Bosnia and Herzegovina has several levels of political structuring under the federal government level. Most important of these levels is the division of the country into two entities: Republika Srpska and the Federation of Bosnia and Herzegovina. The Federation of Bosnia and Herzegovina covers some 51% of Bosnia and Herzegovina's total area, while Republika Srpska covers around 49%. The entities, based largely on the territories held by the two warring sides at the time, were formally established by the Dayton peace agreement in 1995 due to the tremendous changes in Bosnia and Herzegovina's ethnic structure. Since 1996 the power of the entities relative to the federal government has decreased significantly. Nonetheless, entities still have numerous powers to themselves. The Brčko federal district in the north of the country was created in 2000 out of land from both entities. It officially belongs to both, but is governed by neither, and functions under a decentralized system of local government. The Brčko district has been praised for maintaining a multiethnic population and a level of prosperity significantly above the national average.

The third level of Bosnia and Herzegovina's political subdivision is manifested in cantons. They are unique to the Federation of Bosnia and Herzegovina entity, which consists of ten of them. All of them have their own cantonal government, which is under the law of the Federation as a whole. Some cantons are ethnically mixed and have special laws implemented to ensure the equality of all constituent peoples.

The fourth level of political division in Bosnia and Herzegovina are the municipalities. The country consists of 137 municipalities, of which 74 are in the Federation of Bosnia and Herzegovina and 63 in Republika Srpska. Municiaplities also have their own local government, and are typically based around the most significant city or place in the region. As such, many municipalities have a long tradition and history with their present boundaries. Some others, however, were only created following the recent war after traditional municipalities were split by the IEBL. Each canton in the Federation of Bosnia and Herzegovina consists of several municipalities, with the municipalities themselves further divided into local communities.

Besides entities, cantons, and municipalities, Bosnia and Herzegovina also has four "official" cities. These are: Banja Luka, Mostar, Sarajevo, and East Sarajevo. The territory and government of the cities of Banja Luka and Mostar corresponds to the municipalities of the same name, while the cities of Sarajevo and East Sarajevo officially consist of several municipalities. Cities have their own city government whose power is in between that of the municipalities and cantons (or entity, in the case of Republika Srpska).

Bosnia is located in the western Balkans, bordering Croatia(932km) to the north and south-west, Serbia(302km) to the east, and Montenegro(225km) to the southeast. The country is mostly mountainous, encompassing the central Dinaric Alps. The northeastern parts reach into the Pannonian basin, while in the south it borders the Adriatic. The country has only 20 kilometres (12 mi) of coastline, around the town of Neum in the Herzegovina-Neretva Canton, although it's enclosed within Croatian territory and territorial waters. Neum has many hotels and an is important tourism destination.

The country's name comes from the two regions Bosnia and Herzegovina, which have a very vaguely defined border between them. Bosnia occupies the northern areas which are roughly four fifths of the entire country, while Herzegovina occupies the rest in the south part of the country.

The major cities are the capital Sarajevo, Banja Luka in the northwest region known as Bosanska Krajina, Tuzla in the northeast, Zenica in the central part of Bosnia and Mostar, the capital of Herzegovina.

The south part of Bosnia has Mediterranean climate and a great deal of agriculture. Central Bosnia is the most mountainous part of Bosnia featuring predominate mountains Vlasic, Cvrsnica, and Prenj. Eastern Bosnia also features mountains like Trebevic, Jahorina, Igman, Bjelasnica and Treskavica. It was here that the Olympic games were held in 1984.

Eastern Bosnia is heavily forested along the river Drina, and overall close to 50% of Bosnia and Herzegovina is forested. Most forest areas are in Central, Eastern and Western parts of Bosnia. Northern Bosnia contains very fertile agricultural land along the river Sava and the corresponding area is heavily farmed. This farmland is a part of the Parapannonian Plain stretching into neighbouring Croatia and Serbia. The river Sava and corresponding Posavina river basin hold the cities of Brcko, Bosanski Samac, Bosanski Brod and Bosanska Gradiska.

The northwest part of Bosnia is called Bosanska Krajina and holds the cities of Banja Luka, Sanski Most, Cazin, Velika Kladisa and Bihać. Kozara National Park is in this forested region.

There are 7 major rivers in the Republic of Bosnia and Herzegovina:
The Una river in the northwest part of Bosnia flows along the northern and western border of Bosnia and Croatia and through the Bosnian city of Bihac. It is a very beautiful river and popular for rafting and adventure sports.

The Sana flows through the city of Sanski Most and is a tributary of the river Sava in the north.

The Vrbas flows through the cities of Gornji Vakuf - Uskoplje, Bugojno, Jajce and Banja Luka and reaches the river Sava in the north. The Vrbas flows trough the central part of Bosnia and flows outwards to the North.

The River Bosna is the longest river in Bosnia and is fully contained within the country as it stretches from its source near Sarajevo to the river Sava in the north.

The Drina flows through the eastern part of Bosnia, at many places in the border between Bosnia and Serbia. The Drina flows through the cities of Foca, Gorazde and Visegrad.

