (2013) used industry as an independent variable. The means by which the various variables adopted in this study are computed are as shown in Table 1. 229 �Table 1: Measurement of the Variables Variables Abbreviation Formulas Number of days of accounts receivable + Number of days of inventory – Number of days of accounts payable (Current Asset- Current Liability) / Total Assets CCC Working capital requirement WCR_T.A (Current Asset- Current Liability) / Expenses WCR_Exp (Current Asset- Current Liability) / Revenue WCR_Rev ROA Profitability Net income of the firm / total assets Net income of the firm / shareholder’s equity ROE GrsOpPr Leverage (Sales - COGS) / (Total Assets - Financial Assets) LEV Total Debt / Total Assets S.GR (This year’s sales – previous year’s sales)/previous year’s sales (This year’s GDP - previous year’s GDP)/ previous year’s GDP sales Growth GDP Firm Size SIZE Age AGE Industry INDS The natural log of total assets of firm Year under study - Year of incorporation manufacturing firms=1; non- manufacturing=0 Hypothesis There are six hypotheses developed based on previous studies. The following hypotheses and supported studies are detailed. Hypothesis H1 : There is a relationship between Profitability and Working Capital Requirement. (+/-) H2 : There is a relationship between Growth and Working Capital Requirement. (+/-) 230 Reference Literature Nazir and Afza (2009), Abbadi and Abbadi (2013), Palombini and Nakamura (2012) Gill (2011), Naser, Nuseibeh and Al-Hadeya (2013), Appuhami (2008), Nazir and Afza (2009), Saarani and Shahadan (2012) �H3 : There is a relationship between Leverage Nazir and Afza (2009), Abbadi and Abbadi (2013), Palombini and Nakamura (2012) and Working Capital Requirement. (+/-) H4 : There is a relationship between Size and Working Capital Requirement. (+/-) Uyar (2009), Gill (2011), Abbadi and Abbadi (2013) H5 : There is a relationship between Age and Goel and Sharma (2015) Working Capital Requirement. (+/-) H6 : There is a relationship between INDS and Naser, Nuseibeh and Al-Hadeya (2013) Working Capital Requirement. (+/-) Model GrOpPr, ROA, and ROE are the indicators used in the measurement model of profitability. GDP and S.GR are the indicators used in the outer model of Growth. CCC, WCR_T.A, WCR_Rev, and WCR_Exp are the indicators used in the measurement model of working capital requirement. Leverage, firm size, age, and industry have only one indicator in the measurement model. To test the hypothesis we implemented the partial least squares-structural equation modeling technique (PLS-SEM). The data analyzed using SmartPLS® software version 3.2.6. Structural Equation Model is used to test the causal relationships between latent variables and observed variables through models. The aim of the SEM is to determine whether the theoretical model is supported by the data or whether the model conforms to the data. SEM studies are generally based on theory (Doğan, 2015). Because of the frequent use of SEM analysis, measurement errors must be taken into account, unlike regression analysis; it is thought to give more accurate results than the regression analysis (Alkış, 2016). Titman and Wessels (1988), Maddala and Nimalendran (1995) and Saarani and Shahadan (2012) were applied SEM in corporate finance. 231 �Figure 1: PLS algorithm results (factors and items) Result and Discussion Analysis of measurement model reliability and validity In order for a measurement model to has satisfactory internal consistency reliability, each construct must exceed the composite reliability (CR) threshold of 0.7. Outer loadings looked to check indicator reliability and 0.70 or higher is preferred if it is an exploratory research, 0.4 or higher is acceptable (Hulland, 1999). The convergent validity of measurement model is evaluated by investigate its average variance extracted (AVE) value. Convergent validity is sufficient when there are at least 0.5 or more average variance (AVE) values in the constructs. 232 �Table 2: Results of Measurement Model- Convergent Validity Constructs Outer Loadings WCR 0.429 (CCC) 0.883 (WCR/EXP) 0.794 (WCR/T.A) 0.899 (WCR/REV) 0.876 (ROA) 0.414 (ROE) 0.747 (GOP) 0.651 (S.GR) 0.929 (GDP) 1.00 1.00 1.00 1.00 Profitability Growth Leverage Age FirmSize Industry Average Extracted Variance (AVE) Composite reliability (CR) 0.61 0.79 0.50 0.73 0.65 0.85 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Analysis of the Structural Model The coefficient of determination, R2, is 0.431 for the WCR endogenous latent variable. R2 means the amount of described endogenous latent variables variance in the structural model. The R2 value is normed between 0 and +1 and reflects the amount of described variance in the construct (Hair, Hult, Ringle, & Sarstedt, 2017). The value 0.431 in the Profitability, Leverage, Growth, Firm Size, Age, Industry rows and the WCR column is the standardized path coefficient of the relationship from those six variables to WCR. This means that the six latent variables (Profitability, Leverage, Growth, Firm Size, Age and Industry) moderately (Kwong & Wong, 2013) explain 43.1% of the variance in WCR. According to previous studies, the path coefficient must be at least 0.1 a certain effect accounts within the model (Hashim, 2012) (Hair, Hult, Ringle, & Sarstedt, 2017). In this case, by interpreting the graph, we can say that the leverage has a negative impact on WCR. Profitability also affects the WCR positively. 233 �Table 3: Results of Hypothesis Testing Hypotheses H1 Path Relationship Profitability and WCR Β- Coefficient 0.176 T-statistic 3.785 Supported Yes H2 Growth and WCR -0.059 0.909 No H3 Leverage and WCR -0.426 10.324 Yes H4 Firm size and WCR -0.005 0.125 No H5 Age and WCR -0.0064 1.992 No H6 Industry and WCR -0.426 0.521 No Based on the research findings, WCR identified as being influenced by profitability (β = 0.176, t = 3.785, p < 0.05). This finding is in line with previous studies (Nazir & Afza, 2009; Saarani & Shahadan, 2012; Abbadi & Abbadi, 2013). These results means that the more profitable companies are able to manage their working capital better. Besides, the better the company manages its working capital, the more profitable is the company. From the analysis, Working Capital Requirement is not influenced directly by Growth (β = 0.059, t = 0.909, not significant). These results are consistent with previous studies results (Nazir & Afza, 2009) (Saarani & Shahadan , 2012). Based on the research findings, WCR was identified as being influenced by Leverage (β = 0.462, t = 10.324, p < 0.05). This result is supported in other studies (Nazir & Afza, 2009; Onaolapo & Kajola, 2015; Saarani & Shahadan,2012). These results mean that by increasing the ratio of debt to total assets, companies should pay more attention to effective management of working capital in order to prevent excess capital in accounts receivable and inventories. This means that the financial manager can manage the working capital management by reducing the company’s debt level to prevent unnecessary tying up of capital in accounts receivable and stocks. As comprehensively discussed in the literature, this outcome is in accordance with the pecking order theory. From the analysis, working capital requirement is not influenced directly by Firm Size (β = 0.005, t = 0.125, not significant). This finding is in line with previous studies (Nazir & Afza, 2009; Saarani & Shahadan, 2012). Working capital requirement is influenced directly by Age (β = -0.064, t = 1.992, p < 0.05). These results are consistent with previous study results (Nazir and Afza, 2009; and Goel and Sharma, 2015) Working capital requirement is not influenced directly by Industry (β = -0.462, t = 0.521, not significant). These results are consistent with previous study results (Saarani & Shahadan, 2012). 234 �Conclusion The study finds that profitability, age and leverage factors, which are influencing the working capital requirements significantly. So, it can be concluded that the listed companies in BIST their working capital requirements based on the profitability, age and leverage. For age, results are in accordance with the earlier studies of Nazir and Afza (2009) and Goel and Sharma (2015). For profitability, results are in accordance with the earlier studies of Nazir and Afza (2009), Saarani and Shahadan (2012) and Abbadi and Abbadi (2013). For leverage, results are in accordance with the earlier studies of Nazir and Afza (2009), Saarani and Shahadan (2012), Onaolapo and Kajola (2015). In addition, if they manage these factors in a more efficient way, it may be the result that companies can improve their profitability. On the other hand, contrary to expectations, this study could not confirm statistically the importance of four factors- growth (Nazir and Afza, 2009; Saarani and Shahadan, 2012), age (Saarani and Shahadan, 2012), firm size (Nazir and Afza, 2009; Saarani and Shahadan, 2012) and industry (Saarani and Shahadan, 2012) as determinant factors of working capital requirements. These results are in accordance with the earlier studies. References Abbadi, S., & Abbadi, R. T. (2013). The Determinants of Working Capital Requirements in Palestinian Industrial Corporations . International Journal of Economics and Finance , 5 (1), 65-75. Abor, J., & Biekpe, N. (2009). How do we explain the capital structure of SMEs in sub-Saharan Africa? Evidence from Ghana . Journal of Economic Studies , 36 (1), 83-97. Abuzayed, B. (2012). Working capital management and firms’ performance in emerging markets: the case of Jordan . International Journal of Managerial Finance , 8 (2), 155-159. Agha, H. (2014). Impact of Working Capital Management on Profitability. European Scientific Journal , 10 (1), 374-381. Akbulut, R. (2011). An application to measure impact of working capital management on profitability in firms in manufacture sector quoted on ISE. Istanbul University Journal of the School of Business Administration , 195-206. Appuhami, B. R. (2008). The impact of firms' capital expenditure on working capital management: An empirical study across industries in Thailand. International Management Review , 4 (1), 8-21. 235 �Azeem, M., & Marsap, A. (2015). Determinant Factors and Working Capital Requirement . International Journal of Economics and Finance , 7 (2), 280-292. Binti Mohamad, N., & Binti MohdSaad, N. (2010). Working capital management: The effect of market valuation and profitability in Malaysia. International Journal of Business and Management, 5(11), 140–147. Chin, W. W. (1998). The partial least squares approach to structural equation modeling. Modern methods for business research , 295 (2), 295-336. Dang, C., & Li, F. (2015). Measuring Firm Size in Empirical Corporate Finance. SSRN Electronic Journal . Deloof, M. (2003). Does Working Capital Management Affect Profitability of Belgian Firms? Journal of Business Finance & Accounting , 30 (3-4), 573-588. Ding, S., Guariglia, A., & Knight , J. (2013). Investment and financing constraints in China: Does working capital management make a difference? Journal of Banking & Finance , 37 (5), 1490–1507. Filbeck , G., & Krueger, T. (2005). An Analysis of Working Capital Management Results Across Industries . American Journal of Business , 20 (2), 11-18. Fornell, C., & Bookstein, F. L. (1982). Two structural equation models: LISREL and PLS applied to consumer exit-voice theory. Journal of Marketing research , 19 (4), 440-452. Francis, A. (2013, February 13). Dangers of Excessive and Deficiency of working capital . Retrieved from http://letsspeaktogether.blogspot.ba/2013/02/dangers-of-excessive-anddeficiency-of.html Gefen, D., & Straub, D. (2005). A practical guide to factorial validity using PLS-Graph: Tutorial and annotated example. Communications of the Association for Information systems , 16 (1), 91-109. Gill, A. (2011). Factors That Influence Working Capital Requirements In Canada. Economics and Finance Review , 1 (3), 30-40. Gitman, L. J. (1974). Estimating Corporate Liquidity Requirements: A Simplified Approach . The Financial Review , 9 (1), 79-88. Goel, U., & Sharma , A. K. (2015). Working capital management efficiency in Indian manufacturing sector: trends and determinants . Int. J. Economics and Business Research , 10, 30-45. 236 �Gumbochuma, I. (2014). Relationship Between Working Capital Management And Profitability In Retail Sector Companies Listed On The Johannesburg Stock Exchange. Master Thesis, Tshwane University of Technology, Department of Business Administration. Hair, J., Hult, G., Ringle, C., & Sarstedt, M. (2017). A Primer on Partial Least Squares Structural Equation Modeling (2nd Edition ed.). Thousand Oaks: Sage. Hair, J., Ringle, C., & Sarstedt, M. (2011, March). PLS-sem: Indeed a silver bullet . The Journal of Marketing Theory and Practice . Hashim, K. F. (2012). Understanding the determinants of continuous knowledge sharing intention within business online communities. PhD Thesis, Auckland University. Hawley, J. (2015, October 7). Why is working capital management important to a company? Retrieved from Investopedia: http://www.investopedia.com/ask/answers/100715/whyworking-capital-management-important-company.asp Henseler, J., Ringle, C. M., & Rudolf, R. S. (2009). The Use Of Partial Least Squares Path Modeling In International Marketing. Advances in International Marketing, , 20, 277–319. Hulland, J. (1999). Use of partial least squares (PLS) in strategic management research: a review of four recent studies. Strategic Management Journal , 20 (2), 195–204. Khajeh, S. G. (2014). BIST tekstil, deri sektöründeki firmalarda çalışma sermayesi yönetiminin firma karlılığı üzerine etkileri (The Effects Of Working Capital Management On Firm Profitability In Textil And Leather Companies On BIST). Master Thesis, Atatürk Universitesi, Department of business, Erzurum. Kwong, K., & Wong, K. (2013). Partial Least Squares Structural Equation Modeling (PLS-SEM) Techniques Using SmartPLS. Marketing Bulletin , 24, 1-32. Lamberson, M. (1995). Changes in Working Capital of Small Firms in Relation to Changes in Economic Activity. American Journal of Business , 10 (2), 45-50. Lazaridis , I., & Tryfonidis , D. (2006). Relationship between working capital management and profitability of listed companies in the Athens stock exchange. Journal of Financial Management and Analysis , 19 (1), 1-12. Napompech, K. (2012). Effects of Working Capital Management on the Profitability of Thai Listed Firms. international Journal of Trade, Economics and Finance , 3 (3), 227-232. 237 �Naser, K., Nuseibeh, R., & Al-Hadeya, A. (2013). Factors Influencing Corporate Working Capital Management: Evidence From An Emerging Economy. Journal of Contemporary Issues in Business Research , 2 (1), 11-30. Nazir, M. S., & Afza, T. (2009). Working Capital Requirements and the Determining Factors in Pakistan. IUP Journal of Applied Finance , 15 (4), 28-38. Onaolapo, A., & Kajola, S. (2015). What are the Determinants of Working Capital Requirements of Nigerian Firms? Research Journal of Finance and Accounting , 6 (6), 118-127. Qurashi, M., & Zahoor, M. (2017). Working Capital Determinants for the UK Pharmaceutical Companies Listed on FTSE 350 Index. International Journal of Academic Research in Accounting, Finance and Management Sciences , 7 (1), 11-17. Perković, G. (2012). The impact of working capital management on profitability of manufacturing firms in Bosnia And Herzegovina. Zbornik radova-Sarajevo Business and Economics Review (SBER), 32, 117–137. Raheman, A., & Nasr, M. (2007). Working Capital Management And Profitability – Case Of Pakistani Firms. International Review of Business Research Papers , 3 (1), 279-300. Saarani , A. N., & Shahadan , F. (2012). The Determinant Factors of Working Capital Requirements for Enterprise 50 (E50) Firms in Malaysia: Analysis Using Structural Equation Modelling. Scottish Journal of Arts, Social Sciences and Scientific Studies , 5 (2), 52-66. Sharma, A., & Kumar, S. (2011). Effect of Working Capital Management on Firm Profitability: Empirical Evidence from India . Global Business Review , 12 (1), 159-173. 238 � 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. 3661 Title A name given to the resource An Analysis of the Factors Determining the Working Capital Requirement for Non-Financial Companies (doi: 10.14706/icesos1724) Author Author Kadayifci, Seyda COSKUN, Ali Abstract A summary of the resource. The main purpose of this study is to investigate the factors determining the working capital requirement of firms. Companies require working capital to improve the capacity, expand the business volume, reduce the risk of failing to meet their financial obligations, and become profitable and efficient. An inadequacy of the working capital causes interruptions in the business operations. This study investigates the determining factors of the working capital requirements of non-financial companies. The research analysis was done on publicly traded firms, and the data was collected from BIST-100 in Turkey for the years between 2011 and 2016. In this study, working capital requirement was used as the dependent variable. Factors such as profitability, leverage, growth, firm size, age and industry were tested as determining factors. PLS-SEM technique is employed in the research. Results reveal that two explanatory variables- company's leverage, and profitability- are significant factors that determine the companies’ working capital requirements for the period under study. Key words: Working Capital Requirement, Profitability, Leverage, Growth, Size, Age, Industry Date A point or period of time associated with an event in the lifecycle of the resource 2017 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/88526a8264f3ef9f370b526401cc5ccf.pdf f4c504bbd89d475ced952eff3f74ee50 PDF Text Text Measuring Quality of Services at HEI: Case of Private University in BiH Amina Kahriman International Burch University Bosnia and Herzegovina amina-kahriman96@hotmail.com Ajdin Mekić International Burch University Bosnia and Herzegovina ajdin_mekic@hotmail.com Kemal Đug International Burch University Bosnia and Herzegovina k.djug9@gmail.com Ensar Mekić International Burch University Bosnia and Herzegovina ensar.mekic@ibu.edu.ba Abstract: The main purpose of this study is to investigate quality level of higher education institution's (HEI) services through students' perceptions, and to conduct cross years’ comparative analysis. Main instrument for this study is a survey with several dimensions dealing with different aspects of higher education: quality in general, quality of academic staff, quality of administrative staff, quality of campus, quality of study programs, quality of services, personal development support, education facilities and cafeteria. Software used in the study is Microsoft Excel. In total, 440 responses were collected which represents almost 50% of population. Cross years comparative analysis indicated tremendous increase in all indicators after institution has implemented HEA standards and went through successful accreditation process. Recommendations for corrective/preventive measures will be given wherever necessary. Results of the analysis show that students's rating of university services on the level of university have mean of 5,1 which indicates that students are slightly satisfied with the services of university overall. Keywords: HEI, university, quality, comparative analysis 173 �1 Introduction Research on students’ satisfaction with the service quality at higher education institutions in Bosnia and Herzegovina (BiH) was not famous topic among researchers. However, there are few studies dealing exactly with this issue. Mekić & Goksu (2014) investigated how ISO 9001:2008 and standards for accreditation contribute to overall quality of private higher education institutions in the country. Rastoder, Nurović, Smajić, & Mekić (2015) provided insights into perceptions of students towards quality of services at private higher education institution in BiH. Considering very few studies dealing with this issue in BiH, there is a need to provide more empirical evidence and more scientific research on quality management in higher education institutions of Bosnia and Herzegovina. Accordingly, this study is important since it serves this mission of filling gap in literature. On the other hand, considering great criticism in academic community on account of quality standards in higher education, this type of studies contributes to practitioners engaged in quality management processes in the country, because they represent strong support to quality standards as best way to satisfy customers’ needs and demands. Mainly, for purpose of statistical analysis, descriptive statistics will be used. Quality indicators will be compared on the timeline basis, and significant conclusions will be provided, as well as recommendations for improvement. The contribution of this work is threefold. It provides theoretical contribution since it satisfies gap in the literature. This study will enable practitioners having more confidence in quality standards application in higher education, and it will provide practical recommendations for improvement to higher education institution which is in case. Finally, as higher education directly affects society, by improving theory and practice of higher education, social development will come along. 2 Literature Review Variety of sources including books, journal articles, conference proceedings, reports, official web pages have been used while preparing this study. Many different definitions of quality are best evidence that it really is a slippery concept as Naomi Pfeffer and Anna Coote (1991) characterized it. Infact, they even provided several reasons to prove this statement. First one is fact that quality serves different purposes and its meaning changes according to interests that are driving it. Second reason provided by Pfeffer and Coote (1991) is fact that people perceive and experience quality in different ways, and they have different needs and expectations towards it. Third reason is related to outcome of the process of quality assurance which can have infinite number of variables depending on the context. 