Interdisciplinary Management Research V THE APPLICATION OF FACTORIAL AND CLUSTER ANALYSIS IN REGIONAL POLICY Jasmina Osmanković 1 , Rabija Somun-Kapetanović 2 , Emina Resić 3 , Muamer Halilbašić 3 , 1 School of Economics and Business Sarajevo, Bosnia and Herzegovina, jasmina.osmankovic@efsa.unsa.ba 2 School of Economics and Business Sarajevo, Bosnia and Herzegovina, rabija.somun@efsa.unsa.ba 3 School of Economics and Business Sarajevo, Bosnia and Herzegovina, emina.resic efsa.unsa.ba 4 School of Economics and Business Sarajevo, Bosnia and Herzegovina, muamer.halilbasic@efsa.unsa.ba ________________________________________________________________ Abstract The paper deals with the potential use of factorial and cluster analysis in defining a framework for regional economic policy, as well as a statistics framework acceptable to Eurostat. The spatial context of the study is Bosnia and Herzegovina. The paper uses factorial and cluster analysis and comparative analysis. The experience of Croatia in the application of these methods to the grouping of local entities by homogeneity is particularly relevant for the purposes of comparison. The topicality of the research is determined by the need to define an effective territorial or spatial framework for Bosnia and Herzegovina’s regional economic policy, and to ensure that the framework will facilitate access to European funds, programmes and projects. JEL classification: R11, R14, R58 Key words: factorial analysis, cluster analysis, regional policy, Bosnia and Herzegovina. ________________________________________________________________ Introduction The paper contain the results from scientific and research project Statistic (NUTS) Regionalization – the application of the factor and Klaster analysis on the example of Bosnia and Herzegovina financed by Fund for science. (Osmanković et al, 2009). Direct reason is in the Bosnia and Herzegovina obligation to select methods and manners of statistic, or NUTS regionalization in accordance to the goals, principles, the EUROSTAT criterions and experiences of the countries that defined NUTS regions of the second and the third level within the process of stabilization and association to EU. It understands the acceptance of the NUTS nomenclature, its principles, goals and 721