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.

The experience of Eastern European countries indicates that a country cannot simultaneously give up autonomy of monetary and fiscal policy and control of labour mobility without all three causing a reduction in potential GDP at the same time. Namely, if a country opts to peg its currency to the currency of a larger (more developed) country and pursues a restrictive fiscal policy, it will probably 2 lead the workforce to emigrate. This universal rule applies to both developing and developed countries. Nevertheless, the specificity of the developing countries' position is that once the labour force leaves the country, it will almost certainly never return. Therefore, labour mobility should be regarded as entirely different when it takes place between countries at distinct levels of development and when it serves as a mechanism for achieving an external balance between countries at similar income levels. As far as we understand, the just described experience of Eastern European developing countries has not yet been formalized anywhere as economic legality, i.e. trilemma. Thus, this paper can be an introduction to the theory of the impossible trinity of developing countries, explaining the basic concepts, connections between them and open questions.

Abstract The economic openness and reindustrialization. Can these two occurrences exist at the same time? The empirical experience of the East European countries tells us that they cannot. Trade liberalization in the transition countries implemented during the 1990s led to the process of deindustrialization which continued also during the 2000s. The goal of this paper is to present the possible directions for reform of the international trade system which would enable reindustrialization of the small countries in East Europe with simultaneous preservation of the achieved level of trade liberalization. Admittedly, we are separated from the win-win situation by the conviction that this is only possible if the compensation principle is applied on the global trade, according to which the winners in the global trade (developed countries with trade surplus), should compensate to the losers (small insufficiently developed countries) a part of their losses with mandatory support to programs of reindustrialization based on exports, for which the funds are chronically lacking. An alternative is reindustrialization based on import substitution i.e. strengthening of the protectionism, where all benefits of the free trade could vanish so in the end everybody would be in loss.

Economic crisis in Euro- Atlantic economy came in its fifth year although governments of developed countries have taken all measures that they were using more or less successfully in last 60 years. While governments keep looking for more drastically measures to end the crisis, we believe that the time has come for analyzing this situation from another angle. That angle is integral historical analyses of actual roots of this crisis instead of shallow partial analysis that take place these days. Keywords: economic crisis, state intervention, free market JEL classification: E02, E58, E6