174 �Accordingly, when it comes to definition of quality, authors concluded that it refers to something we all unquestioningly favor (Pfeffer & Coote, 1991). Sallis (2005) mentioned that word quality comes from the Latin quails meaning what kind of. While explaining quality, he stated that it is an ideal with which there can be no compromise. Quality things are perfect, valuable, with no expense spared and convey prestige to their owners. Author also stated that quality is synonymous with high quality or top quality (Sallis, 2005). Definitions of quality from various perspectives have been provided by Koslowski (2006). His definitions were reviewed and summarized into one comprehensive definition by Mekić & Goksu (2014) who concluded that quality in HEI is increase in learning as one of important objectives of HEI based on satisfying costumers' requirements, realized as consequence of academic and administrative staff's expertise which results in high ranking levels of HEI, gaining reputation and becoming perceived as valuable institution. The University which is subject of case study in this article is located in Bosnia and Herzegovina. With aim to provide highest possible opportunities for its students, institution from the very beginning showed its loyalty to following world standards, and it implemented ISO 9001:2008 and started with implementation of standards for accreditation required by HEA. In year 2014, it went through accreditation process successfully. Students involvement in decision making processes and all other processes is high in this higher education institution. There are nine indicators in hands of students to follow: 1. Quality in general 2. Quality of Academic Staff 3. Quality of Administrative Staff 4. Quality of campus 5. Quality of Services 6. Study Programs 7. Personal Development 8. Education facilities 9. Cafeteria This means that students are distributing a survey, collecting results, coding them, analyzing them, preparing report and presenting report to Senate with recommendations. It is important to have in mind that this higher education institution carefully implements both ISO 9001 as well as European Standards and Guidelines (which are implemented through adjusted version “Criteria for Institutional Accreditation published by Agency for Development of Higher Education and Quality Assurance (HEA). It is important to have in mind that institution in case had been accredited in 2014, and that all indicators of students’ satisfaction will be compared before and after this point. However, speaking of two mentioned standards, it is important to say that they are fully compatible standards. The best, and very fresh evidence of 175 �this statement is available in comparative analysis conducted by team of authors in 2017. In fact, Bajramović, Mekić, & Muhamedbegović (2017) concluded that implementation of these two standards is realistic and recommended. In addition, they commented that appropriate implementation of both standards can be good way to achieve excellence in higher education. 3 Methodology The survey was the main instrument of data collection and it has been divided into ten major sections. The first section contains questions about personal profiles of the respondents including gender, department of studying, fees, current level of study, country from were a student is coming. The second section contains questions about quality in general and the third section is based on questions about quality of academic staff. The fourth section contains questions about quality of administrative staff, while questions in fifth section are based on campus of university. In sixth section, questions are regarded to services at university and in seventh section they are about study programs that are offered at university. The eight section contains question about personal development and the ninth section is based on questions about education facilities. The tenth section contains questions regarding to cafeteria at university. Survey has been distributed to students of all three cycles of study and all departmets of higher education institution. In total 440 responses were collected which is enough to generalize data in the level of higher education institution. More accurately said, the instrument to collect data has been based on nine variables, and all of them are mentioned as important aspects of quality in higher education in ESG (2005) standards as well as HEA standards. The measurement instrument used is a seven-point Likert scales is representing a range of attitudes from 1 – strongly disagree to 7 – strongly agree used to measure service quality, representing a range of attitudes from strongly disagree (1) to strongly agree (7) to measure students’ satisfaction. The meaning of following numbers is as follows: 1 – Strongly Disagree; 2 – Disagree; 3 – Slightly Disagree; 4 – Neither Agree nor Disagree; 5 – Slightly Agree; 6 – Agree; 7 – Strongly Agree 176 �4. Results 4.1 Demographics In this part of survey, respondents were asked about their faculty, department, current level of study, year of study, highest qualification planned for future, yearly fees for education in BAM, high school they graduated from, gender, age group, where they were from, circumstances in financing their education, and whether they have scholarship. The survey was administered to 227 males and 212 females. When it comes to Faculty, 157 surveys were collected from Faculty of Economics, 212 surveys from Faculty of Engineering, 71 surveys from Faculty of Education. Respondents included those with Bachelor degree, Master degree, PhD, out of which most had a Bachelor degree. Table 1 – Number of respondents from Faculties Faculty # of respondents Faculty of Economics 157 Faculty of Engineering 212 Faculty of Education 71 Total number 440 4.2 Quality of services on the level of University In this section responses of students from all faculties and results were combined to evaluate the satisfaction with services on the level of University. Table 2 – Quality in General Variables and Questions 5,01 Std. Deviation 1,47 4,98 1,34 4,88 1,42 5,20 1,62 Mean Quality in General (QG) How do you rate the quality of the institution's services in general? How do you describe your feelings towards the institution's services in general? How likely are you to recommend the institution to others? With this variable students' satisfaction with quality in general was evaluated. The mean value of this variable is 5,01 which means that students slightly agree with offered statements, and they are slightly satisfied with general quality of International Burh University. The lowest mean value is 4,88 and it is related to question “How do you describe your feelings towards the institution's services in general?“ but still it is within boundaries of „slightly agree“. The highest 177 �mean value is 5,20 which relates to the question “How likely are you to recommend the institution to others?“. This tells us that students agree the most with the statement that they would recommend International Burch University. Table 3 – Quality of Academic Staff Variables and Questions Mean Quality of Academic Staff (QAS) Academic staff have the knowledge to answer my questions relating to the course? Academic staff deal with me in a caring and courteous manner? 5,22 Std. Deviation 1,46 5,25 1,47 5,22 1,50 Academic staff are never too busy to respond to my request for assistance? 5,13 1,57 When I have a problem, academic staff show a sincere interest in solving it? 5,22 1,47 Academic staff show positive attitude towards students? Academic staff communicate well in the classroom? 5,41 5,29 1,42 1,40 Academic staff allocate sufficient and convenient time for consultations? 5,23 1,31 Academic staff provide feedback about my progress? 4,89 1,53 Academic staff are highly educated and experienced in their respective field? 5,31 1,45 The purpose of this variable is to evaluate students' satisfaction with the academic staff at International Burch University. The mean value of this variable is 5,22 which indicates that students are slightly satisfied with the academic in this institution. The lowest mean value is 4,89 and it is related to the question “Academic staff provide feedback about my progress?“ but still it belongs to the region of slight satisfaction. The highest mean value, which is 5,41, is related to the question “Academic staff show positive attitude towards students?“ which tells us that students are satisfied the most with academic staff attitude towards them. Table 4 – Quality of Administrative Staff Variables and Questions Mean Quality of Administrative Staff (QAS) 5,16 Std. Deviation 1,69 When I have problem, administrative staff show a sincere interest in solving it? 5,00 1,58 Administrative staff provide caring and individual attention? 5,00 1,50 Administrative staff are never too busy to respond to a request for assistance? 4,94 1,51 Administrative offices keep accurate and retrievable records? 5,06 1,47 178 �When the staff promise to do something by a certain time, they do so? 5,05 1,57 The opening hours of administrative offices are personally convenient for me? 5,21 2,87 Administrative staff show positive work attitude towards the students? 5,31 1,43 Administrative staff communicate well with students? 5,37 1,46 Administrative staff have good knowledge pf the system/procedures? 5,33 1,45 Students are treated equally and with respect by the staff? 5,18 1,61 The staff respect my confidentiality when I disclosed information to them? 5,25 1,55 This variable represents the students' satisfaction with the administrative staff at International Burch University. The mean value of this variable is 5,16 which indicates that students slightly agree with given statements and they are slightly satisfied with administrative staff in this institution. The lowest mean value relates to the question “Administrative staff are never too busy to respond to a request for assistance?“ and it is 4,94, however it is in positive interval of the scale indicating that students are satisfied with this aspect. The highest mean value is 5,37 and it relates to the question “Administrative staff communicate well with students?“ which means that students are most satisfied with how administrative staff communicate with them. Table 5 – Quality of campus Variables and Questions Mean Campus (C) The institution has a professional appearance/image? The institution has an ideal location with excellent campus layout and appearance? The university has an easily accessible location? The parking services at the university are adequate? The university campus has a safe environment? 4,53 5,14 Std. Deviation 2,06 1,59 4,34 1,73 4,41 3,51 5,25 1,86 2,01 5,25 With this variable students' satisfaction with professional appearance/image, location and environment of university campus was evaluated. The mean value of this variable is 4,53 which means that students slightly agree with given statements and they are slightly satisfied. The lowest mean value is 3,51 and relates to the question “The parking services at the university are adequate?“, which tells that students are slightly dissatisfied with parking services which university offers. The highest mean value is 5,25 and relates to the question “The university campus has a safe environment?“ which means that students are satisfied with the safety of the environment of university campus the most. 179 �Table 6 – Quality of Services Variables and Questions Mean Services Inquires/complaints are dealt with efficiently and promptly? I feel secure and confident in my dealings with this institution? 5,07 4,80 5,24 Std. Deviation 1,82 1,53 1,45 The institution provides services within reasonable/expected time frame? 5,19 1,40 Students are given fair amount of freedom? The institution operates excellent counseling services? Health services are adequate? Information services via web-site is adequate? 5,40 5,14 4,65 5,18 3,25 1,40 1,73 1,54 The institution values feedback from students to improve service performance? 5,07 1,55 The university provides services for students with special needs? 4,94 1,67 The purpose of this variable is to evaluate students' satisfaction about services offered from university. The mean value for this variable is 5,07 which indicates that students slightly agree with given statements and they are slightly satisfied. The lowest average, which is 4,65 was at question “Health services are adequate?“ but still it is within boundaries of slightly agree, which means students are slightly satisfied with this aspect. The highest mean value is 5,40 and relates to the question “Students are given fair amount of freedom?“. This means that students are most satisfied with amount of freedom they have. Table 7 – Study Programs Variables and Questions Mean Study Programs The institution runs excellent quality programs? 4,95 5,03 Std. Deviation 1,54 1,52 The institution offers a wide range of programs with various specialization? 4,93 1,53 The institution offers programs with flexible syllabus and structure? 4,87 1,52 The institution offers highly reputable programs? The institution graduates are easily employable? 4,97 4,93 1,54 1,59 This variable represents the students' satisfaction with quality of study programs that university offers to them. The mean value of this variable is 4,95 which belong to the region of slightly agree with given statements. The lowest mean value is 4,87 and relates to the programs syllabus and structure that university offers, this means that students are slightly satisfied with them. The 180 �highest mean value is 5,03 and relates to the question “The institution runs excellent quality programs?” which tells us that students are most satisfied with programs that the university offer. Table 8 – Personal Development Variables and Questions Mean Personal Development Recreation and sport facilities at the university are adequate? Extracurricular activities (seminars, workshops etc.) at the university are adequate? Services and facilities of art at the university are adequate (music, painting, photography etc.) 4,69 4,12 Std. Deviation 1,74 1,85 5,01 1,65 4,40 1,68 The university supports students' personal development projects? 5,02 1,63 International cooperation programs at the university (student exchange, study visits etc.) are adequate? 4,89 1,69 The purpose of this variable is to evaluate students' satisfaction with opportunities of personal development. With mean value of 4,69 it is possible to conclude that students are slightly satisfied about opportunities of personal development. The lowest mean value (4,12) goes to the first question and it is about recreation and sport facilities at the university. The highest mean value (5,02) goes to the question four and it is about supporting students' personal development projects by faculty. Table 9 – Education facilities Variables and Questions Mean Education Facilities Academic facilities are adequate for quality education? Class sizes are adequate for quality education? The library services at the university are adequate? The institution has up to date equipment? The labs at the university are adequate for quality education? 5,27 5,19 5,38 4,96 5,28 5,43 Std. Deviation 1,50 1,45 1,43 1,60 1,47 1,48 The university provides up-to-date information technology for students? 5,39 1,51 With this variable students' satisfaction with education facilities at International Burch University was evaluated. The mean value of this variable is 5,27 which indicates that students are satisfied with education facilities. The lowest mean value is 4,96 and relates to the question “The library services at the university are adequate?“, which means that students are slightly satisfied with library services. The highest mean value is 5,43 and relates to the question “The 181 �labs at the university are adequate for quality education?“ means that students are most satisfied with labs at the university. Table 10 - Cafeteria Variables and Questions Mean Std. Deviation Cafeteria 4,30 1,93 The university cafeteria provides high quality food and beverages? 3,85 1,89 Prices at the university cafeteria are reasonable? The food variety is adequate? The university cafeteria is clean? Cafeteria staff provide good quality service to students? 3,80 3,78 4,91 5,14 1,91 1,87 1,73 1,77 This variable represents students' satisfaction about cafeteria at International Burch university. With mean 4,30 it indicates that students are neutral regarding given statements. The lowest mean value (3,78) relates to adequate food variety while the highest mean value (5,14) relates to the quality of service that is provided by cafeteria staff to students which indicates that students are slightly satisfied with the service. Table 11 shows overall results indicating that “Education Facilities“ is the highest rated variable with mean value of 5,26, and that variable “Cafeteria“ is the lowest rated variable with mean value of 4,29. The overall mean value of 4,97 indicates that students are slightly satisfied with university services. Table 11 – Overall Results Variables Quality in general Quality of academic staff Quality of administrative staff Campus (C) Services Study Programs Personal Development Education Facilities Cafeteria Overall Result Mean 4,94 5,13 5,10 4,51 5,05 4,94 4,69 5,26 4,29 4,97 182 Std. Deviation 1,46 1,47 1,72 2,09 1,85 1,55 1,74 1,51 1,94 1,72 �Figure 1 - Overall Results 6.00 5.00 4.94 5.13 5.10 5.26 5.05 4.94 4.97 4.69 4.51 4.29 4.00 3.00 2.09 2.00 1.46 1.47 1.85 1.72 1.74 1.55 1.94 1.51 1.72 1.00 0.00 Mean 4.3 Std. Deviation Quality of Institution over Years Figure below indicated that quality of academic staff significantly decreased for the period of 2012 to 2014. If we look at mean grade in academic year 2011/2012 (5,46) we can notice that students negatively changed their opinion about academic staff in following two academic years for value of 0,74. However average grade was increased in academic year 2015/2016 and it is 5,13. Trend line visible in figure below indicates increase in students’ satisfaction with academic staff after 2012/13. Table 12 - Quality of academic staff Indicator of Quality 2011-2012 2012-2013 2013-2014 2015-2016 Scale Quality of academic staff 5,46 4,85 4,72 5,13 1 to 7 183 �Figure 2 – Quality of Academic Staff GRADE OF ACADEMIC STAFF (1 to 7) 5.60 5.40 5.20 5.00 4.80 4.60 4.40 4.20 2011-2012 2012-2013 2013-2014 2015-2016 YEARS Following figure indicates slightly decrease in quality of administrative staff in the academic year 2012/2013 for value of 0,37 compared to the academic year 2011/2012. From the period of 2013 to 2016 average grade was increased and in 2016 it was 5,10 which indicates great improvement in this indicator of quality. Also, trend line presented in figure below shows increase in average grade for period of 2011 to 2016. Table 13 - Quality of administrative staff Indicator of Quality 2011-2012 2012-2013 2013-2014 2015-2016 Scale Quality of administrative staff 5,00 4,63 4,75 5,10 1 to 7 184 �Figure 3 – Quality of Administrative Staff GRADE OF ADMINISTRATIVE STAFF (1 to 7) 5.20 5.10 5.00 4.90 4.80 4.70 4.60 4.50 4.40 4.30 2011-2012 2012-2013 2013-2014 2015-2016 YEARS Table and figure below presents satisfaction of students with campus. Results that are founded shows us that average grade was decreased from 2011 and in last two academic years was 4,51. Trend line however indicated increase after 2012/13 on. Table 14 - Quality of Campus Indicator of Quality 2011-2012 2012-2013 2013-2014 2015-2016 Scale Campus (C) 5,02 4,42 4,51 4,51 1 to 7 GRADE OF CAMPUS (1 to 7) Figure 4 – Quality Campus 5.10 5.00 4.90 4.80 4.70 4.60 4.50 4.40 4.30 4.20 4.10 4.00 2011-2012 2012-2013 2013-2014 YEARS 185 2015-2016 �Once again trend line on graph # shows slightly increase in average grade of services for the academic years from 2011 to 2016. Average grade was increased for the values of 0,08 which indicates that University is improving services. Table 15 - Quality of Services Indicator of Quality 2011-2012 2012-2013 2013-2014 2015-2016 Scale Services 4,97 4,39 4,59 5,05 1 to 7 Figure 5 – Quality of Services 5.20 GRADE OF SERVICES (1 to 7) 5.00 4.80 4.60 4.40 4.20 4.00 2011-2012 2012-2013 2013-2014 2015-2016 YEARS Figure and table below shows significant decrease in the way how student perceive study programs provided by University, which can be visible in decrease of average for period of 2011 to 2014 in value of 0,73. Also we can see that University took certain actions and improved study programs since results in academic year 2015/2016 indicated significant increase growth up to value of 4,94. Table 16 - Quality of Study Programs Indicator of Quality 2011-2012 2012-2013 2013-2014 2015-2016 Scale Study Programs 5,02 4,39 4,29 4,94 1 to 7 186 �Figure 6 – Quality of Study Programs GRADE OF STUDY PROGRAMS (1 to 7) 5.20 5.00 4.80 4.60 4.40 4.20 4.00 3.80 2011-2012 2012-2013 2013-2014 2015-2016 YEARS Following results represented in the table and figure below makes it clear that in four academic years that are investigated students were not satisfied with possibilities of personal development initially, but however, academic year 2015/2016 showed sustainable growth over the coming period. Trend line indicated growth in satisfaction of students with personal development possibilities. Table 17 - Quality of Personal Development Indicator of Quality 2011-2012 2012-2013 2013-2014 2015-2016 Scale Personal Development 4,56 4,17 4,28 4,69 1 to 7 187 �Figure 7 – Quality of Personal Development 4.80 GRADE OF PERSONAL DEVELOPMENT (1 to 7) 4.70 4.60 4.50 4.40 4.30 4.20 4.10 4.00 3.90 2011-2012 2012-2013 2013-2014 2015-2016 YEARS Figure below indicates student satisfaction with education facilities at University. Results shows small decrease in average grade in academic year 2012/2013. But, however after this point, sustainable increase in student satisfaction with education facilities has been indicated. Table 18 - Quality of Education Facilities Indicator of Quality 2011-2012 2012-2013 2013-2014 2015-2016 Scale Education Facilities 5,22 4,61 4,82 5,26 1 to 7 188 �Figure 8 – Quality of Education Facilities GRADE OF EDUCATION FACILITIES (1 to 7) 5.40 5.20 5.00 4.80 4.60 4.40 4.20 2011-2012 2012-2013 2013-2014 2015-2016 YEARS Cafeteria is last variable studied in our research and results from this part are presented in the figure and table below. According to research cafeteria is marked with lowest average grades in four academic years, and this aspect should be on agenda for improvement. Table 19 - Quality of Education Facilities Indicator of Quality 2011-2012 2012-2013 2013-2014 2015-2016 Scale Cafeteria 4,28 3,85 4,21 4,29 1 to 7 Figure 9 – Quality of Cafeteria 4.40 GRADE OF CAFETIRIA (1 to 7) 4.30 4.20 4.10 4.00 3.90 3.80 3.70 3.60 2011-2012 2012-2013 2013-2014 YEARS 189 2015-2016 �5 Recommendations Out of all categories, Cafeteria had a lowest satisfaction level with mean of 4,29 which means that students were neutral regarding the quality of cafeteria. Within the category, students were the least satisfied with prices of the food and the quality of food and beverages, so working on these issues would be a logical recommendation. 