The Neretva river is a large river in Central and Southern Bosnia, flowing from Jablanica south to the Adriatic Sea. The river is famous as it flows through the famous city of Mostar.

The Sava river is the largest river in Bosnia and Herzegovina but not the largest river that is flowing trough Bosnia and Herzegovina. The Sava river flows trough Serbia, Bosnia and Herzegovina and Croatia. Sava is making a natural border between Bosnia and Herzegovina and Croatia and towns like Brcko, Bosanski Samac, Bosanska Gradiska lies on the river.

Bosnia faces the dual problem of rebuilding a war-torn country and introducing market reforms to its former centrally planned economy. The centrally planned economy resulted in many legacies that are slowly being changed. Industry is greatly overstaffed, reflecting the rigidity of the planned economy and the slow process or transition. Under Josip Broz Tito, military industries were pushed in the republic; Bosnia hosted a large share of Yugoslavia's defense plants and a lower amount of commercially viable firms.
Two major export companies in the former Yugoslavia had their headquarters in Sarajevo; UNIS holding and Energoinvest.

For the most part in Bosnia's history, agriculture has been in private hands. Farms have been small and inefficient, and food has traditionally been a net import for the republic.

As part of Yugoslavia, Bosnia and Herzegovina financed many large construction projects throughout Yugoslavia. The Highway "Bratstvo i jedinstvo", a pan-Yugoslavian project, which linked Ljubljana (Slovenia) - Zagreb (Croatia) - Belgrade (Serbia) - Skopje (Macedonia), was financed despite the lack of direct improvement to Bosnia and Herzegovina. This project caused an increase in unemployment and a decrease in production.

The war caused a dramatic change in the Bosnian economy. Production fell to 6%, GDP fell 75% and the destruction of physical infrastructure created massive economic trauma. While much of the production capacity has been restored, the Bosnian economy still faces considerable difficulties.

Figures show GDP and per capita income increased 10% from 2003 to 2004. This and Bosnia's shrinking national debt are positives, but high unemployment and a large trade deficit are cause for concern.

The national currency is the Bosnia and Herzegovina convertible mark (BAM), which is fixed to the euro (€1 = KM1.95583) and is therefore very stable. The inflation rate was 1.4% as of 2005.



Yearly inflation is the lowest compared to other countries that were formerly part of Yugoslavia. The inflation rate was 1.9% in 2004, and international debt was $3.1 billion (2005 est); making it the smallest amount of debt owed from the former Yugoslav countries (Serbia and Montenegro's international debt is $15.43 billion (2005 est), while Croatia is at $29.28 billion (2005 est)). Real GDP growth rate was 5% for 2004 according to the Bosnian Central Bank of BiH and Statistical Office of Bosnia and Herzegovina.

Bosnia and Herzegovina has one of the best income equality rankings in the world, ranked eight among the world's 193 nations.

Overall investment value (1994-2002):

1994-97: 39,563,000 KM

1998: 55,750,000 KM

1999: 154,067,000 KM

2000: 147,214,000 KM

2001: 130,172,000 KM

2002: 321,446,000 KM

Total (1994-2002): 805,013,000 KM

Croatia (308.444.000 €)

Austria (279.533.000 €)

Lithuania (252.395.000 €)

Slovenia (236.532.000 €)

Netherlands (204.889.000 €)

Germany (130.984.000 €)

55.5% Manufacturing

16.5% Banking

8.6% Services

6.2% Trade

0.9% Transport

0,7% Tourism

Large population migrations during the Yugoslav wars in the 1990s have caused a large demographic shift in the country. No census has been taken since 1991, and none is planned for the near future due to political disagreements. Since censuses are the only statistical, inclusive, and objective way to analyze demographics, almost all of the post-war data is simply an estimate. Most sources, however, estimate the population at roughly 4 million (representing a decrease of 350,000 since 1991).

According to the 1991 census, Bosnia and Herzegovina had a population of 4,354,911. Ethnically, 43.7% were Bosniaks, 31.3% Serbs, and 17.3% Croats, with 5.5% declaring themselves Yugoslavs.

According to 2000 data from the CIA World Factbook, Bosnia and Herzegovina is ethnically 48% Bosniak, 37.1% Serb, 14.3% Croat, 0.6% Other.

It is believed by some that Bosniaks now have an outright majority in Bosnia and Herzegovina, although that is speculation, as no census has been conducted for over 15 years.
There is a strong correlation between ethnic identity and religion in Bosnia and Herzegovina. as is shown by the fact that 90% of Bosniaks are Muslims whilst 93% of Serbs are Orthodox Christians. Tensions between the three constitutional peoples remain high in BiH and often provoke political disagreements. Each of the three peoples are influential to roughly a same degree in Bosnia with Bosniaks being the most numerous, Serbs having their own entity, and Croats, though politically marginalized, being the strongest economically.

In Bosnia and Herzegovina Islam is the largest single religion with an estimated 48% being Muslim. The second largest religion in Bosnia and Herzegovina is Serb Orthodox Christianity, accounting for an estimated 37%, and the third largest religion in Bosnia and Herzegovina is Roman Catholicism, with 14% being Catholics.