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Publication in the community "Montenegro"

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Reindustrialization of Montenegro: low start

In continuation of the topic launched on September 22, the Industry of Montenegro: decline and fluctuations, we will try to consistently consider the main parameters of the program document "Industrial Policy of Montenegro until 2020" (further simplify to PP-2020).

PP-2020 is positioned as a strategic document, which should, in fact, restart the economy of the country, and at the same time, bring it to a new technological level. PP-2020 declares a new approach to industrial policy, manufacturing enterprises are seen as drivers of change and development, and state authorities should provide maximum support to producers.

The aim of the new industrial policy is to define such strategic directions and priorities for industrial development that will stimulate the development of the economy, create new jobs, increase the incomes of the population, and, ultimately, improve the standard of living.

The document details about the situation in Montenegro. In particular, such statistics are given: in the early 90s of the 20th century, the industry in Montenegro produced more than 35% of GDP, employing about 56 thousand workers. At present, industry contributes about 11% to GDP, about 23 thousand employees in the industry, while the share of manufacturing is 4.2%, which is an extremely low indicator.

The share of manufacturing in the country's economy steadily declined year after year, for almost 20 years, nevertheless, despite the fact that there were periods of growth in the total GDP of Montenegro, deindustrialization of the country took place.

Early 2000's. is characterized as a period of "economic prosperity", GDP grew at a rate of more than 6% per year in 2006-2008. Then there was a period of decline, which was interrupted in 2013, when signs of recovery were noted, namely, GDP grew by about 3%. But from 2000 to 2013, the share of total industry in GDP fell from 17% to 11%. With the indicators of the 90's. (40%) and there is nothing to compare.
By the way, according to the PP-2020 authors' own data, in 2013 GDP per capita amounted to EUR 5,356.7, which is 42% of the EU average. Interestingly, for Montenegro, there is no data on labor productivity, however, according to OECD (Organization for Economic Cooperation and Development, http://www.oecd.org/), labor productivity in Montenegro is significantly inferior to that of Central European countries, both in industry , and in the services sector.
As a result of extremely weak industry development, in Montenegro's foreign trade a negative balance, imports significantly exceed exports. The diagram shows that the critical collapse of the indicators of commodity exports for some reason occurred in 2012. Very few branches of Montenegro have export potential, now the country's pharmaceutical industry has the highest export value.

Production sectors in Montenegro were declining, the services sector was growing, the structure of the economy was completely transformed. This process has reached such a degree that now, apparently, it will be impossible to concentrate all efforts mainly on the accelerated development of industry, because the level of economic development, well-being of the population, employment and so on depends on the service sector, it is clear that primarily from tourism. But it is no longer possible to ignore the backwardness in industry.
Sectoral imbalance fixes the structure of business organization: 0.3% of enterprises are large, 2.1% - medium-sized enterprises, and 97.6% - small businesses. This, perhaps, can be called even the preindustrial economy or the economy of the initial industrial period ... Such an economy is characterized by low productivity and weak competitiveness in the region, extremely dependent on imports, very sensitive to external shocks. Such, in brief, is the assessment of the current state of industry.

However, the state of Montenegro's industry can not be judged only negatively. In the end, from a low start quickly start, there was a Japanese economic miracle, a Greek miracle, a Chinese miracle, why not be Montenegrin? There are also advantages that can not be overemphasized, above all, this is the location of Montenegro, close enough to high-tech countries, transport and logistics flows, to large investors. Montenegro is a small country, the effect of a properly built strategy of new industrialization, - reindustrialization, - can be rapid.

To be continued…

Sources:
http://www.mek.gov.me/ResourceManager/FileDownload.aspx?rid=209166&rType=2
(PDF file is uploaded from the website of the Ministry of Economy of Montenegro)

Photo: Belgrade. Belgrade Industrial Fair. 1953. Architect M. Pantovich



The author will be grateful for indications of inaccuracy and inaccuracy in the article.

Evgeny Novozhilov
#EvgenyNovozhilov

This is an automatic translation.
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