MONET
MONTENEGRO ECONOMIC TRENDS
September 2006
Monet September 2006
1 © Institute for Strategic Studies and Prognoses
Montenegro Economic Trends
Dear readers,
During the previous six months Montenegro has undergone tremendous changes. Both this preface and all of the articles in this edition of MONET consider these changes.
So far, the reforms in Montenegro have been designed in light of achieving macroeconomic stability. Now, the time to concentrate on economic development has come. In other words, the focus of economic reforms should be switched from macroeconomic stability to economic development. Hence, creating the ambience that will aid in increasing both the GDP growth rate and the employment rate should be the primary goal of macroeconomic policy as opposed to balancing the budget and targeting a lower inflation rate. The goal of reforms should not be simply to comply with the requests of IMF and WB, but also to improve the quality of our lives. For the last twenty years Montenegro has been experiencing the process of transition. During this time we have witnessed transition as a process that significantly influences the way of thinking. Bearing with this process is very difficult, especially for older citizens. Therefore, transition can be considered as an intergenerational redistribution of power, or transmission of power from elders to the younger population.
How can the life of our citizens be improved? There are three key conditions we should comply with: opening and globalization; integration into the European market; and regional integration. These three actions would shed light on Montenegro from both inside and outside; without this, we would remain closed in the darkness of the Balkans. We see globalization as a battle to eliminate the barriers to capital flow. The sooner we understand that the main part of competition today is the attraction of foreign investment, the better we will be. With Montenegro having the third highest per capita FDI in Europe in the previous year, it appears that the Montenegrin society has a good understanding of this.
The geographic position of Montenegro plays a very important role in the economic development of Montenegro. On one hand, one should not forget that Montenegro is a Mediterranean country; while on the other hand, Montenegro borders seven other countries or entities. Therefore, it must be opened and turned towards the regional market. A system that will attract big companies’ interest in exporting products from Montenegro should be created. Thus, Montenegro should become a business platform in the region!
Furthermore, Mediterranean connections must be fully utilized. Montenegro must rely upon the sea and the Mediterranean; it must become the “Mediterranean tiger.” A tunnel called Sozina was built last year making the northern part of the country one hour closer to the sea. In fact, by building new roads it will become even closer. The best criterion for the development of the northern part of Montenegro is its proximity to the sea. Only by connecting the northern territory to the sea will the “Mediterranean tiger” get its real image! Full economic integration of the northern part of the country into the entire Montenegrin economic ambience is necessary. This could be achieved through construction of good roads, small airports, and concessions. Once done, companies and entrepreneurs will be interested in investing in business, and farmers will enter the market as well. Furthermore, good roads would also result in a higher number of tourists. Therefore, only through economic integration of the northern territory can we have long-term development of the North, which would give an additional impulse to the development of Montenegro as a whole. By constructing and improving roads, railroads, and small airports, we will not only connect the North with the rest of Montenegro but also connect all parts of Montenegro with the region.
2 © Institute for Strategic Studies and Prognoses
Monet September 2006
In order to achieve both these short-term and long-term goals, all creators of economic policy have to be cautious, while at the same time being brave and aggressive. Our generation received a life chance which must not be gambled away. As always, ISSP researchers are accurately following and analyzing all economic movements in Montenegro, as well as advocating for important policies, laws, procedures, etc. This is how this issue of MONET is structured.
In the first part, ISSP researchers follow current economic movements in the Montenegrin economy. Many interesting and important findings were brought up. Here we will stress a few of them.