6 Conclusion Results of the analysis show that students's rating of university services on the level of university have mean of 5,1 which indicates that students are slightly satisfied with the services of university overall. When it comes to categories of services within the university, Cafeteria is the category with the lowest mean – 4,29. The questions with lowest means were also in that category, and those are questions pertaining to prices (3,80) and quality of food and beverages (3,85). If we consider fact that in all indicators except quality of cafeteria, trend line increased after the accreditation process which occurred in 2014, the one may conclude that successful implementation of HEA criteria as well as implementing recommendations of the Committee for Accreditation resulted in higher satisfaction of students with different aspects of University’s quality. The case study sent strong message that dedication of higher education institution to quality standards (in this case ISO 9001 and ESG adopted through HEA standards) will be recognized by students, and make positive impact on their perceptions of institution’s quality. Accordingly, this exploratory study could be good basis for explanatory study that will investigate relationship between implementation of HEA criteria and students satisfaction, and this is recommendation for future research. References Bajramović, E., Mekić, E., & Muhamedbegović, B. (2017). Comparative Analysis of Implementing ISO 9001:2015 Standard and ESG. Proceedings of 10th scientific professional gathering with international participation. Neum: University of Zenica. Koslowski, F. (2006). Quality and assessment in context: a brief review. Quality Assurance in Education, 14(3), 277-288. Mekić, E., & Goksu, A. (2014). Implementation of ISO 9001:2008 & Standards for Accreditation at Private University in Bosnia And Herzegovina. European Researcher, 75(5-2), 947-961. Retrieved from http://www.erjournal.ru/journals_n/1401603287.pdf Pfeffer, N., & Coote, A. (1991). Is Quality Good for You?: A Critical Review of Quality Assurance in Welfare services. London: Institute for Public Policy Research. 190 �Rastoder, A., Nurović, E., Smajić, E., & Mekić, E. (2015). Perceptions of Students towards Quality of Services at Private Higher Education Institution in Bosnia and Herzegovina. European Researcher, 101(12), 783-790. Retrieved from https://www.researchgate.net/publication/299485292_Perceptions_of_Students_towards_ Quality_of_Services_at_Private_Higher_Education_Institution_in_Bosnia_and_Herzego vina Sallis, E. (2005). Total Quality in Education. London: Taylor & Francis e-Library. 191 � 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. 3640 Title A name given to the resource Measuring Quality of Services at HEI: Case of Private University in BiH (doi: 10.14706/icesos173) Author Author Kahriman, Amina Mekic, Ajdin Đug, Kemal Mekić, Ensar Abstract A summary of the resource. Abstract: The main purpose of this study is to investigate quality level of higher education institution's (HEI) services through students' perceptions, and to conduct cross years’ comparative analysis. Main instrument for this study is a survey with several dimensions dealing with different aspects of higher education: quality in general, quality of academic staff, quality of administrative staff, quality of campus, quality of study programs, quality of services, personal development support, education facilities and cafeteria. Software used in the study is Microsoft Excel. In total, 440 responses were collected which represents almost 50% of population. Cross years comparative analysis indicated tremendous increase in all indicators after institution has implemented HEA standards and went through successful accreditation process. Recommendations for corrective/preventive measures will be given wherever necessary. Results of the analysis show that students's rating of university services on the level of university have mean of 5,1 which indicates that students are slightly satisfied with the services of university overall. Keywords: HEI, university, quality, comparative analysis Date A point or period of time associated with an event in the lifecycle of the resource 2017 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/6e1a8eb3f8142c47b8c93fa557556fa7.pdf 4936227a95f4372494d7674ad0f0768c PDF Text Text Measuring Financial Inclusion in Western Balkan Countries – A Comparative Survey Meldina Kokorović Jukan Faculty of Economics, University of Tuzla Univerzitetska 8, 75000 Tuzla, BiH Phone: +387 35 320 820 Fax: +387 35 320 821 E-mail: meldina.kokorovic@untz.ba Amra Babajić Faculty of Economics, University of Tuzla Univerzitetska 8, 75000 Tuzla, BiH Phone: +387 35 320 820 Fax: +387 35 320 821 E-mail: amra.babajic@untz.ba Amra Softić Faculty of Economics, University of Tuzla/ Indirect Taxation Authority of BiH, BiH E-mail: amrasoftic@outlook.com Abstract: According to the World Bank, more than one quarter of worlds’ population is without a bank account and is excluded from financial system. Improving financial inclusion and building inclusive financial systems is in agenda of all policy makers in both developed and developing countries aiming to include the poorest part of the population in to the financial system. Financial inclusion is becoming more important topic in academic world, but also among regulators and policy makers. In order to emphasize the importance of financial inclusion, this paper investigates the extent of financial inclusion among Western Balkan countries and in comparison to other developing regions around the world. Using data from the World Banks’ Global Findex data base, this paper provides comparison of the level of financial inclusion in Western Balkans counties, focusing on the importance of government role in increasing financial inclusion. Research shows similar level of financial inclusion within Western Balkan countries measured by the following indicators of financial inclusion: percentage of population having formal account at a financial institution, percentage of population saving at financial institution and percentage of population borrowing at financial institution. Furthermore, the research shows that the level of financial inclusion in Western Balkan countries is slightly above the levels in other developing regions around the world, but still Western Balkan countries lack national financial inclusion strategies which will help increase their levels of financial inclusion to the level of more developed countries. Keywords: financial inclusion, Western Balkan countries, developing regions, national financial inclusion strategies, policy makers 43 �Introductory Considerations The Center for Financial Inclusion (CFI) defines full financial inclusion as a state in which everyone who can use financial services/products has access to a wide range of quality financial services at affordable prices, with convenience, dignity, and consumer protections, delivered by a range of providers in a stable, competitive market to financially capable clients. Furthermore, according to the World Bank, financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.3 The term financial inclusion needs to be interpreted in a relative dimension. Depending on the stage of development, the degree of financial inclusion differs among countries. For example, in a developed country non-payment of utility bills through banks may be considered as a case of financial exclusion. However, the same may not (and need not) be considered as financial exclusion in an underdeveloped nation as the financial system is not yet developed to provide sophisticated services. Hence, while making any cross country comparisons due care needs to be taken (Mehrotra et. al., 2009:14). Improving access and building inclusive financial systems is a goal that is relevant to economies at all levels of development (World Bank, 2008:21) aiming to include the poorest part of the population in the financial streams. It is empirically proven that financial inclusion correlates with high levels of economic development in that country and vice-versa (Swamy, 2014). Furthermore, financial inclusion is becoming the main priority in developing countries since the research shows that increase in financial inclusion of individuals plays an important role in reduction of poverty and achieving inclusive economic growth. Greater access to financial services for both individuals and firms may help reduce income inequality and accelerate economic growth. Contrary to inclusion there is financial exclusion, which is often defined in the context of a larger issue – social exclusion. Financial exclusion is indeed a reflection of social exclusion, as countries having low GDP per capita, relatively higher levels of income inequality, low rates of literacy, low urbanisation and poor connectivity seem to be less financially inclusive (Sarma, Pais, 2008:23). This relationship can also be viewed from the other side: The reduction of financial exclusion is a priority for the government because it can lead to social exclusion (Mitton, 2008). As Western Balkan countries are developing part of the world, financial inclusion can be perceived as on the important aspects and contributors to economic development. Therefore, this 3 http://www.worldbank.org/en/topic/financialinclusion/overview 44 �paper complements to existing literature on financial inclusion measurement, by providing a comparative analysis of financial inclusion in the countries of this region, focusing on the level of financial inclusion and on the government role in increasing financial inclusion. The second part of the paper summarizes previous researches on financial inclusion globally. In the third part of the paper the methodology of the research was introduced, while in the fourth part of the paper the comparative analysis of financial inclusion in Western Balkan countries is presented. Previous Research Financial literacy is a rather new topic among academics. Its’ importance increased in the last decade as a result of the global financial crisis. Academic research is mainly focused on measurements of financial inclusion, in other words, on creating integrative measures of financial literacy that can be both internationally comparable and that can capture the specifics of particular national economy that is the subject of the research. There are two approaches to investigate financial inclusion based on the data collection method. Different databases offer either supply side or demand side data. Supply-side studies and databases (such as CGAP Financial Access, IMF Financial Access Survey or Microfinance Information eXchange) compile data from various types of (formal and non-formal) financial institutions aiming to calculate and understand their overall outreach and performance in providing financial services to individuals in one country, region and globally. Until recently, the measurement of financial inclusion around the world has focused on usage and access to the formal financial services by using supply-side aggregate data, meaning that data were collected directly from financial institutions. These are the so-called density indicators, such as the number of bank branches or automatic teller machines (ATMs) per capita. Data of this type have been compiled by surveying financial service providers (e.g. Beck, Demirgüç-Kunt, and Martínez Pería 2007; Honohan 2008; Kendall, Mylenko, and Ponce 2010; Chakravarty and Pal 2010; Sarma and Mandira (2012); Amidžić et. al. 2014, etc.). Demand-side (provider side) information on financial inclusion is now collected as part of the IMF’s Financial Access Survey, which has annual data for 187 jurisdictions from 2001 up to date.4 While these indicators have made it possible to obtain basic provider-side information on the use of financial services, relatively little has been known until recently about the global reach of the financial sector, that is, the extent of financial inclusion and the degree to which the poor, women, and other population segments are excluded from formal financial systems (World Bank 2014:39). 4 More on IMFs Financial Access Survey data can be obtained from the following website: http://data.imf.org/?sk=E5DCAB7E-A5CA-4892-A6EA-598B5463A34C 45 �World Banks' Global Findex database, released in 2011, helps to overcome the problem of better understanding the underlying reasons of financial exclusion among different population groups. According to Demirguc-Kunt and Klapper (2012), ”The Global Findex fills a major gap in the financial inclusion data landscape and is the first public database on demand-side indicators that consistently measures individuals’ usage of financial products across countries and over time. Covering a range of topics, the Global Findex can be used to track global financial inclusion policies and facilitate a deeper and more nuanced understanding of how adults around the world save, borrow, and make payments.“ Most of recent research on financial inclusion levels around the world relies on the data from Global Findex database. Most of the research provides analysis of several usage and barriers related indicators on countries and regional levels (Demirguc-Kunt and Klapper, 2013, Demirguc-Kunt et al., 2015). Some of the research addresses gender, age, and income inequalities in financial inclusion (e.g. Aterido, Beck, and Iacovone 2011; Demirguc-Kunt, Klapper and Singer 2013), but on the regional level. Still there is no more detailed research on individual level. Research Methodology In this research, the status of financial inclusion among Western Balkan countries was assessed using secondary data from World Bank Global Findex Database (2014) through descriptive statistics. The Global Findex indicators measure two dimension of financial inclusion: access to financial services and the use of financial services. As the Global Findex indicators cover very broad area of topics of individuals’ financial behaviour, we focus on the following indicators that we believe are particularly important to provide better insight into overall financial inclusion of individuals among Western Balkan countries: - formal account – holding an account (savings or checking) at a financial institution - formal savings – savings at financial institution - formal borrowing – loan at financial institution Additionally, a chi-square test of independence was performed to examine whether there are statistically significant differences in financial inclusion levels among individuals in respect to gender, education level and income level. Furthermore, we examine barriers to financial inclusion through understanding the reasons why individuals do not have an account at financial institutions. The indicators in the Global Financial Inclusion (Global Findex) database are drawn from survey data covering almost 150,000 people in more than 140 economies—representing more 46 �than 97% of the world’s population. The survey was carried out over the 2014 calendar year by Gallup, Inc. as part of its Gallup World Poll, which since 2005 has continually conducted surveys of approximately 1,000 people in each of more than 160 economies and in over 140 languages, using randomly selected, nationally representative samples. The target population is the entire civilian, non-institutionalized population aged 15 and above. 5 Empirical Evidences on Financial Inculusion in Western Balkans Formal account penetration The most common indicator of financial inclusion is formal account penetration which measures the percentage of population having (owning) a formal account at financial institution.6 Having an account at formal financial sector serves as an entry point into the formal financial sector and opening/having a bank account is considered as the starting point to have relationship with a bank (Bapat, 2010; Demirguc-Kunt and Klapper, 2013). According to the Global Findex database 2014, it can be clearly observed that there is a wide difference in account penetration among Western Balkan countries (see Figure 1). The highest levels of formal account penetration can be observed in Croatia (87,50%) and Serbia (83,70%), while the lowest level of account penetration is in Albania (38,24%). Figure 1 Formal Account Penetration across Western Balkan countries Croatia 87.50% Serbia 83.70% Maceodnia 79.40% Montenegro 64.90% Bosnia and Herzegovina 54.05% Kosovo 51.65% Albania 38.24% 0% 20% 40% 5 60% 80% 100% More on Global Findex methodology and questionnaire can be obtained from the following web-site: http://www.worldbank.org/en/programs/globalfindex/methodology 6 Global Findex data set captures formal account penetration through a mobile money providers as well, but as such service is not provided in Western Balkan countries, this data were ommited form analysis. 47 �Additionally, a chi-square test of independence shows that there are significant differences in formal account penetration in respect to gender, education and household income. Results of a chi-square test are reported in the following table. Table 1: Results of chi-square test of independence for formal account penetration Country Gender Education level Income level  (1, N=999) =10,829 p=0,001 2  (1, N=1001) =16,055 p=0,000 2  (1, N=1000) =1,317 p=0,251 2  (1, N=1001) = 46,718 p=0,000 2  (1, N=1000) = 1,735 p=0,188 2  (1, N=1000) = 19,803 p=0,000 2  (1, N=1000) = 0,134 p=0,714  (2, N=999)=144,040 p=0,001 2  (3, N=1001)=71,618 p=0,000 (*) 2  (4, N=1000)=107,295 p=0,001 (*) 2  (4, N=1001) = 89,823 p=0,000 (*) 2  (3, N=1000) = 90,466 p=0,000 (*) 2  (4, N=1000)= 62,186 p=0,000 (*) 2  (3, N=1000)=18,385 p=0,000 (*)  (4, N=999)=82,533 p=0,001 2  (4, N=1001)=36,098 p=0,000 2  (4, N=1000)=23,549 p=0,000 2  (4, N=1001)= 34,801 p=0,000 2  (4, N=1000)= 31,629 p=0,000 2  (4, N=1000)= 43,030 p=0,000 2  (4, N=1000)=11,239 p=0,024 2 Albania Bosnia and Herzegovina Croatia Kosovo Montenegro Macedonia Serbia 2 2 At significance level 0,05 *at least 2 cells have expected count less then 5 Based on chi-square test of independence, it can be concluded that there is a significant association between having account at formal institution and gender in Albania, Bosnia and Herzegovina, Kosovo and Macedonia, where is it is more likely that males will have an account than females (see table 1). Also, a significant association exists between having a bank account and income level (except in Serbia). Savings The second indicator of financial inclusion we focus on is saving. Savings are an essential ingredient for the financial inclusion of low-income populations, allowing households to manage short-term liquidity safely and conveniently, as well as to accumulate assets for future needs.7 Savings help in consumption smoothening during the economic shocks, especially for individuals with low-level income. 