Regardless of the geopolitical and economic challenges the world as well as the European Union (EU) face, it appears that these issues have not, in the slightest, affected the EU's commitment to the green transition. The European Commission continues to provide strong support to member countries in implementing reforms that encourage the green transition. In conditions of sluggish economic growth, the investments in the green transition are characterized as a significant driver of economic growth. This paper analyzes and evaluates the implications of the EU's green transformation on the economic development of the Western Balkans (WB), with a special focus on the Green Deal and climate neutrality. The Green Deal represents the EU's key strategy for achieving climate goals and transitioning to a sustainable, green economy. Through an analytical approach, the impacts of the green transformation and related policies on the economic, social, and environmental aspects of the region are explored, considering the global Green Economy Index. The research methodology includes cluster analysis and analysis of the green economy index to assess the correlation between factors of the green economy and economic development, considering financial, institutional, and legal aspects of the Green Deal. Additionally, a comparison of development according to the Green Economy Index is applied to identify the position, potential, but also limitations of the Western Balkans in this context. Key indicators of the green economy, such as investments in renewable energy sources, energy efficiency, and sustainable infrastructure, are analyzed in terms of their impact on macroeconomic indicators such as gross domestic product per capita, unemployment, etc., in the Western Balkans. The paper identifies a range of opportunities for economic development, including increasing investments in renewable energy sources and developing sustainable infrastructure projects, but at the same time recognizes limitations, such as a lack of capacity, financial resources and public sector support to implement sustainable policies. Furthermore, there is a risk of increasing economic and social inequalities in the process of green transformation, as well as potential negative environmental consequences if appropriate measures are not taken.

Circular Economy (CE) and Artificial Intelligence (AI) are two key concepts that can significantly contribute to sustainable development. The first is based on the goal of maximizing resource utilization and minimizing waste, creating conditions for sustainable and environmentally friendly economic development. On the other hand, AI aims to optimize various processes and improve efficiency in the application of CE, providing tools for innovation and enhancement of business processes. The focus of this research is the analysis of performance indicators for the application of Circular Economy (CE), Artificial Intelligence (AI), and Sustainable Development Goals (SDGs) in countries with different levels of economic development and within the context of global territorial coverage. Circular Economy is crucial for sustainable development through waste reduction and maximum resource utilization. Countries such as the Netherlands, Denmark, and Germany demonstrate high recycling rates and use of secondary raw materials, while Romania, Bosnia and Herzegovina, and Albania lag in these aspects. Artificial Intelligence plays an important role in economic growth and innovation. The United States, China, and Japan lead in investments, number of patents, and number of experts in this field, making them leaders in AI technologies. Less developed countries have limited capacities and need international support for the development of this field. Sustainable Development Goals represent a comprehensive approach to economic, social, and environmental progress. Countries with high SDG indices, such as the Netherlands, Denmark, and Germany, successfully implement sustainable development strategies. In contrast, the least developed countries face significant challenges in achieving these goals. This research shows that developed countries are successful in applying Circular Economy and Artificial Intelligence, while less developed countries lag behind and need additional support. Global cooperation and the exchange of knowledge and technologies are crucial for achieving sustainable development and technological advancement in all countries.

With its nominal GDP USD 177.3 billion in 2022, the Hungarian economy is roughly equivalent to the economies of Serbia, Croatia and Slovenia, combined. Yet, these three countries are among the five most important Bosnia and Herzegovina's (B&H) trading partners in exports and imports, while Hungary only ranks eighth among B&H's most significant trading partners. By applying the gravity model, it was found that the basic gravity model (which takes into account only the size of the economy and the distance) is insufficient to explain the volume of trade between Bosnia and Herzegovina and Hungary. Actually, the fact that Bosnia and Herzegovina was once a member state of the Former Yugoslavia still has a significant impact on explaining the international trade of Bosnia and Herzegovina, simultaneously indicating the importance of historical, cultural, and political ties between the countries. The results obtained in this research study pertaining to the ten most significant trading partners of Bosnia and Herzegovina also suggest that the distance between the major cities more strongly influences exports than imports. Taking into consideration the size of the Hungarian economy and the distance, these results suggest that the trade volume between Bosnia and Herzegovina and Hungary is far below the expected level.

