Before World War II, Bosnia and Herzegovina had a mainly agricultural economy. When the communist government took control in 1945, it set about industrializing the country. All companies were state owned, though operated under a system of self-management. Many people found employment in manufacturing and services, and the government provided workers with social benefits. However, the country remained one of the poorest in Yugoslavia.
Currently, about 20% of the population works in agriculture, mostly on small, privately owned farms where much of the work is done by hand. The country’s arable land is limited and often difficult to farm. The principal cash crops are grains such as wheat and corn, vegetables and tobacco; southern Bosnia and Herzegovina also produces olives and fruits such as peaches, plums, grapes, kiwis and tangerines. Livestock and milk are also major products.
Currently, mining and manufacturing are Bosnia and Herzegovina’s most lucrative industries, employing about 25% of the workforce. Bosnia and Herzegovina is rich in natural resources such as coal, zinc, manganese, lead and iron ore; abundant forests contribute to a large wood and paper industry. Bosnian factories produce food products, wood furniture, appliances, textiles, cars and military equipment, and numerous hydroelectric plants export power. Most industries are located in the country's large cities, such as Sarajevo and Banja Luka.
The remainder of the workforce is employed in services, a large portion of which used to be government. With the move to a privatized economy, many people will face the challenge of adapting their skills to a capitalist system. Since the fall of communism and independence, many small, private companies have been established, but privatization has been slowed by the recent civil war, which devastated the economy. Much of the country's farming infrastructure was destroyed, thus keeping farmers from producing crops.
In the mid-1990s, the economy was nearly at a standstill, with massive unemployment and many people subsisting on relief assistance from foreign countries. Since the end of hostilities, the economy has been reviving very slowly, but the government is faced with both debt and damages. A new banking system was introduced in 2001, and the international community has been providing assistance for reconstruction. Humanitarian aid has helped rebuild infrastructure, but unemployment remains very high, and many people must rely on financial assistance from relatives abroad.