7 https://www.fomin.org/Portals/0/remesas/BROCHURE_Remesas_y_Ahorros_ingl%C3%A9s.pdf 48 �Survey data shows variation in savings among Western Balkan countries. The highest level of savings can be observed in Croatia where more than 50% of population have savings, while the lowest level of savings is observed in Bosnia and Herzegovina (26,97%). Figure 2: Participation in Formal Saving across Western Balkan countries Croatia 52.10% Maceodnia 40.70% Kosovo 37.96% Albania 37.44% Montenegro 30.70% Serbia 30.30% Bosnia and Herzegovina 26.97% 0% 10% 20% 30% 40% 50% 60% A chi-square test of independence shows that there are significant differences in savings in respect to household income (see Table 2). Table 2: Results of chi-square test of independence for savings Country Albania Bosnia and Herzegovina Croatia Kosovo Montenegro Macedonia Serbia Gender Education level Income level  (1, N=999) =3,910 p=0,048 2  (1, N=1001) =1,096 p=0,295 2  (1, N=1000) =6,043 p=0,014 2  (1, N=1001) = 16,845 p=0,000 2  (1, N=1000) = 0,193 p=0,660 2  (1, N=1000) = 5,740 p=0,170 2  (1, N=1000) = 1,099 p=0,295  (2, N=999)=50,801 p=0,000 2  (3, N=1001)=9,073 p=0,028 (*) 2  (4, N=1000)=44,852 p=0,000 (*) 2  (4, N=1001) = 67,588 p=0,000 (*) 2  (3, N=1000) = 17,525 p=0,001 (*) 2  (4, N=1000)= 39,385 p=0,000 (*) 2  (3, N=1000)=18,385 p=0,000 (*)  (4, N=999)=56,285 p=0,000 2  (4, N=1001)=25,925 p=0,000 2  (4, N=1000)=6,577 p=0,0160 2  (4, N=1001)= 17,095 p=0,002 2  (4, N=1000)= 63,245 p=0,000 2  (4, N=1000)= 18,650 p=0,001 2  (4, N=1000)=44,791 p=0,000 2 2 2 At significance level 0,05 *at least 2 cells have expected count less then 5 Based on chi-square test of independence, it can be concluded that there is a significant association between participation in formal savings and income level (except in Croatia), where 49 �individuals with higher income level participate in formal savings more than individuals with lower income level. Also, there is no significant association between participation in formal savings and gender (except in Kosovo) and education level. Borrowing Analysis of participation in borrowing in Western Balkan countries showed that the highest level of borrowings is in Croatia, where more than 58% of population have loan at financial institution, while the lowest level of borrowing (25,37%) is observed in Bosnia and Herzegovina (see Figure 3). Figure3: Participation in Borrowing across Western Balkan countries Croatia 58.20% Albania 54.25% Montenegro 50.80% Maceodnia 39.30% Kosovo 36.66% Serbia 32.50% Bosnia and Herzegovina 25.37% 0% 10% 20% 30% 40% 50% 60% 70% A chi-square test of independence shows that there are no significant differences in borrowings in respect to gender, education level and household income (see Table 3). The only exception is Albania, where there is a significant association between participation in borrowing and income level. Table 3: Results of chi-square test of independence for borrowing Country Albania Bosnia and Herzegovina Croatia Kosovo Montenegro Macedonia Serbia Gender Education level Income level  (1, N=999) =1,874 p=0,171 2 (1, N=1001) =1,157 p=0,282 2 (1, N=1000) =1,538 p=0,215 2 (1, N=1001) = 5,695 p=0,017 2 (1, N=1000) = 1,512 p=0,219 2 (1, N=1000) = 19,803 p=0,192 2 (1, N=1000) = 0,270 p=0,604  (2, N=999)=4,433 p=0,106 2(3, N=1001)=25,428 p=0,000 (*) 2(4, N=1000)=53,966 p=0,001 (*) 2(4, N=1001) = 15,786 p=0,003 (*) 2(3, N=1000) = 13,610 p=0,000 (*) 2(4, N=1000)= 62,186 p=0,003 (*) 2(3, N=1000)=3,735 p=0,292 (*)  (4, N=999)=57,535 p=0,000 2(4, N=1001)=0,413 p=0,981 2(4, N=1000)=0,593 p=0,964 2(4, N=1001)= 12,651 p=0,013 2(4, N=1000)= 31,629 p=0,000 2(4, N=1000)= 4,891 p=0,299 2(4, N=1000)=1,942 p=0,746 2 2 At significance level 0,05 *at least 2 cells have expected count less then 5 50 2 �Differences in financial inclusion levels among income quintiles We also analysed basic indicators of financial inclusion among poorest 40 percent and richest 60 percent within WB economies (see Figures 4 and 5). Figure 4 Basic indicators on financial inclusion among poorest 40 percent within economies 28.55% 18.81% 30.16% 26.50% 16.61% 34.84% 27.58% 26.04% 31.05% 25.73% 29.21% 36.24% 34.17% 36.47% 36.77% 26.06% 21.11% 31.10% 21.73% 22.46% 43.36% Serbia Montenegro Maceodnia Kosovo Croatia Bosnia and Herzegovina Albania 0% 20% Formal Account Penetration 40% 60% Savings 80% 100% Borrowing The poorest 40 percent have overall lower levels of financial inclusion in comparison to 60 richest. Among three indicators we analysed, the poorest mainly use borrowing, while savings is the less used indicator (except in Kosovo, Croatia and Albania). Figure 5 Basic indicators on financial inclusion among richest 60 percent within economies 72.81% 75.61% 65.21% Average 71.44% 81.18% 69.84% Serbia 73.50% 83.39% 65.16% Montenegro Maceodnia 72.42% 73.95% 68.95% Kosovo 74.27% 70.79% 63.76% Croatia 65.83% 63.53% 63.23% 73.94% 78.89% 68.89% Bosnia and Herzegovina Albania 56.64% 0% 20% 40% Formal Account Penetration 51 Savings 60% 78.27% 77.53% 80% Borrowing 100% �The richest 60 percent mostly use savings and current account and they are less oriented to lending at financial institution. Overview of financial inclusion indicators in WB region in comparison to other developing regions and developed countries is given in Table 4. Table 4 Financial inclusion indicators by region Region Eastern Asia South Asia Central Asia Latin America SubSaharan Africa The Western Balkans* High income countries Formal account 69.00% 46.40% 51.40% 51.40% 34.20% 65.80% 94.00% Formal savings 36.50% 12.80% 8.40% 13.50% 15.90% 11.31% 51.60% Formal borrowing 11.00% 6.40% 12.40% 11.30% 6.30% 14.04% 18.40% Debit cards 42.90% 18.00% 36.90% 40.40% 17.90% 45.06% 79.70% Mobile account usage 0.40% 2.60% 0.30% 1.70% 11.50% N/A N/A * Data for the Western Balkans calculated as an average of particular indicator for the Western Balkan countries (Bosnia and Herzegovina, Serbia, Croatia, Montenegro, FYR Macedonia, Albania, Kosovo, and Greece) Source: Global Findex database and authors’ calculations We can see that the Western Balkans, in average, are far behind developed countries when it comes to financial inclusion measured by the possession of formal account, formal savings, formal borrowing and holding a debit card. On the other side, the level of financial inclusion in Western Balkan countries is mainly slightly above the levels in other developing regions around the world. Barriers to financial inclusion We also conducted analysis of barriers to financial inclusion in Western Balkan countries (see Figure 6). 52 �Figure 6 Reasons of poor financial inclusion in WB countries 60.00% 50.00% 53.21% 40.97% 40.00% 30.00% 26.26% 25.47% 20.00% 13.57% 13.23% 12.47% 12.12% 10.00% 3.84% 0.00% Among the reasons why individuals do not have an account at financial institutions the most important are the lack of money and no need for financial services. Conclusions and Recommendations For many governments the importance of financial inclusion is well known. Financial inclusion is on the agenda of both developed and developing countries. Around 60 countries in the world own and implement financial inclusion strategies. Great Britain is among the first countries to make progress in this field by publishing a financial inclusion strategy, within the Report for the Promotion of Financial Inclusion in 2004. When it comes to Western Balkan countries, none of them has strategy for financial inclusion, nor is financial inclusion included as goal in any other strategy. Bosnia and Herzegovina, for example, partly addresses this topic in the framework of the 2010 social inclusion strategy proposal. Montenegro has strategies to improve the situation of Roma and Egyptians in Montenegro 2012-2016, inclusive education strategy and national employment strategy; Croatia has a strategy to combat poverty and social exclusion, education strategy, employment strategy, etc. In Serbia a lot of research and studies on financial inclusion is being conducted. However, no country has a national strategy for financial inclusion. Improvement of financial inclusion requires national and regional strategies, whose success requires government support as well as involvement of the private and financial sector that will be interested only if the strategy corresponds to the market. Government should create and put into effect active measures in the context of the development of electronic and mobile banking. With that aim, close cooperation between the government and commercial banks must exist, in terms of limiting overpricing of banking products and services. 53 �That way the number of ATMs and applicants for mobile and electronic banking could be increased. Beside with commercial banks, government must collaborate with private associations to exchange expertise, knowledge and information. Also, there are a lot of possibilities for creating new and improvement of the existing regulation which treat this issue. Financial literacy and financial information must be actively promoted among individuals through formal and informal financial education programs. References Alliance for Financial Inclusion. (2010). Financial Inclusion Measurement for Regulators: Survey Design and Implementation. Policy paper, Data Working Group, AFI, Bangkok. [Online]. Available from: http://www.afiglobal.org/sites/default/files/afi_policypaper_datameasurement_en.pdf , [Accessed: 20 December 2016] Alliance for Financial Inclusion. (2011). Measuring Financial Inclusion: Core Set of Financial Inclusion Indicators. Data Working Group, AFI, Bangkok. [Online]. Available from: http://www.afi-global.org/sites/default/files/publications/fidwg-core-set-measuring-fi.pdf, [Accessed: 20 December 2016] Amidzic, G., Massara, A. &Mialou, A. (2014).Assessing Countries' Financial Inclusion - A New Composite Index. IMF Working Paper, WP=14=36., [Online]. Available from:https://www.imf.org/external/pubs/ft/wp/2014/wp1436.pdf[Accessed: 12 Januar 2017] Beck, T., Demirguc-Kunt, A. &Peria. M.S.M. (2007). Reaching Out: Access to and Use of Banking Services across Countries. Journal of Financial Economics 85 (1), pp. 234–66. Chakravarty, S. & Pal, P. (2010).Measuring Financial Inclusion: An Axiomatic Approach. Indira Gandhi Institute of Development Research, Working Paper no. WP 2010=003. [Online]. Available from: http://www.igidr.ac.in/pdf/publication/WP-2010-003.pdf, [Accessed: 12 January 2017] Demirguc-Kunt, A., &Klapper, L.( 2012).Measuring Financial Inclusion: The GlobalFindex.Policy Research Working Paper 6025, World Bank, Washington, D.C. Demirg-Kunt, A. &Klapper, L. (2013).Measuring Financial inclusion: Explaining Variation in Use of Financial Services across Countries and within Countries. Brookings papers on Economic Activity, Spring Demirguc-Kunt, A., Klapper, L. & Singer, D. (2013). Financial inclusion and legal discrimination against women: evidence from developing countries. Policy Research working paper ; no. WPS 6416. Washington, DC: World Bank. Available from: http://dx.doi.org/10.1596/1813-9450-6416, [Accessed: 12 January 2017] Demirguc-Kunt, A., Klapper, L., Singer, D. & Van Oudheusden, P. (2015). The Global Findex Database 2014: Measuring Financial Inclusion around the World. Policy Research Working Paper 7255, World Bank, Washington, DC. 54 �Honohan, P.( 2008). Cross-Country Variation in Household Access to Financial Services, Journal of Banking & Finance, Elsevier, vol. 32(11), pp. 2493-2500 Kendall, J., Mylenko, N. & Ponce., A. (2010).Measuring Financial Access around the World.Policy Research Working Paper 5253, World Bank, Washington, DC. Ledgerwood, J. (2013). Measuring Financial Inclusion and Assessing Impact, in Ledgerwood, J., Earne, J., & Nelson, C. (eds) (2013) The New Microfinance Handbook: A Financial Market System Perspective, Washington D.C.: World Bank, pp. 113-146. Mandira S., Pais J. (2008). Financial Inclusion and Development: A Cross Country Analysis, [Online]. Available from: http://icrier.org/pdf/Mandira%20Sarma-Paper.pdf [Accessed: 12 April 2017] Mehrotra N., Puhazhendhi V., Nair G. &Sahoo, B.B. (2009).Financial Inclusion - An Overview.Department of Economic Analysis and Research, National Bank for Agriculture and Rural Development (NABARD), Occasional Paper 48, Mumbai, [Online]. Available from:https://www.nabard.org/pdf/OccasionalPapersonFinancialInclusion_080509.pdf , [Accessed: 12 January 2017] Mitton L. (2008). Financial inclusion in the UK: Review of policy and practice, Joseph Rowntree Foundation [Online]. Available from: https://www.jrf.org.uk/sites/default/files/jrf/migrated/files/2234.pdf, [Accessed: 15 April 2017] Sarma, Mandira, (2012). Index of Financial Inclusion A measure of financial sector inclusiveness, Berlin Working Papers on Money, Finance, Trade and Development, Working Paper no. 07=2012. Swamy, V. (2014).Financial inclusion, gender dimension and economic impact on poor households. World Development, 56, 1-15 World Bank. (2008). Finance for All? Policies and Pitfalls in Expanding Access. Washington D.C.: World Bank World Bank. (2014). Global Financial Development Report 2014: Financial Inclusion. Washington, DC: World Bank. doi:10.1596/978-0-8213-9985-9. License: CreativeCommons Attribution CC BY 3.0 Other Internet sources: http://www.worldbank.org/en/topic/financialinclusion/overview http://www.worldbank.org/en/programs/globalfindex/methodology http://www.centerforfinancialinclusion.org/about/who-we-are/our-definition-of-financialinclusion http://data.imf.org/?sk=E5DCAB7E-A5CA-4892-A6EA-598B5463A34C 55 � 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. 3652 Title A name given to the resource Measuring Financial Inclusion in Western Balkan Countries – A Comparative Survey (doi: 10.14706/icesos1715) Author Author Kokorovic Jukan, Meldina Babajic, Amra Softic, Amra Abstract A summary of the resource. Abstract: According to the World Bank, more than one quarter of worlds’ population is without a bank account and is excluded from financial system. Improving financial inclusion and building inclusive financial systems is in agenda of all policy makers in both developed and developing countries aiming to include the poorest part of the population in to the financial system. Financial inclusion is becoming more important topic in academic world, but also among regulators and policy makers. In order to emphasize the importance of financial inclusion, this paper investigates the extent of financial inclusion among Western Balkan countries and in comparison to other developing regions around the world. Using data from the World Banks’ Global Findex data base, this paper provides comparison of the level of financial inclusion in Western Balkans counties, focusing on the importance of government role in increasing financial inclusion. Research shows similar level of financial inclusion within Western Balkan countries measured by the following indicators of financial inclusion: percentage of population having formal account at a financial institution, percentage of population saving at financial institution and percentage of population borrowing at financial institution. Furthermore, the research shows that the level of financial inclusion in Western Balkan countries is slightly above the levels in other developing regions around the world, but still Western Balkan countries lack national financial inclusion strategies which will help increase their levels of financial inclusion to the level of more developed countries. Keywords: financial inclusion, Western Balkan countries, developing regions, national financial inclusion strategies, policy makers Date A point or period of time associated with an event in the lifecycle of the resource 2017 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/b8d9f0fe789cc30e1874664345604bf4.pdf 83c908f3f5d1dd47f46168bb504f3b04 PDF Text Text Journal of Economic and Social Studies     Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Postsocialist Society Merita H. Meçe Clemson University mmece@g.clemson.edu Abstract: Significant increase of internal migration in Albanian post-socialist society affected people’s connections and their identity.   Keywords:  Internal Migration, Social Identity Theory, Social Identity, Prejudice, Stigma New social phenomena were differently perceived by the existing city inhabitants and the newcomers. On the one hand, the concept of social identity struggled between inclusionary/exclusionary boundaries; on the other hand, prejudice and stigma triggered from this complex reality. This paper applies Social Identity Theory to JEL Classification: Article History Submitted: 12.6.207 Resubmitted: 8.2.2018 Accepted: 25.5.2018 examine how internal migration affects social identity and its implications on prejudice and stigma in Albanian post-socialist http://dx.doi.org/10.14706/JE COSS17724 society. This qualitative study is based on desk research and secondary data drawn by national statistics and cross-sectional research conducted in Albania during the period 1991-2017. It concludes that more longitudinal studies should be conducted to understand the dynamics of social identity construction within the context of internal migration in Albania. This is necessary to promote a more inclusive society in order to accommodate social diversity and view internal migrants as local agents of development rather than objects of prejudice and stigma. Volume 7 | Issue 2 | 56 �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   Introduction   A growing body of research indicates that internal migration is a multi-dimensional phenomenon. It is rapidly growing in both, time and space raising various challenges (World Bank, 2009; Meng, 2012; Potts, 2012). Even though it affects the life of so many people worldwide, it is not easily measured. Thus, data about its scale are limited and outdated (World Economic Forum, 2017). Statistics estimate 740 million internal migrants worldwide (United Nations Development Programme, 2009). Internal migration highly increased in Albanian post-socialist society. Formerly this phenomenon was strictly controlled by the government and subject to central planning of distribution of human resources. The exact number of the internal migrants in Albania is unknown for two main reasons: a) some certain groups such as Roma population are not officially registered as internal movers. Thus, they are under recorded in national censuses; b) statistics from the population registers of the local government units are inaccurate and unreliable (Vullnetari, 2014). However, the World Bank estimated around 500,000 internal migrants in Albania during the period 1991-2005 (UNDP, 2009). On the other hand, Institute of Statistics (INSTAT) (2002) estimated 252,735 people who migrated from one prefecture to another during the period between two censuses (1989-2001). But the increasing scale of this phenomenon is triggered by uneven and complex realities among regions within a country (International Organization for Migration, 2015). Research shows that it is combined with stretching processes of fast urbanization. Thus, connections among people and their identity are dialectically impacted. In a broader sense, the concept of social identity offers possibilities to open up the influence of the environment on the self. It relates to: a) possible influences of the culture or ethnic group the individual is belonging to; b) personal situations and circumstances along with groups where individuals belong to or not; c) their direct contact with other people (Haas, 2008; Reicher, Spears and Haslam, 2010). According to Social Identity Theory, individuals strive to have a positive selfimage in order to become a member of the group which enhances this possibility (Haas, 2008). They are involved in social comparisons to favorably differentiate ingroup from out-group members (Dovidio et al., 2005; McLeod, 2008). While they think, feel, and act as members of collective groups socially constructed by the group’s frame of reference (Padilla and Perez, 2003), they stigmatize other groups, devaluate and discriminate them (Kurzban and Leary, 2001; Dovidio et al., 2005; McLeod, 2008). Volume 7 | Issue 2 | 57 �Merita H. Meçe   Research carried out during the last decades in various countries and regions highlighted several causes of the discrimination of the internal migrants mainly: a) complex structures (Lee and Piper, 2013), b) legal and institutional barriers (International Labor Organization and International Office for Migration, 2001; Afridi, Li and Ren, 2012), c) socio-cultural barriers (Jungteerapanich, 2014), d) gender (Weber, 2014), and e) religion (Engbers, 2015). However, limited research has been documented on the impact of internal migration on social identity and its implications on prejudice and stigma especially outside Europe and North America. The impact of internal migration on social identity construction has been little explored in Albanian post-socialist society as well. Literature shows that research conducted during this period mostly focused on: a) the challenges of this phenomenon on the new urban space (Cila, 2006; Mele, 2010; Pojani, 2013; Dirks, 2014), b) limited and inadequate service delivery (UNDP, 2000; UNDP, 2002; Hagen-Zanker and Azzarri, 2009) and c) gender inequality (United Nations Women, 2014; Jorgji, 2015). Very few studies addressed how internal migration shaped social identity and affected group boundaries between existing city inhabitants and the newcomers. In addition, very limited data are available to make some comparisons. The main purpose of this paper is to examine how internal migration affects social identity construction and its implications on prejudice and stigma in Albanian postsocialist society. This qualitative study is based on two research questions: 1) To what extent does internal migration affect social identity construction and group boundaries in Albanian post-socialist society? 