The mobility of factors of production from the very beginnings of the theory of the optimal currency area (OCA) stands out as one of the primary mechanisms for achieving a balance of payments, i.e. sustainability of the monetary union (Mundell criterion). However, there is a significant qualitative difference between the monetary union of countries with similar income levels and the one with different development stages Namely, in the first case, labor mobility, as a rule, has short-term economic effects, while it has a longer-term (more negative) impact – especially on the long-run aggregate supply (LRAS). Many Eastern European countries, which expressed a desire to become part of European integration and the monetary union after the communist ruin, experienced this. In a previous paper, the authors set the thesis about “Impossible Trinity of Developing Countries”. In this paper, the aspiration is to confirm the validity of this theory by analyzing Greece within the period 1999-2020, specifically observing the impact of three variables (fiscal policy, social development level, and level of economic freedom) on the emigration of the population under conditions of monetary union and labor force mobility. The results obtained in this research indicate that the fiscal policy in the observed period was the most significant factor in explaining migration trends. The implications for developing countries that are currently entering (such as Croatia) or intend to enter the monetary union with more developed countries in the future are particularly significant.

ABSTRACT The research determines the gap (Great Decoupling) between labour productivity and workers’ compensation in the two blocks of EU countries (Western versus Eastern). The division of countries into two groups provides a basis further to determine whether the previous socio-economic and political evolutionary development of these countries blocks still has a significant impact on the functional distribution of national income, on the extent to which labour productivity growth is transmitted to workers. The results are heterogeneous. In the sample of highly developed Western EU countries where higher levels of labour productivity, as well as high levels of technological development, lead to an increase in labour productivity to be followed by a lower increase in workers’ compensation. On the sample of Eastern EU countries, results indicate different relationships and the strength of causality between productivity and labour compensation. Central-East EU countries had a more positive relationship between real workers’ compensation and labour productivity, compared to the Southeast Europe (Balkan) countries where an increase in workers’ compensation causes a reduction in labour productivity. The results also offer a solid basis for understanding wage/income/productivity relationships d for creating policies for a more efficient distribution of national income.

Background Cigarette use is one of the major risk factors for non-communicable diseases in Bosnia and Herzegovina, with 41.1% of adults being current smokers in 2019 and almost half of current smokers using more than 20 cigarettes per day. Methods This study applies the prevalence-based, cost-of-illness approach to estimate the annual economic cost of smoking in Bosnia and Herzegovina in 2019. Results The study estimates that cigarette use by adults in Bosnia and Herzegovina caused between 24.4% and 42.8% of all deaths in 2019 and a total economic cost of between €367.5 and €635.1 million (2.0%–3.5% of gross domestic product). The direct costs represent the largest share of the total cost (between 1.0% and 1.7% of gross domestic product). Conclusion Cigarette use imposes a significant health and economic burden in the society of Bosnia and Herzegovina. Various tobacco control measures can be implemented to prevent and reduce tobacco consumption and the negative health consequences of tobacco use. Numerous studies have shown taxes on tobacco products are very effective in reducing tobacco use, especially among certain demographic groups, such as youth and low-income individuals. Smoke-free laws have also shown benefits. Other policy measures that can be implemented include restrictions to advertising, limitations on who can purchase tobacco products, how and where they can be purchased, etc. In addition, governments could also implement various education programmes on the negative health consequences of smoking. The results of this study provide information that calls for prompt and strengthened implementation of tobacco control measures to reduce cigarette consumption in the country and improve the health outcomes and productivity of its inhabitants.

