Although Bosnia-Herzegovina is a land of fertile fields and significant natural resources, its industrial development did not commence until very late. As in other countries that were long subject to Ottoman rule, the primitive state of agriculture played a decisive role: the continual division of plots through inheritance fragmented the arable land to such an extent that no large, capital-intensive landholdings could emerge and no surpluses could be produced, so that  most of the peasants were unable to feed even themselves.

When the Ottomans conquered the country in the mid-15th century they continued the centuries old production of salt near Tuzla, where today this history is preserved by a museum, and expanded the first foundry near Priyedor, which also dates back to pre-Christian times. Trade began to flourish in Bosnian cities in the 17th century. The merchant class, made up of Moslem Bosnians, Jews, Catholic Croats and Orthodox Serbs, reflected the country’s multi-ethnic population. They transformed Sarajevo into a jewel: the city’s name comes from “saray”, the Turkish word for “palace”.

Beginning in the mid-19th century, the reforming attempts of the ailing Ottoman empire began to have an impact: the first railway line between Croatia and Banja Luka, today the capital of the Republic of Srpska, was completed in 1872. However, economic progress did not occur until the country was ceded to another occupying power: from 1878 on, Bosnia-Herzegovina was a (remote) part of the Habsburg Empire, and the government in Vienna initiated the construction of further railway lines, new roads and bridges. Sarajevo saw the construction of historicist  representational buildings in a city centre laid out in the style of Islamic architecture.

Austrian entrepreneurs invested mainly in heavy industry and mining. They modernised the iron ore mine in Prijedor, today operated by steel conglomerate Arcelor-Mittal, and opened the Zenica steel works in 1893, which even after a long and eventful history continues to produce steel today. However, foreign capital also flowed into more traditional sectors, such as forestry, tobacco processing and salt-making. One case that exemplifies this process was the carpet factory founded in Sarajevo by Philipp Haas in 1879. Haas commissioned a Vienna museum director to create designs, and women weavers in Bosnia wove them into carpets that were subsequently marketed, and even exhibited in museums, as “traditional Bosnian” handicrafts. Some historians characterise this type of economic and intellectual exploitation as the Habsburg version of colonialism.

Nevertheless, at the start of World War I, Bosnia was still a poor, predominantly agrarian country. There were no factory jobs to absorb the great numbers of unemployed agricultural workers. Cityscapes were characterised not by industrial smokestacks and multi-storey tenements, but by single-storey hovels whose inhabitants survived through agriculture. “Worker-peasants” alternated between the factories and their fields. The half-hearted agricultural reform propagated by the “Kingdom of Serbs, Croats and Slovenes” proclaimed in 1918 did little to change this. On the contrary, the disparity between the northern and southern parts of the country grew even more pronounced in the first Yugoslavian state. In addition to overpopulation, a shortage of capital and an inadequate infrastructure, the extremely low level of education also played a role: even at the end of the 1930s, close to two thirds of the Bosnian population were illiterate.

As in the other socialist countries, the Socialist Federal Republic of Yugoslavia too launched its transformation into an industrial state with a massive expansion of heavy industry. Bosnia in particular profited from President Tito’s break with the Soviet Union in 1948: relatively far from the nation’s borders, it was considered a safe location for industry. Consequently, the SOKO aircraft works was established in Mostar, the primary city in Herzegovina. A coking plant was built from scratch in Lukavac, and the expansion of the iron works doubled the population of Zenica. Bauxite mining began in the eastern part of the country in 1959, which gave rise to a significant aluminium industry. Yugoslavia’s industrial production grew by leaps and bounds, but although the government consistently strove to even out the differences between the constituent republics, Bosnia-Herzegovina soon fell behind once more – long before unemployment, foreign debt and shoddy quality laid bare the systemic weaknesses of Yugoslavian industry in the 1970s.

Bosnia and Herzegovina was part of the 'Socialist Federal Republic of Yugoslavia', which disintegrated since 1991.
Therefore, for completeness, please also read our articles on the industrial history of the other states that were formerly part of Yugoslavia.

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