2) What are its implications for prejudice and stigma? Since research about this topic is scant in Albania, this study intends to contribute to this discussion by addressing this gap in the current literature and research. Methods and Paper Organization Both, desk research and secondary data analyses are used to address two research questions of this qualitative study. Secondary research is mainly focused on the review of the concepts of internal migration and social identity based on migration theories and Social Identity Theory. It is combined with an overview of the profile of the internal migration in Albanian post-socialist society, its dynamics and characteristics. Secondary data are drawn by various national statistics, reports and studies conducted in Albania during the period 1991-2017. Institute of Statistics (INSTAT) 58 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   in Albania is the main official data source on internal migration. This national   statistical institute is responsible to conduct censuses, process data, release results nationwide and produce reports. Population reports issued by it during the period under study have been widely used in this paper. Other data have been drawn by cross-sectional studies conducted in limited geographical areas of the country in different periods of time by several researchers and organizations with a specific focus on migration. Data collection period varied between 2-6 months and their target group covered both sexes and different age-groups. They highlight how internal migration failed to successfully accommodate the differences among the existing city inhabitants and the newcomers. The relational term of ‘social identity’ served as both, a function of similarities with ‘us’ and a function of differences with ‘them’. Thus, prejudice and stigma triggered. This paper is composed of five parts. Following the first part which presents introduction (including methods and paper organization), the second part provides a theoretical framework of the concepts of internal migration and social identity based on migration theories and Social Identity Theory. The third part provides a profile of the internal migration in Albania during the years of transition to market economy and how it affected social identity construction. Implications on stigma and prejudice are provided in the fourth part. Some conclusions are drawn in the fifth part followed by study limitations. Theoretical Framework of Internal Migration and Social Identity Theory This section helps understand how the dynamics of the modern life ‘on the move’ affect groups’ boundaries and shape both similarities and differences among people. It shortly explains the theoretical framework of the phenomenon of internal migration, its key characteristics and main drivers. Furthermore, it briefly describes the relational nature of the concept of social identity based on Social Identity Theory. Definition of Internal Migration, Its Drivers and Some Theoretical Aspects Definition of internal migration is very challenging because internal migrants stay within country borders but move across provinces, municipalities, rural and urban settings. Especially nowadays the definition of this phenomenon is becoming more unclear because cities grow and consume satellite towns. On the other hand, satellite towns develop and provide residence along the outskirts of cities. But, the definition of the internal migration may depend not only on the classification of government entities but also on the purpose of migration (Fleury, 2016). Literature defines Volume 7 | Issue 2 | 59 �Merita H. Meçe   internal migration as movement of people within the country, from one administrative unit to another (IOM, 2005; IOM, 2008; Cazzuffi and Modrego, 2016). It represents one of the most spread forms of migration (Geddes et al., 2012) even though discussion on its patterns and trends is limited due to lack of adequate data (Rees et al., 2016). Research highlights four types of internal migration mainly: rural-urban, rural-rural, urban-rural, and urban-urban. But rural-urban migration is the fastest growing type of internal migration that dominates in most poor countries (IOM, 2005; IOM, 2008; Geddes et al., 2012). Internal migration flows differ from their direction, composition and duration (IOM, 2008). They can be temporary, permanent, circular, voluntary or for economic purposes, marriage or education (Fleury, 2016). But this definition of internal migration is not always a fitting word for migratory movement especially when it refers to the term ‘voluntary’ internal migration. It is hard to believe that departure of people from their place of origin that does not guarantee their livelihood is ‘voluntary’ (IOM, 2005). However, the literature mainly deals with permanent internal migration because official demographic, economic and employment statistics can easily track it (IOM, 2005; Rees et al., 2016). Evidence shows that internal migration is fuelled by the effects of and interactions between economic differentials (Kanbur and Venables, 2005; Geddes et al., 2012; Rees et al., 2016), social inequalities (Kobzar et al., 2015; Cazzuffi and Modrego, 2016; United Nations Educational, Scientific and Cultural Organization, 2017), political instability and state fragility (World Bank, 2009; United Nations Children’s Fund, 2014), demographic imbalances (Aroca and Maloney, 2005) and environmental hazards (Geddes et al., 2012; Clewett, 2015). The neo-classical approach views migration as an adjustment mechanism to labour market inequalities and employment (Boyle, Halfacree and Robinson, 1998; Green and Worth, 2015). The main goal of the internal migrants is to maximize utility (Cazzuffi and Modrego, 2016) through access to employment or improvement of terms and conditions in employment (Fielding, 2012; UNESCO, 2017). According to Food and Agriculture Organization (2016), more than 75 percent of the world’s poor population resides in rural areas and depends on agriculture for subsistence. Lack of access to markets, poverty and food insecurity pushes them to migrate in urban areas. But the neo-classical approach emphasizes that decisions to migrate to the areas that offer the highest net return to human capital (Cazzuffi and Modrego, 2016) are taken at micro-level and macro-level (Aroca and Maloney, 2005; Hagen-Zanker, 60 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   2008). Micro-level theories have been focused on the decisions taken by individuals   to migrate (Hagen-Zanker, 2008) and their characteristics (Cazzuffi and Modrego, 2016). On the other hand, macro-level theories explain migration as a result of uneven spatial distribution of labour (King, 2012) and the existence of macrostructural forces embedded in exploitative and economic power imbalances of global capitalism (Morawska, 2013). Besides these, modern migration theory highlights a range of reasons that push people to migrate. Their motives vary between temporary and permanent migration. Spatial inequalities in quality of life increase their expectation to achieve better wellbeing elsewhere (Lall, Selod and Shalizi, 2006; Macours and Vakis, 2010; Dustmann and Okatenko, 2014). In this paper, internal migration is defined as a permanent movement of people from one administrative unit to another with a special emphasis from rural areas to urban areas of Albania. Based on state statistics and national censuses, this type of migration highly spread in the country after 1991 when Albania changed its political system. Other types of internal migratory movements are neither discussed nor examined in this paper. Social Identity Theory Social Identity Theory (SIT) is a social psychological theory which was initiated by Henri Tajfel by the beginning of the 1970s. It intends to explain how individual behaviour reflects individuals’ larger societal units with the help of group processes, intergroup relations and the social self (Hogg, Terry and White, 1995; Padilla and Perez, 2003). The core idea of this theory is that membership in a social group determines the behaviour of the individual (Davis, 2014). It defines social identity as a person’s sense that he or she belongs to a certain group or social category along with the value and emotional significance attached to it (Tajfel, 1972). This definition implies two key elements: a) belief that an individual belongs to a social group; b) group membership is important to individual’s self (Whitley and Kite, 2010). Social identity provides a bridge between the individual and the society. It is a relational term which defines people as a function of their similarities and differences with others (Reicher, Spears and Haslam, 2010). Social identity is focused on the structures that differentiate one group from another (Burke and Stets, 1998). Besides this, social identity is shared with others providing a basis for shared action. Meanings attached to social identity are products of our collective history (Reicher, Volume 7 | Issue 2 | 61 �Merita H. Meçe   Spears and Haslam, 2010) because group members enact roles that are part of group’s expectations (Turner et al., 1994). Groups give their members a sense of belonging to the social world, a particular social status, protection, security and emotional support (Korostelina, 2014). That is why they are an important source of pride and self-esteem (Tajfel, 1979). Belonging to a certain group means being like other group members and viewing things from the group’s perspective (Stets and Burke, 2000; Korostelina, 2014). According to Social Identity Theory, social identity has three main components: a) social categorization; b) social identification; c) social comparison (Tajfel and Turner, 1979). Social categorization is a process that puts people including ourselves into categories. It labels them in ways that associate their self-image with the categories they belong to (Tajfel, 1979). It sharpens intergroup boundaries and produces group- distinctive normative perceptions (Hogg, Abrams and White, 1995). According to Tajfel (1979), people create categories due to their limited capacities to process information. Therefore, social categorization simplifies their understanding of the world. It helps individuals define their place in the society through segmenting, classifying and ordering the social environment (Tajfel, 1981). Social categories precede individuals in their personal history. Individuals are born in a structural society where the sense of self largely derives from the social categories they belong to (Hogg and Abrams, 1988). They provide a self-definition of a person in terms of the characteristics of the category (Hogg, Terry and White, 1995). They make the individual have a unique self-concept because during the life course, the individual is a member of a unique combination of social categories (Hogg and Abrams, 1988). Social identification is a process where individuals associate themselves with certain groups and adopt the identity of the group they have been categorized as belonging to (McLeod, 2008). They show emotional significance to their identification with a group and self-esteem bound with group membership (Brewer, 1991). Guided by the need to be unique and the need to belong, individuals perceive themselves to be similar and have positive qualities with in-group members. They maintain their distinctiveness and perceive themselves different from out-group members who possess less favourable qualities striving to remain detached from them (Brewer, 1991; Brown, 1995). Social comparison aims at evaluating the social groups to which individuals belong to (Tajfel, 1978). Social Identity Theory implies not only social categorization of individuals but also groups’ evaluation. Individuals prefer to positively differentiate 62 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   themselves from others. The outcome of comparison with out-groups might be   advantageous or disadvantageous for their status (Taylor and Brown, 1988). Tajfel and Turner (1979) argued that social identity can be positive or negative depending on the evaluation of the group that contributes to it. Since people have a basic need to have a positive social identity, self-evaluative consequences of social identity strongly motivate members of one group to keep self-enhancement by comparing themselves with others (Hogg, Terry and White, 1995). A General Overview of the Internal Migration in Albanian Post-socialist Society This part describes the profile of internal migration in Albania after 1991. It examines how social identity construction appeared in the context of changing of the meaning of social category. It highlights the complexity of groups’ boundaries created during the process of social identity negotiation where in- and out-groups interactions are redefined. Profile of Internal Migration in Albanian Post-socialist Society Internal migration has been one of the most dramatic features of the development of Albanian post-socialist society. It occurred rapidly and did not follow any normal trend (UNDP, 2002). Before the change of the political system, this phenomenon was tightly regulated and highly controlled by the central government (INSTAT, 2014). Policies that restricted the free movement of population were lifted after 1991 when the socialist system collapsed. The country was exposed to rapid and substantial changes that affected its social, economic and political structure. Mass uncontrolled and unplanned migration of population (mainly from villages and remote mountainous areas) towards towns and cities led to overpopulation of some urban areas (UNDP, 2000; World Bank, 2003) and drastic depopulation of some others (INSTAT, 2014). Relocation of the whole household is one of the characteristics of internal migration in Albania. Statistics show that one in five families in Albania has experienced internal migration (INSTAT, 2010). The 2011 Census data revealed that 10 percent of the population now live in a different town or village compared to that of a decade ago. More than 10 percent of the internal migrants had moved multiple times (INSTAT, 2014). The unknown experience of multiple moves spread during the last decade. It was combined with high tendency of direct moves and impacted the total number of urban population. For the first time in the history of Albania, population living in urban areas outnumbered that living in rural areas (INSTAT, Volume 7 | Issue 2 | 63 �Merita H. Meçe   2014). Figure 1 shows rural-urban population distribution trends in Albania based on data of the last three censuses. Figure 1: Rural-Urban Population Distribution Trends in Albania, 1989-2011 Source: INSTAT (1990); INSTAT (2014) Diverse drivers of internal migration in Albanian post-socialist society include: a) economic motives. People rapidly reacted against negative externalities caused by economic transformations during the first years of democratic transition. These factors pushed people away from collapsed agricultural cooperatives and state farms. In addition, destructive effects of sudden closure of industries in mono-industrial interior towns increased the trend of movement of their inhabitants towards big cities (King and Vullnetari, 2013); b) city life attraction. People were willing to benefit from advantages of ‘modern’ urban lifestyle. However, their aspirations were not always fulfilled. Both, the scarcity of well-paid jobs and their settlement in periurban informal areas hindered them (King and Vullnetari, 2013); c) democracy deficit. Fragile democracy was followed by weak state institutions, lack of rule of law and lack of trust in governmental structures. Democracy deficit activated traditional customary law especially in the Northern part of Albania. Revitalization of Kanun of Leke Dukagjini was followed by blood feud (honour killing). To escape from blood feud conflicts, many highlanders migrated from their villages to other parts of the country (UNDP, 2000; Peço, 2014; Meçe, 2017). 64 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   But, socio-economic and political development of the country determined not only   the dimension, but also the direction of internal migration in Albania (UNDP, 2002). The majority of the internal migrants were from geographically landlocked, underdeveloped and mountainous parts of the North and North-eastern areas of Albania. Their total population decreased by 21 percent during the period 20012011. Newcomers were settled in lowlands and coastline particularly in Durres and Tirana regions. Statistics show that, after 1991, the annual population growth rate in Kamza Municipality located just 11 km away from Tirana (the capital city of Albania) was 66 percent (INSTAT, 2014). This dramatic demographic boom recorded in main regions and cities of the country increased their population density. It affected their urbanization process and impacted relationships among the existing city inhabitants and the newcomers (UNDP, 2002; INSTAT, 2014). The 2011 Census data showed that 49 percent of the newcomers resided in Tirana while 15 percent resided in Durres (INSTAT, 2014). The majority of the newcomers (more than 50 percent) was young (aged 15 – 34 years). The distinct peak was reached by 20-24 age-group. Women were more involved in internal migration and they represented 59 percent of the total internal migrants. Different from men who migrated for employment purposes, the main purpose of internal migration of women was related to family issues. In general, the largest group of internal migrants has a lower secondary education (INSTAT, 2014). Internal Migration and Social Identity in Albania The structure of the Albanian post-socialist society was highly affected by mass ruralurban migration towards main cities (UNDP, 2000; Likaj and Baltaci, 2008; Titili, 2015). This was followed by the change of city values and gradual loss of traditional features of the city life. Socio-economic, educational and cultural differences between existing city population and the newcomers became evident. They were the main cause of tension and poor social cohesion (UNDP, 2000; Ndreka, 2014). The newcomers were not always welcomed by the existing city inhabitants. They faced their resistance to consider them ‘as part of their group’. Local norms and customs they inherited from their place of origin were deeply rooted in the mentality of the newcomers. They practiced them in the new communities where they were settled even though they were not easily ‘digested’ by the existing city inhabitants. Thus, boundaries between the existing city inhabitants and the newcomers were deepened (UNDP, 2002; Titili, 2015). Lack of patience to accommodate social diversity became problematic especially in areas formerly recognized as populated by old city communities (UNDP, 2002; Volume 7 | Issue 2 | 65 �Merita H. Meçe   Likaj and Baltaci, 2008). For instance, in Tirana city, existing inhabitants proudly categorised themselves as ‘Tironsa’ (a dialect word used by those who were born and raised in Tirana city or lived there for a very long time. It means ‘We are from Tirana’) (Bardhoshi, 2011). They identified themselves as part of this group and openly expressed their feeling of belonging to it. Its members attributed positive values to its membership and showed strong attachment to their group. They spoke in Tirana dialect to preserve their Tirana city group identity. The members of this group perceived themselves as being different from the newcomers’ group. According to ‘Tironsat’ group, ‘Tironsit’ were kind and generous people. They respected their neighbours and the rules of the community life. They were very connected to their city and linked its development with their life events. But this group was very disappointed with the newcomers. Its members felt that the newcomers destroyed their cosmos and community life (Bardhoshi, 2011). In his study conducted in 2011 with 1000 participants (500 existing inhabitants and 500 newcomers after 1991 located in the periphery of Tirana), Janaqi (2014) found that 82 percent of the respondents from the group of the existing inhabitants perceived their culture as being threatened by the culture of the newcomers. According to them, the newcomers used harsh and aggressive vocabulary. They applied the ‘rule of the strongest’ to get what they wanted. They did not apply civilized means of communication (Ribas-Mateos, 2005; Bardhoshi, 2011). In some other cases, the group of the existing city inhabitants viewed the group of the newcomers as rivals. They blamed them for deterioration of their quality of life. This was more evident in both, the labour market and in the share of the benefit of city services and facilities. According to the existing city inhabitants, the newcomers were like ‘proletarians’. They had nothing to lose because they had a low level of education and did not have resources. Thus, they were willing to take up every job and did not negotiate for their salary. This sudden competitive situation fostered the ‘in-group solidarity’ among the members of the existing city inhabitants to help each other. For instance, in Tirana city, in many cases, they approached each other to ask a favour for other group members by saying ‘Nimoje pak kët Tironsin tim’ (a dialect expression used by people born and raised in Tirana or lived there for a long time. It means ‘Help a little bit my Tirana fellow’). However, in the periphery of the main cities, there were cases when group boundaries were translated into a clear division of the territory. On the one side, there were areas characterized by modern patterns of lifestyle, on the other side, there were areas that failed to accommodate diversity (Titili, 2015). The strong sense of rural belonging of the newcomers was expressed in the identification of the new geographical location of their community. For instance, in the main road (heading 66 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   from Tirana to Kamza city), internal migrants from Kukes region had placed an   orientation sign where it was written ‘Kukës – 100 m djathtas’ (it means ‘Kukes is 100 m on the right’). But geographically Kukes is located in the Northern part of Albania about 130 km far from Kamza. During the process of ‘spontaneous regulation of their space’, newcomers developed a dual social identity. On the one hand, they pretended to be residents of suburban environment. Thus, they identified themselves as city inhabitants and negotiated with the host society for their rights and equal treatment. On the other hand, they practiced their patriarchal mentality within the family and kinship (Sinani, 2013). Thus, they insisted on their rural identity and felt more comfortable within their rural social group. In his study conducted in 2011 with 1,000 participants (500 were newcomers and 500 were existing inhabitants from Tirana), Janaqi (2014) found that 93 percent of the newcomers did not feel comfortable to reside in an area surrounded by local inhabitants. But newcomers’ social identity construction was not a smooth process. It was dominated by old norms of gender division of labour and inter-generational conflict. Ndreka (2014) conducted a qualitative study in Spitalla area (Durres city) which is highly affected by internal migration. In total, 400 participants were interviewed (132 males and 268 females). They were internal migrants from Dibra region (located in the North eastern part of Albania) who had migrated in the study area during the last 10 years. She found that female newcomers of this community were not very willing to be involved in community life making group boundaries stronger. Even though they were more deprived in the city than in their village of origin, they followed strict patterns of rural lifestyle. Their primary role was focused on family chores and child upbringing (Ndreka, 2014). Thus, they categorised themselves as rural women and identified themselves as members of this group. In 2009, Çaro, Bailey and van Wissen (2012) conducted 25 in-depth interviews with migrant women from the northern part of the country who resided in four sites of Kamza. They found that their social networks outside their migrant community were poorly developed. According to the respondents, their dialect, tradition and way of living hindered their interactions with the host society. They perceived themselves as being rural and preserved their rural identity despite many years of migration to the city. One of the main reasons for this was that they were part of the clusters which shared strong tradition and the nostalgic feeling about their origin (Çaro, Bailey and van Wissen, 2012). Moreover, in his study, Doçi (2013) mentioned a qualitative research conducted with 800 internal migrants who were based in Breglumasi area (part of Tirana Municipality). From their face-to-face Volume 7 | Issue 2 | 67 �Merita H. Meçe   interviews, it was found out that their community life was under patriarchal norms of male domination. In general, family life outside the community was very limited. Traditional gender division of roles had increased female subordination because of the fear of men not to lose the control over their wives and daughters (Doçi, 2013). Thus, male newcomers developed new mechanisms to strengthen their sense of rural belonging. They categorised themselves as rural people and were strongly attached to their rural identity. Furthermore, inter-generational conflict dominated the process of social identity construction among the newcomers located in the main cities of Albania after 1991. Tensions were observed between the young generation of the newcomers born in the city (or migrated there at a very young age) and the old generation of the newcomers born in the rural areas. While the first group was proud to claim that it was from the city, the second one strongly emphasized that it was from the village. The old generation of internal migrants was happy to stick on its sense of rural belonging. It categorised itself as being originally from the village and attached itself to the group of the rural newcomers. Thus, it insisted to be located in those neighbourhoods of the cities where other rural families from their village of origin were accommodated. But, this situation complicated the daily life of the newcomers’ school children. They had to balance their traditional life at home/neighbourhood with their wish to be like other peers of host society in the school and community. Children reported that they were warned every morning by their parents to be away from other children who did not belong to their region of origin and did not have their customs (Andoni, 2017). In this way, their parents served as gatekeepers of children’s social identity preservation. They wanted to keep group boundaries and transmit them to young generation. But children wanted to cross them, adjust to new city life and bridge with the group of city children. Therefore, they were in a dilemma because, after school hours, they had to go back to their strict family mentality (Andoni, 2017). Even young rural migrants with high expectations from city life were not able to bond in any social group. They tried to interact with young people from the existing city inhabitants group and be part of it. But group boundaries were not always flexible. Living for several years in the periphery of Tirana city, some of them started speaking in the dialect of Tirana. They dressed like Tirana city youngsters and went to night pubs. But when they ‘categorised’ themselves as ‘Tironsa’ and wanted to join ‘Tironsat’ group, its members laughed at them ‘Ky osht Tirons i vjetër që ka 5 vjet m’Tironë’ (it is an expression in Tirana dialect that means ‘This person is an old Tirana citizen who lives here for 5 years’). 