Digitalization and the Circular Economy in Bosnia and Herzegovina: Challenges of the Twin Transition in a Transitional Economy

Abstract

The transition from a linear economic model to a circular economy (CE) is vital for sustainable development, climate mitigation, and resource resilience. Industry 4.0 digital technologies (DTs), as the Internet of Things (IoT), Artificial Intelligence (AI), Big Data analytics, and block-chain are increasingly recognized as structural enablers of this transformation. They facilitate real-time monitoring, resource tracking, and data-driven decision-making across product lifecycles. However, while developed nations rapidly advance toward "intelligent circular systems," transitional economies like Bosnia and Herzegovina undoubtedly face distinct socio-economic, institutional, and technological barriers. This paper evaluates the intersection of entrepreneurship and digital transitions in operationalizing circular business models within Bosnia and Herzegovina. Through a qualitative literature synthesis and contextual analysis, this short study maps the applications of digital tools in resource optimization, identifies systemic issues - including regulatory fragmentation and digital literacy deficits and proposes a strategic pathway for accelerating the twin digital and green transition. The findings indicate that localized entrepreneurial initiatives, supported by targeted institutional incentives, can effectively bridge existing governance gaps and catalyze sustainable economic restructuring.