Digital transformation represents a key factor of modern economic development. However, its effects are not evenly distributed for a number of reasons. In the countries of the Western Balkans, particularly in Bosnia and Herzegovina, Serbia and Croatia, various challenges are present that lead to differences in access to information and communication technologies, as well as in the level of digital skills, thereby deepening existing development inequalities.The aim of this paper is to examine the extent to which the digital divide represents a constraint on regional and local development in Bosnia and Herzegovina, Serbia and Croatia, as well as to analyze differences in terms of digital infrastructure, the level of digital competencies, and the existence of strategic frameworks for the development of artificial intelligence, which is becoming increasingly important in modern business. The empirical analysis is based on secondary data obtained from the Eurostat database, as well as from the national statistical offices of the observed countries. The study employs comparative analysis and descriptive statistical analysis of the level of digital development in these countries. The contribution of this paper lies in identifying the key mechanisms through which the digital divide affects business performance and regional development in the observed countries.

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