68 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   Despite efforts made by children and the youth from the newcomers’ group to   change their social identity and join the city inhabitants group, the other members of the newcomers group positively evaluated their group. The process of social comparison with the group of the existing city inhabitants yielded positive results for both groups. Each of them evaluated their group as having more advantages than the other group. For instance, the group of the newcomers evaluated its members as hardworking persons who tried hard to make their living despite relative deprivation imposed by the local inhabitants. They perceived the members of the other group as being lazy. They valued the ability of their group members to use different coping mechanism to overcome difficulties faced. They appreciated in-group support (Janaqi, 2014). On the other hand, the group of the existing city inhabitants positively evaluated its group in various aspects including: high level of education, tolerance, civic education, politeness, etcetera. Implications of Internal Migration on Prejudice and Stigma Internal migration impacts transformation of self and raises various social consequences. Segmentation of migrants has implications for their social identity. Arbitrary categorization of individuals has been stigmatizing and disempowering (Schimmele and Wu, 2015). Usually internal migrants are perceived as nondominant groups exposed to negative social evaluations of their group, dilemma or threat of their identity (Tajfel, 1978). Both, the intensification of the dynamics of the modern life and its unequal development path have provoked the tendency of negatively valued groups to tend to move into groups with a positive social identity (McLeod, 2008). Prejudice refers to negative attitudes or behaviours towards members of a certain group (Augoustinos and Reynolds, 2001). It is experienced by people who belong to certain categories or groups with negative evaluations (Haas, 2008). Prejudice has been traditionally understood as rigid, bad, unjustified, erroneous and emotional (Augoustinos and Reynolds, 2001). Research shows that ongoing prejudice can produce external attribution for negative outcomes. In general, minority groups have been devalued and prejudiced by the majority groups (Dovidio et al., 2005). In their study on the impact of China’s hukou system on social identity and inequality, Afridi, Li and Ren (2012) found that migrant children were labelled less intelligent and had low academic results. Migrant girls faced dual discrimination caused by discrimination against rural migrants and gender discrimination. They concluded that even though China is a homogenous society, long-term systemic approaches of social exclusion between rural areas and urban areas had played a Volume 7 | Issue 2 | 69 �Merita H. Meçe   powerful role in prejudice and discrimination. This influenced behaviour of migrant children (Afridi, Li and Ren, 2012). Moreover, social stigma is defined as a function of the possession of a particular attribute that conveys a devalued social identity in a particular context (Crocker, Major and Steele, 1998). It is a special kind of relationship between attribute and stereotype (Goffman, 1963) that arises during social interactions of the individuals with a social identity that does not meet normative expectations of the society for the attributes that they should possess (Kurzban and Leary, 2001). These attributes cause negative stigmatization of groups. They are usually associated with powerlessness and minority standing (Padilla and Perez, 2003). Stigmatization is a process that affects both, how individuals perceive themselves and how they feel that the others perceive them (Goffman, 1963). It denigrates others by putting one group in a psychologically superior position (Turner, 1982). Stigmatized groups are very often subject to negative attitudes and negative treatment. Perceptions of discrimination can negatively impact their mental and physical health because they produce high levels of stress (Williams, Spencer and Jackson, 1999). Goffman (1963) distinguished three types of stigma: a) that related to various physical deformities; b) individual characteristics perceived as mental disorder and weak will; c) tribal stigma related to race, religion and nation. Frable (1993) identified two dimensions of stigma respectively, danger and visibility. It was assumed that the higher the visibility of a stigmatized person is, the greater its negative impact on social interaction is. Visibly stigmatized individuals with devalued social identity might be challenged in their daily interactions. Being aware of the negative connotations of their social identity, they might be excluded from interactions while try to minimize their stigma (Padilla and Perez, 2003). Research conducted in 2013 with 868 individuals (mainly internal migrants) from Bathore Administrative Unit of Kamza Municipality in Albania showed that 27.4 percent of the respondents confirmed that they left their home in the northern part of the country to escape conflicts and blood feud consequences (Peço, 2014). But the existing local people in Kamza labelled them ‘Chechens’ or ‘Maloks’ (a pejorative word used for those who come from mountains). In addition, they blamed them as the main cause of high crime rate in the country due to the application of Kanun (Schwander-Sievers, 2008). Not only internal migrants from the northern part of Albania but also internal migrants from the southern part of the country were subject to prejudice and stigma. 70 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   The existing local inhabitants in both Tirana and Durres main cities stigmatized   newcomers from the southern villages and labelled them ‘Katunars’ (a pejorative word in the dialect of Tirana and Durres regions that implies uncivilized people who come from villages). They complained all the time by saying ‘Na mbyten katunaret’ (‘Village people are suffocating us’). Prejudice about newcomers has been expressed in various ways. In his study conducted in 2011 in Albania with 1,000 participants (500 were existing inhabitants while 500 were new comers after 1991), Janaqi (2014) found that: a) 78.9 percent of the respondents from the group of the existing inhabitants did not want to educate their children in the schools dominated by children of the families who migrated in their host society after 1991; b) 54.3 percent of the respondents from the group of the existing inhabitants categorically refused to sell their land to a newcomer; c) 43.3 percent of the respondents from the group of the existing inhabitants declared that they openly expressed their direct prejudice towards newcomers; d) 85.7 percent of the respondents from the group of the existing inhabitants thought that they were more civilized that newcomers (Janaqi, 2014). Conclusion This paper examined how internal migration in Albanian post-socialist society affected social identity construction and group boundaries along with its implications on prejudice and stigma. Focused on permanent rural-urban migration, it argued that this complex and diverse phenomenon exposed both local people and newcomers in different dilemmas and challenges about their social identity. Based on Social identity Theory, it analysed how group membership assigned social identity by favouring in-group and unfairly discriminating, prejudicing and stigmatizing outgroup. Usually viewed as having a lower social status than that of the local people, newcomers were negatively viewed, unequally treated and imposed to multiple identities. But migration and human mobility are inseparable part of the modern life that goes hand in hand with transformative social processes and ongoing dynamics. Thus, more research is needed to understand both, identity negotiations in the host society (at societal level) and double norms/mechanisms that newcomers apply to ensure ingroup positive social identity. It will be worthy to search how they negotiate within the group to make sure that its values will not be compromised by their inclusion in mainstream society. More longitudinal research is needed to capture various challenges of social identity construction among different age groups and gender. Volume 7 | Issue 2 | 71 �Merita H. Meçe   Finally, at policy making level, it will be very helpful to design more accountable policies that encourage multi-cultural communication, diversity promotion and social identity respect. Prejudice and stigma towards the newcomers does not help social cohesion and the process of social integration. This attitude will not stop or minimize the phenomenon of the internal migration. On the other hand, it is not helpful for both, young and old generations to live in a hostile and fragmented environment. Awareness raising and education programs to promote inclusion and social integration are important to remove barriers among the groups. There is a need to view internal migrants as local agents of development and contributors of local change. This is important not only in short-term but also in long-term in order to achieve a more cohesive society based on mutual respect and peaceful coexistence. Limitations This paper has four main limitations: a) firstly, it is focused on secondary data drawn by research conducted during the period 1991-2017. However, very few studies on internal migration and social identity in Albanian post-socialist society were available for analysis; b) secondly, longitudinal research on impact of internal migration on social identity construction in Albania lacks. Thus, data collected by some crosssectional studies have been used. However, they were conducted one point in time and in fragmented areas; c) thirdly, some regions including Western Balkan countries and Eastern Europe are short in this research topic. Therefore, comparisons with other regions where the phenomenon of internal migration is evident have been partially applied; d) fourthly, the primary focus of this study is internal migration during the years of Albania’s transformation to the open market economy. Thus, external migration is neither discussed nor addressed in analyses conducted. References Afridi, F., Li, X.Sh., & Ren, Y. (2012). Social identity and inequality: The impact of China’ s Hukou system. Discussion Paper No. 6417, IZA, Germany. Andoni, B. (2017). Life and death in Kamza: between old tradition and capital city life. Reporter.al. Retrieved 15 April 2017 from https://www.reporter.al/jeta-dhe-vdekjane-kamez-midis-kryeqytetit-dhe-tradites-se-qemotit/ Aroca, P., & Maloney, W.F. (2005). Migration, trade, and foreign direct investment in Mexico. The World Bank Economic Review, 19 (3), 449-472. 72 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   Augoustinos, M., & Reynolds, J.K. (2001). Prejudice, racism, and social psychology. In M. Augoustinos., & K. J. Reynolds (eds.). Understanding prejudice, racism, and social conflict. SAGE Publications Ltd, 1-23. Bardhoshi, N. (2011). The ‘citizen’ and the ‘transformation’ period in Albania. In I. Parolo., & G. B. Prato (eds.). Citizen and the Legitimacy of Governance. Anthropology in the Mediterranean Region, 115-132. UK: Ashgate Pulishing Ltd. Boyle, P., Halfacree, K., & Robinson, V. (1998). Exploring contemporary migration. Longman. London. Brewer, M.B. (1991). The social self: On being the same and different at the same time. Personality and Social Psychology Bulletin, 17, 475-482. Brown, R. (1995). Prejudice, Its social psychology. Blackwell, Oxford. UK. Burke, J.P., & Stets, E.J. (1998). Identity theory and social identity theory. Paper presented at the Social Psychology Section Session on Theoretical Frameworks at the Annual Meetings of the American Sociological Association, San Francisco, 1998. Cazzuffi, C., & Modrego, F. (2016). Internal migration and the role of the place of origin. Working Paper Series No. 198. RIMISP. Retrieved 25 April 2017 from www.rimisp.org Cila, J. (2006). Making a livelihood. A study of rural migrants in Bathore, Tirana. UMD Report No. 2. Rotterdam. Retrieved 5 April 2017 from https://thesis.eur.nl/pub/12008/ Clewett, P. (2015). Redefining Nepal: Internal migration in a post-conflict, postdisaster society. Migration Policy Institute. Retrieved 10 April 2017 from www.migrationpolicy.org Crocker, J., Major, B., Steele, C. (1999). Social stigma. In D.T.Gilbert, S.T.Fiske., & G.Lindzey (eds.). The handbook of social psychology. New York: McGraw-Hill, 504-553. Volume 7 | Issue 2 | 73   �Merita H. Meçe   Çaro, E., Bailey, A., & van Wissen, L. (2012). Negotiating between patriarchy and emancipation: rural-to-urban migrant women in Albania. Gender, Place and Culture: A Journal of Feminist Geography, 19 (4), 472-493. Çaro, E. (2013). Winners or losers? The adjustment strategies of rural-to-urban migrants in Tirana, Albania. Journal of Ethnic and Migration Studies, 39 (3), 501519. Davis, B.J. (2014). Social capital and social identity: Trust and conflict. In A. Christoforou., & J. Davis (eds.). Social capital and economics: Social values, power and identity. London and New York: Routlege Taylor & Francis Group. Dirks, C.H.G. (2014). The implementation of zoning plans in informal areas and the possibilities of public-private partnership in Albania. Radboud University. Retrieved 6 April 2017 from http://gpm.ruhosting.nl/mt/PL2014/2014MAPL45DrksCarl.pdf Doçi, N. (2013). Internal migration, employment relations and social problems of community. Paper presented in the 1st International Conference on Research and Education – Challenges towards the future, 24-25 May 2013, Shkodra. Albania. Dovidio, F.J., Gaertner, L.S., Pearson, R.A., & Riek, M.B. (2005). Social identities and social context: social attitudes and personal well-being. Advances in Group Processes, 22, 231-260. Dustmann, C., & Okatenko, A. (2014). Out-migration, wealth constraints, and the quality of local amenities. Journal of Development Economics, 110, 52-63. Engbers, Y. (2015). Strategies in discrimination. The influence of social identity on coping with and reporting of discrimination amongst Dutch Moroccan men and women on the labor market. Radboud University Nijmegen, the Netherlands. Retrieved November 28, 2015 from http://www.ieder1gelijk.nl/uploads/media/Thesis_Strategies_in_Discrimination_Yvette_En gbers.pdf FAO. (2016). Addressing the root causes of migration and harnessing its potential for development 2016. Food Agricultural Organization. Rome. Fielding, T. (2012). Migration in Britain: Paradoxes of the present, prospects for the future. Cheltenham: Edward Elgar. 74 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society Fleury, A. (2016). Understanding women and migration: A literature review.   KNOMAD Working Paper 8, KNOMAD. Retrieved 1 April 2017 from www.KNOMAD.org Frable, D.E.S. (1993). Dimensions of marginality: Distinctions among those who are different. Personal and Social Psychology Bulletin, 19(4), 370-380. Geddes, A., Adger, W.N., Arnell, N.W., Black, R., & Thomas, D.S.G. (2012). Migration, environmental change and the challenges of governance. Environmental and Planning: Government and Policy, 39, 951-967, DOI:10.1068/c3006ed Goffman, E. (1963). Stigma. London: Penguin. Green, A., & Worth, I.Sh. (2015). Labor markets and internal migration. In. Darren, P., Finney, N., Walford, N., & Halfacree, K. (Eds.). Internal migration. Geographical perspectives and processes. Ashgate Publishing, 65-80. Hagen-Zanker, J. (2008). Why do people migrate? A review of the theoretical literature. Working Paper WP 002. MPRA Paper 28197. Hagen-Zanker, J., & Azzarri, C. (2009). Are internal migrants in Albania leaving for the better? ESA Working Paper No. 09 – 08. The Food and Agriculture Organization of the United Nations. Retrieved 7 April 2017 from www.fao.org/es/esa Haas, E. (2008). Community and identity. Social psychological backgrounds of identity development in multicultural society. INHOLLAND. Hogg, M., & Abrams, D. (1988). Social identification: A social psychology of intergroup relations and group processes. London: Routlege. Hogg, A.M., Terry, J.D., & White, M.K. (1995). A tale of two theories: A critical comparison of identity theory with social identity theory. Social Psychology Quarterly, 58(4), 255-269. ILO & IOM. (2001). International migration, racism, discrimination and xenophobia. Paper distributed in World Conference against racism, racial discrimination, xenophobia and related intolerance. Volume 7 | Issue 2 | 75   �Merita H. Meçe   INSTAT. (2002). The population of Albania in 2001: Main Results of the Population and Housing Census. Tirana: Instituti i Statistikës. INSTAT. (2010). Albania Demographic and Health Survey 2008-2009. Institute of Statistics, Institute of Public Health and ICF Macro. Tirana. Albania. INSTAT. (2014). Migration in Albania. INSTAT. Tirana. Albania. IOM. (2005). Internal migration and development: A global perspective. IOM Migration Research Series, 19. IOM IOM. (2008). World Migration Report 2008. IOM. IOM. (2015). World Migration Report 2015. International Organization for Migration. Geneva. Janaqi, G. (2014). Types of prejudice in migratory areas of Albania among newcomers and local people. PhD thesis. Faculty of Social Sciences. Tirana University. Retrieved 19 April 2017 from http://www.doktoratura.unitir.edu.al/wpcontent/uploads/2014/02/Doktoratura-GertiJanaqi-Fakulteti-i-Shkencave-Sociale-Departamenti-Psikologji-Pedagogjise.pdf Jorgji, E. (2015). Why do women migrate internally? Empirical analysis of determinants in the case of Albania. Interdisciplinary Journal of Research and Development, 2(2), 121-130 Jungteerapanich, K. (2014). Discrimination and social exclusion in Sweden in the age of globalization. The case study of Thai migrants. Lund University, Sweden. Retrieved November 28, 2015 from http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=4460809&file OId=4460812 Kanbur, R., & Venables, A.J. (2005). Spatial inequality and development – Overview of UNU-WIDER project. Working Paper 23. Department of Applied Economics and Management, Cornell University, Ithaca, NY. King, R. (2012). Theories and typologies of migration: An overview and a primer. WILLYBRANDT Series of Working Papers in International Migration and Ethnic Relations. Malmö Institute for Studies of Migration, Diversity and Welfare, Malmö University, Malmö, Sweden. 76 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society   King, R., & Vullnetari, J. (2013). Interrelationships between gender, care and migration: Albania during and after communism. WILLY Brandt Series of Working Papers in International Migration and Ethnic Relations 3/13. Malmö University. Malmö Institute for Studies of Migration Diversity and Welfare. Korostelina, K. (2014). Intergroup identity insults: A social identity theory perspective. International Journal of Theory and Research, 14, 214-229. Kurzban, R., & Leary, R.M. (2001). Evolutionary origins of stigmatization: The functions of social exclusion. Psychological Bulletin. 