Abstract This paper investigated the opportunities for public sector improvement by digitalization Financial Management and Control (FMC) system in the Western Balkans (WB) countries. Optimizing business processes within public sector through the digitalization of the FMC system offers opportunities for public sector improvement. The idea is to analyze the existing legal solutions on FMC system in the WB countries and evaluate the current level of digitalization of the system to find the abilities for improvement FMC. The data obtained through an interview with management persons in the Ministry of Finance of the WB Countries and key experts who worked on behalf of the EU as expert consultants on EU-funded projects. Also, we use secondary data collected by exploring literature and OECD reports. Since the database is limited, we use descriptive statistics to analyze the data and the case-study method. The digitalization of the entire system presented only at the entity and state level in Bosnia and Herzegovina. The research showed that the development of a quality FMC system can be enabled by the digitalization of the entire system. The main contribution of this paper is its focus on digitalization of FMC system, since there is limited research paper on this subject.

Background Tobacco tax policy in Bosnia and Herzegovina (B&H) assumes a gradual annual increase in specific excise taxes on cigarettes. However, it is insufficient to reduce significantly consumption. This paper examines effects of the increase in cigarette prices and disposable income on cigarette demand in B&H by different income consumer groups. Methods Based on the Household Budget Surveys and microdata from 2007, 2011 and 2015, we employed logit model to estimate prevalence and Deaton’s model to estimate intensity elasticity of cigarette demand for the sample of 21 424 households (9953 are smoking households) by different income groups. We used obtained elasticities and estimated the impact of tax increase on cigarette consumption and government revenue in three tax increase scenarios. Results Ten per cent price increase would reduce the consumption of low-income households by 14%, as opposed to 9.9% for middle-income and 7% for high-income households. Low-income households would significantly increase the demand for cigarettes compared with high-income households if income increased. Increase in the specific excise tax by 25% would reduce cigarette consumption and increase government revenue, while the low-income group would experience a reduction in tax burden. Conclusions Changes in prices have different impacts on tobacco prevalence and consumption of low-income compared with middle-income and high-income socioeconomic groups. Low-income households are most responsive to changes in prices and income. Thus, the poor in B&H would benefit from an increase in tobacco excise taxes and price.

Background and objective Tobacco tax evasion undermines the goal of tobacco taxes as a tobacco control measure to make tobacco products less affordable, increases the health risks for those who smoke and decreases the government revenue. This paper analyses the tobacco tax evasion in six Western Balkan (WB) countries: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. The aim of this research is to estimate the size of the illicit market and identify the main determinants of tax evasion activities in the Southeastern European region. Data and methods Data from 2019 Survey on Tobacco Consumption in Southeastern Europe (STC-SEE) are used. STC-SEE provides uniquely comparable nationally representative data on smoking behaviour for adult (18–85 years old) population for each country. Tax evasion is defined on the basis of available information on tax stamps, health warnings, price and the place of purchase, in accordance with the previous research on tax evasion. In order to estimate the determinants of illicit purchases we use binary choice model of tax evasion. Results The study finds that 20.4% of all current smokers in WB countries evade taxes on tobacco products, with evasion being much more frequent for hand-rolled (HR) tobacco (86.7%) than for the manufactured cigarettes (MC) (8.6%). While HR is predominantly illicit in all six countries, MC evasion varies significantly, with evasion being significantly higher in Montenegro and Bosnia and Herzegovina. Results further suggest that tax evasion is higher in the statistical regions where institutional capacities to tackle illicit trade are lower, in municipalities bordering countries with high MC evasion, as well as among smokers with low income, women and elderly. We also provide evidence that higher tobacco taxes and prices do not increase illicit consumption. Conclusion The findings from the research suggest that in order to decrease tax evasion, governments should put additional effort to strengthen institutional capacities to tackle illicit tobacco markets. Furthermore, improving regional coordination in development and implementation of tobacco control policies, including the prevention of illicit market, is essential in lowering evasion in all WB countries. Finally, WB countries should regulate and enforce excise tax stamp requirements on the HR tobacco market to a much higher degree.