The small and medium enterprises (SMEs) are particular components of the overall organizational structure of the economy in Bosnia and Herzegovina (BiH); therefore, their accelerated development orientation, financial consolidation and competitiveness are of very great importance. On the one hand, the issue of SMEs is an issue of regional development policy, but on the other hand, it is a part of the economic policies of the State. The purpose of this thesis is to provide an overview of the potential of SMEs in the economic development of Bosnia and Herzegovina after the signing of the Dayton Agreement. In BiH there are basically four possible forms of enterprises, namely, Unlimited Joint Liability Company, Limited Liability Company, Joint-Stock Company, and Limited Partnership; however, the Limited Liability Company is the most common form of SMEs. In BiH, in addition to the industry sector, the mining sector is very strongly developed, but the trade sector is dominant, in which SMEs are the most active. As a result of the Stabilisation and Association Agreement (SAA), the EU has granted BiH and at the same time the SMEs of the country, trade preferences that enable the export of goods from BiH that meet all EU-standards to the EU countries without quantitative restrictions and imposition of export tariffs. Within the framework of globalization and particularly in the development and promotion of trade and direct foreign investment, not only the enterprises from their direct regional environment but especially the neighbouring countries play a crucial role for the SMEs in BiH. This thesis is based primarily on the annual reports and studies of the Federal Statistical Office and the Central Bank of BiH, on BiH laws, as well as BiH economic, trade and official gazettes.