127(2), 187-208. Lall, S.V., Selod, H., & Shalizi, Z. (2006). Rural-urban migration in developing countries: A survey of theoretical predictions and empirical findings. World Bank Policy Research Working Paper, 3915. Lee, S., & Piper, N. (2013). Understanding multiple discrimination against labor migrants in Asia. An intersectional analysis. Friedrich Ebert Stiftung. Germany. Likaj, M., & Baltaci, C. (2008). The changes of social structure and migration in cities in Albania. Paper presented in the 1st International Conference on Balkan studies, 7-8 November 2008. Epoka University. Tirana. Albania. Macours, K., & Vakis, R. (2010). Seasonal migration and early childhood development. World Development, 38 (6), 875-869. McLeod, S.A. (2008). Social identity theory – simply psychology. Retrieved November 4, 2015 from http://www.simplypsychology.org/social-identity-theory.html Meçe, M.H. (2017). Living in uncertainty: Resurgence of blood feud in Albanian post-socialist society and its consequences on children and young adults. Contemporary Readings in Law and Social Justice, 9 (2), 28-28. Mele, M. (2010). Transition stories: Politics of urban living space in Tirana city region, Albania. PhD thesis, University of Hull. Retrieved 4 April 2017 from https://hydra.hull.ac.uk/assets/hull:5804a/content Meng, X. (2012). Labor market outcomes and reforms in China. Journal of Economic Perspectives, 26 (4), 75-102. DOI:10.1257/jep.26.4.75 Volume 7 | Issue 2 | 77   �Merita H. Meçe   Morawska, E. (2012). Historical-structural models of international migration. In. Martinello, M., & Rath, J. (eds.). An introduction to international migration studies. Amsterdam: Amsterdam University Press, 55-75. Ndreka, A. (2014). Social status of internal migrant women in Durres, Albania. Academic Journal of Interdisciplinary Studies, 3(3), 549-552. Padilla, M.A., & Perez, W. (2003). Acculturation, social identity, and social cognition: A new perspective. Hispanic Journal of Behavioral Sciences, 25(1), 35-55. Peço, E. (2014). Blood feud – Internally displacing because of life security threat. Mediterranean Journal of Social Sciences, 5 (4), 509-515. Pojani, D. (2013). From squatter settlement to suburb: The transformation of Bathore, Albania. Housing Studies 28(6). Potts, D. (2012). Challenging the myths of urban dynamics in Sub-Saharan Africa: The evidence from Nigeria. World Development, 40 (7), 1382-1393. Rees, P., Bell, M., Kupiszewski, M., Kupiszewska, D., Ueffing, P., Bernard, A., Charles-Edwards, E., & Stillwell, J. (2016). The impact of internal migration on population redistribution: An international comparison. Population, Space and Place. DOI:10.1002/psp.2036. Reicher, S.D., Spears, R., & Haslam, S.A. (2010). The social identity approach in social psychology. In M.S.Wetherell., & C.T.Mohanty (eds.). SAGE identities handbook, London, SAGE, 45-85. Ribas-Mateos, N. (2005). Migration, Welfare, and Borders. The Mediterranean in the Age of Globalization. New Jersey: Transaction Publishers. Schimmele, C., & Wu, Zh. (2015). The new immigration and ethnic identity. Population Change and Life Course Strategic Knowledge Cluster Discussion Paper Series 3(1). Schwandner-Sievers, S. (2008). Albanians, Albanianism and the strategic subversion of stereotypes. Anthropological Notebook 14(2): 47-64. Sinani, E. (2013). Issues of Albanian internal migration represented in the printed media. Paper presented in the RRPP Annual Conference. Retrieved 8 April 2017 from http://www.rrpp-westernbalkans.net/en/conferences/RRPP-Annual- 78 Journal of Economic and Social Studies �Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society Conference-2013/Conference-Papers   2013/mainColumnParagraphs/00/text_files/file6/Sinani_Entela.pdf Stets, J.E., & Burke, P.J. (2000). Identity theory and social identity theory. Social Psychology Quarterly, 63(3), 224-237. Tajfel, H. (1972). Social categorization. English manuscript of ‘La categorization sociale’. In. S. Moscovici (ed.). Introduction à la psychologie sociale, Paris: Larousse, 272-302. Tajfel, H. (1974). Social identity and intergroup behavior. Social Science Information, 13, 65-93. Tajfel, H. (1978). Differentiation between social groups. London: Academic press. Tajfel, H. (1979). Individuals and groups in social psychology. British Journal of Social and Clinical Psychology, 18, 183-190. Tajfel, H. (1981). Social identity and intergroup relations. London: Cambridge University Press. Tajfel, H., & Turner, J. (1979). An integrative theory of intergroup conflict. In W.G.Austin., & S. Worchel (eds.). The social psychology of intergroup relations, Monterey, CA, Brooks/Cole, 33-48. Taylor, S.E., & Brown, J.D. (1988). Illusion and well-being: A social psychological perspective on mental health. Psychological Bulletin, 103, 193-210. Titili, D. (2015). Social and cultural impact of migration on Albanian society after 1990s. Journal of Social Sciences and Humanities, 1(2), 114-118. Turner, J.C. (1982). Towards a cognitive redefinition of the social group. In. H. Tajfel (eds.). Social identity and intergroup relations. Cambridge, England: Cambridge University Press, 15-40. UNDP. (2000). Albanian Human Development Report 2000. UNDP Tirana. Albania. UNDP. (2002). Human Development Report. Albania 2002. Challenges of Local governance and regional development. UNDP and Human Development Promotion Center. Tirana. Albania. Volume 7 | Issue 2 | 79   �Merita H. Meçe   UNDP. (2009). Human Development Report 2009 – Overcoming barriers: Human mobility and development. United Nations, New York. Retrieved November 22, 2015 from http://hde.undp.org/en/content/human-development-report-2009 UNESCO. (2017). Migration as a development challenge. Analysis of root causes and policy implications. Retrieved 4 April 2017 from unerdoc.unesco.org/images/0024/002470/247089E.pdf UNICEF. (2014). Migration and youth: Challenges and opportunities. J. Cortina, P. Taran, & A. Raphael. (Eds.), Global Migration Group. UN Women. (2014). Gender perspectives in Albania. Gender analysis Census 2011. UN Women. Tirana. Albania. Vullnetari, J. (2014). Internal migration in Albania: A critical overview. In Pichler, R (ed.). Legacy and Change: Albanian Transformation from Multidisciplinary Perspectives. Vienna: LIT Verlag, 47-67. Weber, R. (2014). Negotiating gender social identity in a context of migration. Papers on Social Representations, 23, 8.1-8.20. Whitley, E.B., & Kite, E.M. (2010). The psychology of prejudice and discrimination. 2nd Edition, Wadsworth, Cengage Learning. Williams, D.R., Spencer, M.S., & Jackson, J.S. (1999). Race, stress, and physical health: The role of group identity. In J. Contrada., & R. Ashmore (eds.). Self, social identity and physical health. New York: Oxford University Press, 71-100. World Bank. (2003). Albania: Poverty during growth. A poverty profile of Albania. Background paper for the World Bank Poverty Assessment. Washington, DC and Tirana. World Bank and INSTAT. Report No. 40071-AL. World Bank. (2009). Reshaping Economic Geography. World Development Report 2009. The World Bank, Washington, DC. World Economic Forum. (2017). Migration and its Impact on Cities. Switzerland: Geneva. Retrieved December 30, 2017 from www.weforum.org 80 Journal of Economic and Social Studies � 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. 3746 Title A name given to the resource Internal Migration and Social Identity Construction: Implications for Prejudice and Stigma in Albanian Post-socialist Society Author Author Meçe, Merita H. Abstract A summary of the resource. Abstract: Significant increase of internal migration in Albanian post-socialist society affected people’s connections and their identity. New social phenomena were differently perceived by the existing city inhabitants and the newcomers. On the one hand, the concept of social identity struggled between inclusionary/exclusionary boundaries; on the other hand, prejudice and stigma triggered from this complex reality. This paper applies Social Identity Theory to examine how internal migration affects social identity and its implications on prejudice and stigma in Albanian post-socialist society. This qualitative study is based on desk research and secondary data drawn by national statistics and cross-sectional research conducted in Albania during the period 1991-2017. It concludes that more longitudinal studies should be conducted to understand the dynamics of social identity construction within the context of internal migration in Albania. This is necessary to promote a more inclusive society in order to accommodate social diversity and view internal migrants as local agents of development rather than objects of prejudice and stigma. 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 2017 Keywords Keywords. Article PeerReviewed DOI Digital object identifier doi:"10.14706/JECOSS17724 " Identifier An unambiguous reference to the resource within a given context ISSN 1986-8499, H Social Sciences (General),HB Economic Theory https://omeka.ibu.edu.ba/files/original/7c899d3213dee73f3d7a8016a86a8a87.pdf bd826210d6321854f2ad12e59eb5209c PDF Text Text Significance of Expatriates for the Competitiveness in the International Construction Market with an Example of Strabag Concern Fata Miljković Burch University Bosnia and Herzegovina fata.miljkovic@gmail.com Abstract: In today's business environment, where global competition grows every day, being successful only in domestic market is no longer enough. Globalization allowed free flow of capital, goods, information, people, and set new demands for companies which want to succeed in international market. This refers not only to the way of how companies operate their business but also on how companies manage their human capital. With changes in the international markets and company’s human resources politics, expatriates become a key factor of competitive advantages in the international construction market. Key words: international human resource management, expatriation, motivation factor Introduction Globalization requires new measures for companies that want to succeed in the international market. These measures relate not only to the way businesses operate but also to the management of their human capital. Exactly as a result of changes in the management of international companies and their human potential, expatriates have emerged and become a key factor in the competition on the international scene (Juhl, 2009). The number of multinational companies and the number of people working in them grows worldwide. Multinational companies enable the acquisition of new knowledge and skills, especially cross-border. They play a very important role in transferring knowledge, opening up excellent opportunities both for the parent company and for the foreign affiliate (Dobrai, 2012). A changeable business environment has led organizational knowhow to be among the key factors of a sustainable competitive advantage. Today, the transfer of knowledge and skills within the company plays a key role in the long-term survival of the company, in other words it has strategic importance. Insufficient attention is paid on the motivators of employees to accept an international engagement and the awareness of the organization itself on the impact of these factors on the overall process of expatriation seems also insufficient. Through this research key factors that influence an individual's decision on acceptance of foreign engagement are identified and analyzed. 201 �Primary goal of this paper is to contribute the understanding of motivators for going on an international engagement and improve the process of expatriation at multinational companies. The research results can be useful feedback to of human resources managers in planning and implementing expatriation process. This paper examines the phenomenon of expatriation whose presence is increasing in companies operating in the international market. Construction companies train local employees through expatriates and achieve transfers knowledge throe Concern. However, insufficient attention is paid on the motivators of employees to accept an international engagement and the awareness of the organization itself on the impact of these factors on the overall process of expatriation seems also insufficient. This brings us to the purpose of this study carried out in the company Strabag Ltd. Sarajevo, a subsidiary of Strabag Concern. Through this research key factors that influence an individual's decision on acceptance of foreign engagement are identified and analyzed. Literature review Human resources include the competence and motivation of employees in order to fulfill their entrusted tasks (Rahimic, 2010). Because of the big changes in the business environment and the increasing globalization of the market, human resources have become the most important factor in the business, development and competitive advantages of the company. In the global competition, a person is strategically engaged as a resource and a key factor that affects the company's competitive advantage. In other words, knowledge and skills of employees represent the most important resource in an enterprise and seeks to ensure their long-term survival with these resources. Therefore, in the literature we can find many works dealing with human resources and their management by companies. The founder of management as a science discipline is Frederick W. Taylor, who first used the word management (Mintzberg, 2004). The most commonly cited definition of management is the definition of the American management theorist from the early 1930s Follet P.M., which defines management as "... the art of doing human affairs". Management is nothing but a job that requires the engagement of a certain, larger or smaller, number of people, regardless of the type and nature of the job. Today, business is exposed to the effects of different cultures, practices and styles of management in different countries, that is, internationalization has signified the process of expanding business to other countries. All of this can be seen as a consequence of globalization that has resulted in a large number of multinational companies spreading their power to almost all countries. These are growth-oriented companies that enter the markets of an increasing number of countries and become serious competitors. Investment decisions of these companies are made globally, by transferring capital and resources from one country to another, affecting 202 �employment of millions of people and the degree of economic activity in individual countries (Rakita, 2006). Information transfer and exchange of experiences among foreign affiliates results in cumulative knowledge that ensures a competitive advantage (Rahimic, 2012). As global competition grows, the importance of managing international operations of multinational companies has increased, and therefore the need to recognize competent foreign managers that can implement the strategy of a company in subsidiaries in other countries. Thus, the phenomenon of expatriates emerged as a result of the recognition that employees on foreign engagement can be an excellent mechanism for monitoring and evaluating activities and behaviors within the branch (Musasizi, 2008). It can also be said that this phenomenon is the result of globalization, the entry of companies into foreign markets, and the emergence of a large number of multinationals company. Expatriation is a term that refers to foreign business engagement at a certain time, and the process of expatriation is most simply defined as the process of international transfers of managers. Expatriates are generally defined as employees who temporarily leave the parent company to conduct business in a foreign subsidiary for a period of several years, with the intention of returning to the country of the parent company when the task is done (Lassere, 1997). This phenomenon of expatriation occurred as a result of the realization that employees at the foreign engagement can be an excellent mechanism for monitoring and evaluation activities and behaviors within the branch. Globalization is a consequence of the development of science, modern technology, market economy and democracy. It enabled the free movement of capital, goods, information and people through the world by elimination of borders. In a multinational company, we can identify two types of engagements: emitted from a parent company or from a third country to a branch - expatriate and emailed employees from a branch to a parent company - inpatriates (Harwey, 2000). Expatriates play an important role in disseminating the knowledge of the parent company to affiliates (Dobrai, 2012). Citizenship of employees is a major factor in determining "categories" of employees. In the international corporation models differ: - Citizens of the country of the branch - Nationals of the parent company - Third-country nationals (Morgan, 1986). 203 �Methodology The primary goal of the research is to contribute to the understanding of employees' motives for going to international engagement and to improve the process of expatriation by respecting them. In addition to the stated goal:  to highlight the importance of planning the process of expatriation for the survival of international companies;  point out the motivators that have proved to be the most important for existing and potential expatriates;  give HRM a better roadmap, how and in what way to plan the outbound process and what conditions to offer to employees selected for such an international task. Because of the complexity of the topic that was chosen, in this paper will be used more scientific and research methods to achieve objectivity, reliability, accuracy and thoroughness. The method that will be primarily used is the descriptive analysis. Descriptive analysis has the following tasks: sorting and grouping of statistical data, displaying statistics and determine the basic indicators of statistical series. The results of the research will be done at the end of the work and will be presented in several ways, including: tabular, graphical and textual. Taking into account the subjects of the paper, in the research process it will be used different methods and techniques in order to meet the basic methodological requirements - objectivity, reliability, generality and systematic. This requires the application of basic analytical and synthetic methods: analysis, synthesis, induction, deduction, abstraction, concretization and generalization. In the course of the research will be used method of cognitive processes while studying and consulting the latest scientific literature in the subject area. The paper used analytical (historical type of research and survey) and a descriptive type of research. The most important facts about expatriates and international management in multinational companies have been collected by the historical type of research. The survey, which is carried out within the company Strabag Ltd Sarajevo, where employees who were previously internationally engaged were interviewed, as well as those who do not have an international experience, confirmed the hypotheses. A descriptive type of research was used to define concepts and facts related to research issues. Hypothesis The main research hypothesis is: '' A better understanding of the factors that influence the decision to accept international involvement leads to improvement of the process of expatriation. '' Support hypotheses: 204 �H1: '' The employee will sooner accept foreign engagement if it leads to promotion. '‘ H2: '' The fee is a critical factor when considering a decision on acceptance the foreign involvement. '‘ H3: '' The family is the most common reason for rejection of foreign involvement. '‘ Research In the research part of the paper, Strabag Concern is presented, its organizational structure and the position of human resources in the Group. The company Strabag Ltd. Sarajevo which is part of the Group is presented as well. The results of the research carried out within the company Strabag Ltd Sarajevo, where interviewed employees who were previously internationally engaged, as well as those who do not have an international experience. Strabag is the central operating brand of Strabag SE and it operates in all areas of the construction industry. This Group is large and significant European construction company and it operates worldwide. As one of the leading providers of construction services in central and Eastern Europe, the Group employs more than 73,000 employees at more than 500 locations, and carries out operations worth almost € 13.6 billion. Entrepreneurial thought is oriented towards the needs of national and international markets. Strabag's business scope is as diverse as the demands it faces. The spectrum of activities extends from individual services and works by measure, from small businesses to spectacular large projects. High professional competence, knowledge and experience oriented to the future and excellent internal infrastructure enable Strabag to fulfill even the most demanding customer's wishes in a safe and economical way, in a short time and in a flexible way. Strabag's team concept offers companies a wide range of services based on different starting points and covers all relevant construction work - from design, through planning and implementation, to impeccable finished project. The turnover achieved by the Group in 2016 amounted to 13,491.03 Md. Euro. In the chart below we can see the turnover of the Group in the last 5 years: 205 �As part of the Group's profile, company Strabag Ltd Sarajevo is one of the numerous subsidiary companies in the Group. It currently has over 100 local employees and more than 20 expatriates. Out of that number, 38 are employees, as the Group calls them, while the rest are workers on construction positions. By the reputation of the company, the company is divided into directions, and each directorate is in charge of its leader. The division of officers is as follows: commercialists, technical functions and administrative functions such as accounting. Regarding the expatriate, the highest number of workers from Croatia, followed by Austria and Germany. Managers' functions are performed mainly by Austrian employees, while expatriates from Croatia are mainly operatives with significant experience for individual projects. Strabag started operating in Bosnia and Herzegovina in 2006, having since only few employees developed into a strong competitor in the Bosnian construction sector. In the past few years, Strabag has been working on significant projects, and in 2017, a considerable amount of work is planned. Some of the projects that Strabag in Bosnia does are Corridor 5c Svilaj-Odžak, Hydro power plant Vranduk, residential building DVOR Luxury Apartments, residential building Sarajevo Garden, Hotel Residence Inn Sarajevo by Marriott and other smaller projects. Human Resources in the Group The construction is labor intensive industry and its business results depend mostly on the commitment of the people working in it. Therefore, the Group constantly works to encourage and optimize the professional and personal qualifications of its employees. Due to the lack of skilled workforce employees are a critical factor in Strabag. The Group responds to this issue with consistent strategic planning of the workforce and continuous training of its employees. In order to ensure professional handling when selecting a candidate, modern information technology, software and processes are used. Thus, the Group uses an international IT platform for the publication of vacancies. 