Tuesday, March 13, 2007


I recently noted an article discussing the challanges of Montenegro.

From the economic point of view, in real terms, the GDP growth between 2002 and 2005 reached almost 15 percent. The economic growth has been supported by the infusion of foreign direct investment. Montenegro maintains an open policy towards foreign investment. The total cost of starting a business is estimated at $242,41 (USD).

In the field of investors' protection, Montenegro is among the top 20 countries in the world. In terms of general observation, Montenegro has set a modestly good grounding for further economic growth and structural convergence but a bulk of challenges still remain (privatization, price liberalization, contract enforcement and property rights protection, labor market reform, tax reform ...), including the reform of the judiciary and cutting the red-tape.

Credit risk should be minimized in order to diffuse the investment easier and less risky which, coupled with sound investment and tax environment, may galvanize the economy's transformation. In terms of the speed of convergence, the business sector is ought to stream towards the competitive business policy and innovative models because in a global world, competitiveness depends on the ability of the business sector (not government ownership and intervention) to accomplish ambitious objectives on an international as well as on domestic basis.

The policy of openness to foreign direct investment and rapid privatization is a direction that may accelerate the pace of convergence. The latter is a crucial challenge depending on the ability and innovation (human capital approach, R&D, value-added ...) of the business sector to sustain, innovate and grow domestically and internati0nally.

Frederic Sautet and Kyle McKenzie; A Mediterranean Tiger? - TCS Daily, 12 March 2007

Frederic Sautet, Kyle McKenzie, Maja Drakic; Montenegro: The Challenges of A Newborn State, Mercatus GMU, 2007

Doing Business in Montenegro, WB

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