The main Preconditions for Economic Development

In order for Montenegro to continu being the fastest growing economy of the Western Balkans, but also to ensure sustainable economic development and provide its internal (political and social) stability it is necessary to act in three strategic direction:

  • To continue to attract foreign direct investment – in order to provide the necessary capital for the use of all resources that are at our disposal, and to ensure stable economic growth, with fiscal and macroeconomic stability of the country. Montenegro achieved definitely the gratest progress in this segment in the past decade, however, there are still major limitations since a part of state institutions behaves as if Montenegro is the only investment destination in the world, so we still have not solved status of many development projects in the country. Relationship with investors and projects that have the potential to be realized, must be based on the “one-stop-shop” model which will provide answers in any moment such as: what is the requirement for each of the projects (BOT / DBOT, greenfield, private-public partnership, financing, or …), with whom the investors needs to negotiate, under what conditions, how long the negotiation / decision making / documentation process may last etc.
  • Infrastructure development – is of crucial importance for a comprehensive socio-economic development of the country and improving the quality of life in Montenegro. But, in order to overcome restrictions on financing of major infrastructure projects Montenegro should use the potential of China’s “Silk Road”, given that China has to offer cutting edge technological solutions with the most favorable conditions for funding. Business agreement with CRBC on highway construction and interest of different Chinese companies for the energy sector are encouraging, but Montenegro should prepare as many projects as possible for future Summits under the “16 + 1” initiative, in order to use existing global ‘momentum’.
  • Development of the social economy – is crucial for elimination of social inequality, the contrast between the North and South and ensuring balanced economic development. We must be aware that the market is not able to solve many social issues, such as employment of hardly employable groups, social inclusion and regional development of the country, because these are the areas which are characterized with high transaction costs and low rates of return on capital, so it is not realistic to expect that any domestic or foreign investor will operate in these areas, regardless of the numerous incentives that the country offers.

This document was developed on the basis of the research results “Strategic Study on Social Economy Development in the Context of the South East Europe 2020 Strategy” which has been done in 2014, as part of a regional expert team, for the purposes of the European Movement in Serbia and SeCons, in accordance with the requirements of Regional Cooperation Council from Sarajevo. The document deals with the third course of action, ie. development of social economy and social entrepreneurship, which should also be part of an active government policy in Montenegro.

The study makes it clear that the objectives of the social economy are fully incorporated in all strategic documents of Montenegro, and that the concept has been developed in most EU countries, in order to overcome those structural problems in the economy that nor the market, nor the state, are able to solve alone. If we transfer data on the impact of the social economy from the EU to Montenegro, this would mean that at least 14,000 new jobs in the country could be created, primarily in the segment of hardly employable persons and persons who come from less developed municipalities in Montenegro. On the other hand, if the level of the social economy development would reach a stage of development as in the case of Ireland and the Netherlands, this part of the economy could even include 20-22.000 employees (9 – 9.50% of the working population).

The document presents the status of the social economy in Montenegro, with recommendations for development of this concept, as well as answers to key issues that emerged lately, such as the types of organizations of the social economy, models of financing and successful management structure for social enterprises.

The development of the social economy can directly reflect in increased employment, greater inclusion of marginalized groups, higher per capita income and solving of various social problems that the existing system can not solve. The concept of social entrepreneurship should be recognized as a model that will offer new ways of addressing and solving these problems.

What is particularly important to emphasize is that the development of this concept does not need a large budget allocations, due to various support mechanisms that already exist in the country, but it is necessary to develop a favorable institutional framework and harmonize different incentives that the Government has already started implementing in the area of employment, development of small and medium enterprises, rural development, integration of persons with disabilities etc.

Advocating for the development of the social economy means a commitment to full use of available resources, greater employment, reducing social exclusion and poverty, justice, humanity and a harmonious society.

* Source: “Social entrepreneurship as one of the pillars for economic development of Montenegro”, CEPS 2017.