206 �As a result of the typical winter break in construction, the STRABAG Group is subject to seasonal fluctuations in employee numbers. For this reason, the number of employees – as is usual in the industry – is only stated as an annual average. 71,839 employees (43,381 blue collar and 28,458 white-collar) worked for Strabag in 2016. The number of employees thus fell slightly by 2 %. Traditionally, the construction industry employs primarily men. Women are therefore underrepresented at all hierarchy levels. In 2016, the number of women as a percentage of employees within the entire group amounted to 14.9 % after 13.9 % the year before. Since Strabag is an international company, the employees of the Group are from 84 different countries, ie 84 different nationalities. As the Group employs people of different nationalities, it also employs people of different ages. As we can see on the chart, the concern employs people from 21 years of age to 60 years of age. There are fewer those with over 60 or fewer than 20 years of age. The explanation for this distribution can be reconsidered in the sector in which the Group operates. It is natural for workers at construction sites to be younger, but at the same time, managers with significant work experience are middle age. In the management, we can find employees in the 1920s and thirtieth years with rapid career advancement, but also employees in the fifties with enormous experience behind. 207 �Research carried out in the company Starbag Ltd. Sarajevo A survey that was conducted in Strabag Ltd aimed to identified and analyzed factors that influence the decision of an individual to accept foreign engagement and thus demonstrate their importance both to planning and to the success of the overall engagement. A survey conducted for this purpose at the company Strabag Ltd Sarajevo, more precisely in the accounting, civil engineering, construction, environmental, quality assurance and special projects sections, covers all employees with the position of with color employees of this company. Through e-mail, employees received a link that was enabled by an anonymous response to an online inquiry. During the research conducted in the period from 03.04.-24.04.2017. For years, employees have accepted the evaluation process positively. Of the 102 employees, 38 of them are employees, a sample of our research. 35 responded to the survey, and the criterion of at least 80% was met. Given the hypothesis of the work and the goal of the research, it is necessary to first analyze the data on employees such as: age, sex, level of education, years of work experience, marital status. Out of the total number of employed, 26 were male respondents (75%), and 9 of them female respondents (25%). 208 �Gender Female 25% Male 75% The number of respondents, nine of them (25%), is up to 30 years of age. The largest number of respondents is aged from 31 to 40, fourteen of them (38%) and 41 to 50 years old, eleven of them (33%). The smallest number, one of them (4%), is over 51 years of age. 4% 25% up to 30 years old 31 - 40 years old 33% 41 - 50 years old 38% over the 50 years old When it comes to education level, 31.25% of employees have secondary education, 15.62% are higher education, while more than half of them are employed, 17 are high (53.12%), they are highly qualified. There is no one among the employed officials without the school. 16 foreign respondents speak one foreign language, while 15 foreign speakers speak two foreign languages. Only one participant in this research speaks three or more foreign languages. 209 �master degree 6% Qualifications high school degree 31% college degree 63% The duration of the employment relationship in a company is classified into three categories for easier processing of data, so that the first category includes employees who are in the company for less than 2 years, ten of them (31.25%). The second category includes those employees who are in the company for more than two years and less than five years, 12 of them (37.5%). In the third category we can classify as many as 10 (31.25%) who have been employed for more than 5 years in Strabag. Out of the total number of respondents, five persons declared themselves as a manager, 10 as a commercial worker, 11 as a technical worker, while 6 persons belong to the accounting sector. A few important information from the first part of the survey: Only 18.75% of all respondents never cooperated with someone who had an outsourcing contract. While everyone else worked with one or more expatriates. Only 7 respondents had previously been engaged abroad, while the remainder of 78% had never had such an engagement. Of these 7, there's only one woman. Three respondents who had previously been engaged abroad have been employed by Strabag for more than 5 years, the other three are in the company employed between 2 and 5 years, and only one respondent has been employed for less than 2 years in this company. Most foreign engagements lasted from 1 to 2 years, while only one respondent was engaged for 3 to 5 years. The rate of unsuccessful foreign engagement of our respondents is 43%, and the reason for the 2/3 is family issues, while one respondent replied that he was temporarily back from engagement for security reasons (state uncertainty). The remaining 57% who had previously been on foreign engagement successfully completed the same, with all of them engaging not more than two years. Results Through this research, key factors that influence employees in deciding on the acceptance of international engagement have been identified and analyzed. Factors that are separated and which, to a large extent, in addition to their age and family status, affect the decision to accept 210 �engagement are the following: location of engagements, monetary compensation offered to potential expatriates, the possibility of improvement, as well as previous experience in foreign engagements. In conclusion, the results of this research should contribute to a better understanding of the motivation of employees for going to international engagement. In the first part of the survey, general data on respondents, such as age and sex, were collected. The next part of the study included claims that directly relate to the decision to accept / reject foreign engagement. For each of the questions, employees could give a response in the range [15]. Analyzing the results was particularly interesting were the answers to the question how the possibility of improvement influences the respondents' decision to accept foreign engagement, which is graphically depicted below: I would accept a foreign arrangement if it means improvement in the career 0% Disagree 12% 44% Neither agree nor disagree 44% Agree Strongly agree These results lead to the assumption that higher material benefits during the expiration time positively affect the will and motivation of the expatriate, what confirms the hypothesis 1. Also, from the above results we can conclude that the family is not only the most frequent reason for the refusal of international engagements but should also be taken as a very important factor for the success of the entire process of expatriation. It is assumed that employees, if they receive additional stimulus and bonuses for good performance of their tasks, better perform their tasks and more try to successfully complete the engagement. In accordance with the hypotheses and the purpose of this survey, the respondents wondered about the extent to which family status influenced their decision to accept or reject the offer for foreign engagement. For this purpose, the respondents were asked to declare whether they agree or disagree with the following statement: "If I refused the offered engagement, the reason would be the family." The results of the response are shown on the graph below: 211 �If I refused the offered engagement, the reason would be my family 0% 0% 12% Strongly disagree 44% Disagree 44% Neither agree nor disagree Agree Strongly agree This confirms hypothesis 3 that claims that the family is the most frequent reason for refusing foreign engagement. Also, from the above results we can conclude that the family is not only the most frequent reason for the refusal of international engagements but should also be taken as a very important factor for the success of the entire process of expatriation. As a key motivator, both the decision on accepting international engagement and the success of potential expatriates proved to be a monetary compensation. A very strong statement was given to the respondents: "When deciding on the acceptance of foreign engagement, the most important thing for me is financial compensation." What all the respondents agreed with us. Even 44% of them fully agree with what we can see on the graphics below: When deciding on the acceptance of foreign engagement, the most important thing for me is financial compensation 0% 0% Strongly disagree 12% 44% Disagree 44% Neither agree nor disagree Agree From the answer to this question, we conclude that in spite of the attractiveness and security of the site and the possibilities for promotion, the monetary compensation has the greatest influence on the decision to accept the engagement. Interestingly, neither the age nor the full structure had 212 �a significant impact on the results of the response to this claim. Of the 12% of those who only partially agree, three workers belong to the technical sector and have over 41 years, while one of them is a manager of the age of 31-40 years. These figures are probably the result of the ratio of those who have never been on an international task, 78% of them, with those who are. The assumption is that such employees were not faced with cultural shocks, separation from the family, repatriation problems and many other difficulties that the foreign engagement very often brings with them, and therefore see monetary compensation as the main driving force. However, those with an international experience see monetary compensation as a significant motivation factor in accepting engagement, and one of the respondents who were previously on a foreign mission fully agreed with this assertion. Interestingly, none of the respondents on the set of questions related to the influence of a financial nature factor on the decision to accept the engagement did not give a response that they have no influence on him. This is not at all surprising given the economic situation of the state in which Strabag Ltd operates, and where foreign respondents see foreign engagement as an opportunity for higher earnings and improvement of their financial situation. Furthermore, every employee sees foreign engagement as an opportunity for additional earnings, or additional financial gain, in addition to being able to progress and gain new experiences. Conclusion The purpose of this paper is to investigate some of the most important factors affecting employees' decision to accept foreign engagement and to point out the importance of these factors to the entire process of expatriation. The aim is to show how a better understanding of the factors that influence the decision to accept foreign engagement leads to an improvement in the process of expatriation. In short, the same expatriation plan cannot be applied to each employee, nor do equal employees have an equal impact on each employee. All this human resources management should be taken into consideration when planning the outcome, and ultimately it will receive a smaller number of prematurely discontinued engagements and a greater benefit from the expatriate upon return to the parent company. In order to prove claims from the work, research was carried out in the branch of a large international company - Strabag Ltd Sarajevo, daughter of Strabag SE. Strabag SE operates in all areas of the construction industry around the world. Today Strabag Ltd Sarajevo has more than 100 local employees and 20 expatriates. A representative sample was selected and a quantitative survey was conducted in the form of a survey. In summary, the results show support for the first hypothesis that an employee will soon accept foreign engagement if it leads to improvement, which gives us clear evidence that improvement, along with its potential benefits, is a major motivator when deciding to accept engagement. Investigating the impact of monetary compensation on respondents, it can be 213 �concluded that the amount of material income is a key factor affecting the readiness of candidates for international engagement. According to respondents, financial factors have been shown to be very important for the success of expatriate and its motivation during the engagement period. At the beginning of the work, it is stated that the family is the most frequent reason for refusing foreign engagement. From the results of this research we can conclude that the family is not only the most frequent reason for the refusal of international engagements but should also be taken as a very important factor for the success of the entire process of expatriation. The most important thing for employees was the monetary compensation offered to them, then the possibility of improvement in the work place. It is especially emphasize the influence of the family as a very important factor for the employees of our area. The results of the research carried out in this paper can be useful feedback to human resource managers in planning and implementing the process of expatriation and improvement of the same, and point out the motivation of employees who in most cases are neglected and put in another plan. References: Juhl, B., Fuglsig, S.C.S. (2009). A study on motivational factors influencing the expatriate through the expatriation cycle. Dobrai, K., Farkas, F., Karoliny, Z., Poór, J. (2012). Knowledge Transfer in Multinational Companies – Evidence from Hungary. University of Pécs, Faculty of Business and Economics Rahimić, Z. (2010). Human resource Management. Sarajevo: Faculty of Economy in Sarajevo Mintzberg, H. (2004). Managers not MBA's: A hard look at the soft practice of managing and management development. San Francisco: Berrett Kohler. Lassere, P. (1997). Global Strategic Management. Second edition. New York: Palgrave Macmillan. p.338 Harwey, M. G., Novicevic, M. M. i Speier, C. (2000). Strategic Global Human Resource Management: The Role of Inpatriate Managers. Human Resource Management Review. 10 (2). pp.153-175 Morgan, P. V. (1986). International Human Resource Management: Fact or Fiction. Personnel Administrator. Dowling, P. J., Welch, D. E. i Schuler R. S. (1999). International Human Resource Management: Managing People in a Multinational Context. Cincinnati. OH: South-West. Goldsmith, M., Greenberg, C. L., Robertson, A. i Hu-Chan, M. (2003). Global Leadership-The Next Generation. Upper Saddle River, NJ: Financial Times Prentice Hall. Festing, M., Dowling, P. J., Weber, W. i Engle, A. D. (2011). Internationales Personalmanagement. Wiesbaden:Gabler Verlag Noe, R., Hollenbeck, R. J. i Wright, M. P. (2006). Menadžment ljudskih potencijala. Zagreb: Mate. 214 �Pollock, D. i Van Reken, R. E. (2009). Third Culture Kids: Growing Up Among Worlds. Boston/London: Nicholas Brealey Publishing. Gregersen, H., Morrison, A. J. i Black, J. S. (1998). Developing Leaders for the Global Frontier. Sloan Management Review Harvey, M. G., Novicevic, M. M. i Speier, C. (2000). Strategic Global Human Resource Management: The Role of Inpatriate Managers. Human Resource Management Review Raduan Che Rose et al. (2010). Expatriate Performance in International Assignments: The Role of Cultural Intelligence as Dynamic Intercultural Competency. International Journal of Business and Management Suutuari, V. (2003). Global managers: Career orientation, career tracks, life-style complications and career commitment. Journal of Managerial Psychology. 215 � 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. 3647 Title A name given to the resource Significance of Expatriates for the Competitiveness in the International Construction Market with an Example of Strabag Concern (doi: 10.14706/icesos1710) Author Author Miljkovic, Fata Abstract A summary of the resource. Abstract: In today's business environment, where global competition grows every day, being successful only in domestic market is no longer enough. Globalization allowed free flow of capital, goods, information, people, and set new demands for companies which want to succeed in international market. This refers not only to the way of how companies operate their business but also on how companies manage their human capital. With changes in the international markets and company’s human resources politics, expatriates become a key factor of competitive advantages in the international construction market. Key words: international human resource management, expatriation, motivation factor Date A point or period of time associated with an event in the lifecycle of the resource 2017 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/4f460e505a3d30ee2dfe5ed55ea86126.docx e21fd4a2c5898203c5c9c082401d357b 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. 3666 Title A name given to the resource FIGHTING WITH POORNESS IN BOSNIA AND HERZEGOVINA doi: 14.706/icesos1727 Author Author Nikšić, Haris DUMAN, Teoman Abstract A summary of the resource. This topic will help me to understand the political statements, how generally “political world“ in our county is fighting with poorness, how to increase employment. How to help people who survive the war, who survive flooding, and any kind of poorness, how to stop that and how to growth economy, agriculture, forestry, farming, agronomy, tourism. Two main problems we will focus on it are increasing VAT and improve tourism as a two ways of fighting the poorness. For the needs of this research, we have collected responses from 160 people, both males and females. Their responses were collected and later we analyzed them in IBM SPSS software. The obtained data helped us to better understand and to develop possible theories regarding the bad economic situation in Bosnia and Herzegovina and possible ways to fight poverty. Keywords: poorness, economic condition, working condition, employment. Date A point or period of time associated with an event in the lifecycle of the resource 2017 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/f6e505e5beb4a13ac3442096d097a249.pdf fe82d2f44db186a7877ebf9daf4e4156 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. 3650 Title A name given to the resource An Empirical Study of the Relationship between Financial Literacy and Tolerance towards Financial Risk among Entrepreneurs in Bosnia and Herzegovina (doi: 10.14706/icesos1713) Author Author OKIČIĆ, Jasmina Selimovic, Damir Abstract A summary of the resource. Abstract: The purpose of this study is to explain difference in tolerance towards financial risk among entrepreneurs with different levels of financial literacy. Financial risk tolerance is the maximum amount of uncertainty an entrepreneur is willing to accept when making a financial decision. On the other hand, and according to the Organisation for Economic Co-operation and Development (OECD), financial literacy can be defined as a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing. Therefore, the aim of the study is to explain relationship between measured level of entrepreneurs’ financial literacy and their assessed tolerance towards financial risk. This is a quantitative study, where we use a questionnaire to asses tolerance towards financial risk and to measure the level of financial literacy. Also, we use non-probability sampling methods where participants are recruited by e-mail. To gain better understanding of relationship between entrepreneurs’ financial literacy and their assessed tolerance towards financial risk we use descriptive statistics, chi-square, correlation analysis and multiple regression analysis. The results of this study are expected to shed more light on understanding of relationship between entrepreneurs’ overall financial literacy and their tolerance towards financial risk. Implications of this study suggest that entrepreneurs’ tolerance towards financial risk may be driven more by their financial attitude and behaviour rather than their financial knowledge. Key words: measurement of financial literacy, measuring tolerance towards financial risk, entrepreneurs Date A point or period of time associated with an event in the lifecycle of the resource 2017 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General)