As a successful furniture exporter, Elizabeta Josipovic is one of a new breed of Bosnian entrepreneurs who have moved beyond the bitter ethnic rivalries that have stunted the country’s development. But she remains in thrall to a government that, nearly 15 years after Bosnia was riven by Europe’s deadliest fighting since World War II, she says still spends much of its time and money playing politics instead of helping mid-sized firms such as hers breathe new life into a still stagnant economy.

Started in 1998 in the Bosnian Serb Republic town of Prijedor with a staff of just four, Josipovic’s Sconto-Prom today employs around 500 workers at three production plants and seven shops across the country, selling to outlets in the European Union and beyond. Josipovic, whose main client is Swedish chain IKEA, plans further expansion.

“We can’t just sit and wait for others to do the job for us,” she said in her furniture shop in the nearby town of Banja Luka. “We are here on our own.”

A small, energetic woman and a rare female face in Bosnia’s business community, Josipovic says exporters are crying out for state help at a time of economic crisis when only the most persistent and talented operators can survive on their own.

“There are no state laws,” she said. “It seems that our political structures are not interested in creating a state based on law.”

Bosnians are due to vote in parliamentary and presidential elections on Oct. 3, campaigning for which—along with prolonged rivalry between the country’s two autonomous regions—has delayed privatisations and other reforms, experts say.

A sluggish performance by an economy driven mainly by exports of metal and timber has in turn done nothing to ease deep-seated ethnic tensions.

Gross domestic product shrank around 3 percent in 2009 and is expected to grow just 1 percent at best this year. In the World Bank’s Doing Business competitiveness survey for 2010 , Bosnia was ranked a lowly 116 out of 183 countries.

After stagnating in 2009, exports increased by 33 percent in the first half of 2010 and foreign direct investment reached about 400 million Bosnian marka ($267 million), roughly the same as in all of 2009 when investment fell sharply.

With the region’s highest level of public spending at around 47 percent of gross domestic product, Bosnia still relies on money from the International Monetary Fund and other global lenders to preserve fiscal stability.

Still in Crisis
“There are no indications that we will exit the economic crisis by the end of the year,” said Damir Miljevic, an economics professor at Banja Luka University. “Authorities have done nothing during the year, the election campaign is under way and then we shall wait for the formation of governments.”

Miljevic said small and mid-sized enterprises, the cornerstone of Bosnia’s export sector, were burdened with high taxes and increased input prices as authorities have failed to draft a systematic support plan for their development.

By way of example, Josipovic must charge EU clients customs fees on the material she uses for padding on her furniture, which she imports from Turkey. That’s because Bosnia cannot declare the country of origin since Sarajevo has not ratified a free-trade agreement with Ankara.

Bosnia aspires to join the EU but has made little progress. Tensions between the Muslim-Croat federation and the Serb Republic have kept political and economic reforms on hold since the country’s last election in 2006.

Whether it now heads toward closer internal integration or further division is something next month’s vote will go a long way towards determining, officials and analysts say.

Still Divided
“The society is absolutely divided,” said Muharem Murselovic, a Muslim deputy in the Serb Republic parliament. “We cannot talk about economic prosperity unless there are radical changes.”

His hometown of Prijedor was the site of some of the worst atrocities against Bosniaks (Bosnian Muslims) and Croats during th