Since the late 1990s, Montenegro has undertaken a series of reforms designed to move its economy from a socialist to a modern market-based economy. The macroeconomic and structural reforms have yielded modest economic recovery and transition. Yet, significant challenges remain. This Memorandum, the first of its kind for Montenegro, sheds light on these key challenges.
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This chapter looks at Montenegro’s labor market and its main characteristics, the extent to which the areas in which the labor law continues to be restrictive (despite recent improvements), and examines whether the collective bargaining and social dialogue are supportive of growth and private sector employment creation.
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This chapter discusses Montenegro’s fiscal policy, including whether the fiscal position is sustainable and whether the current level and structure of spending are supportive of growth, and what reallocation may be needed, if any, to support growth and competitiveness.
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This chapter examines the extent to which poor administrative and institutional capacity, poor property rights and contract enforcement, and the high cost of capital and low financial intermediation are holding back growth and competitiveness in Montenegro. These are treated under the theme of constraints to private sector investment, growth and competitiveness.
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Tourism holds considerable promise for Montenegro’s export-oriented growth and employment creation.This chapter discusses several specific measures needed to overcome stiff competition from neighboring countries and other destinations worldwide, many of which currently offer a more competitive combination of quality and price to the same target markets.
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