FROM BYTES TO JOBS: DECODING BOSNIA AND HERZEGOVINA'S EMPLOYMENT PUZZLE THROUGH FDI AND ICT

Bosnia and Herzegovina's transition from socialism to capitalism has led to fundamental changes in the country's economic structure, with unemployment, FDI, economic growth, and information technologies becoming critical factors in this process. Information and Communication Technology (ICT) and Foreign Direct Investment (FDI) can promote economic growth and generate employment, helping to tackle unemployment through various channels. Bosnia and Herzegovina has been facing long-term unemployment for years. Thus, this study uses an Autoregressive Distributed Lag (ARDL) bounds testing approach and structural break technique to explore the impact of FDI, ICT, and growth on unemployment in Bosnia and Herzegovina for the period 1997-2022. The research findings indicate that FDI has a negative impact on unemployment in the long run. On the other hand, ICT has a positive impact on unemployment in the long run. Moreover, empirical findings demonstrated that there is a negative and significant relationship between growth and unemployment in the long run. This implies the validity of Okun's Law for Bosnia and Herzegovina. Furthermore, the study brings forth a crucial insight that the impacts of FDI on unemployment are not uniform and differ significantly based on the type of FDI inflows.