HOME
TheInfoList



The economy of Montenegro is currently in a process of transition, as it navigates the impacts of the
Yugoslav Wars The Yugoslav Wars were a series of separate but related Naimark (2003), p. xvii. ethnic conflicts, wars of independence, and insurgencies fought in the former Yugoslavia from 1991 to 2001, which led to the breakup of the Yugoslav federation ...
, the decline of industry following the dissolution of the
Socialist Federal Republic of Yugoslavia The Socialist Federal Republic of Yugoslavia, commonly referred to as SFR Yugoslavia or simply Yugoslavia, was a country in Southeast Europe, Southeast and Central Europe that existed from its foundation in the aftermath of World War II until ...
, and
economic sanctions Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they ma ...
imposed by the
United Nations The United Nations (UN) is an intergovernmental organization that aims to maintain international peace and international security, security, develop friendly relations among nations, achieve international cooperation, and be a centre for har ...
.


History

As a relatively small principality founded in 1852,
Montenegro Montenegro (; cnr, Црна Гора, Crna Gora, lit. "Black Mountain", ) is a country in Southeast Europe Southeast Europe or Southeastern Europe () is a geographical region of Europe Europe is a continent A continent is o ...
's economy was originally wholly based in agriculture, but it began developing an industrial economy at the turn of the 20th century. Growth was hampered by its small population, lack of raw materials, an underdeveloped transport network, and a comparatively low rate of domestic and international investment. The first industrial enterprises built in Montenegro were wood mills, an
oil refinery An oil refinery or petroleum refinery is an industrial process plant where crude oil is transformed and refined into useful products such as petroleum naphtha, gasoline, diesel fuel, asphalt base, heating oil, kerosene, liquefied petroleum ...
, a
brewery brewery A brewery or brewing company is a business that makes and sells beer. The place at which beer is commercially made is either called a brewery or a beerhouse, where distinct sets of brewing equipment are called plant. The commercial brewin ...
, salt works, and electric
power plantsPower Station or The Power Station may refer to: * Power station, a facility for the generation of electricity Music * The Power Station (band), a 1980s supergroup ** The Power Station (album), ''The Power Station'' (album), a 1985 album by The Pow ...
. Economic development was interrupted by several wars, including the
First Balkan War The First Balkan War ( bg, Балканска война; el, Αʹ Βαλκανικός πόλεμος; sr, Први балкански рат, ''Prvi Balkanski rat''; tr, Birinci Balkan Savaşı) lasted from October 1912 to May 1913 and invol ...

First Balkan War
(1912–13),
World War I World War I or the First World War, often abbreviated as WWI or WW1, was a global war originating in Europe that lasted from 28 July 1914 to 11 November 1918. Contemporaneously known as the Great War or "The war to end war, the war ...
(1914–18), and
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a World war, global war that lasted from 1939 to 1945. It involved World War II by country, the vast majority of the world's countries—including all the great ...
(1939–45). Throughout the first half of the 20th century, agriculture continued to dominate Montenegro's economic activity.


The Yugoslavian era

Montenegro's economy was developed significantly after World War II, as the country was integrated into the
Socialist Federal Republic of Yugoslavia The Socialist Federal Republic of Yugoslavia, commonly referred to as SFR Yugoslavia or simply Yugoslavia, was a country in Southeast Europe, Southeast and Central Europe that existed from its foundation in the aftermath of World War II until ...
and experienced a period of rapid urbanization and industrialization. Its industrial sector included the generation of electricity,
steel Steel is an alloy of iron with typically a few tenths of a percent of carbon to improve its strength of materials, strength and fracture toughness, fracture resistance compared to iron. Many other elements may be present or added. Stainless ste ...
and
aluminum Aluminium (aluminum in American and Canadian English) is a chemical element Image:Simple Periodic Table Chart-blocks.svg, 400px, Periodic table, The periodic table of the chemical elements In chemistry, an element is a pure substance ...
production,
coal mining Coal mining is the process of resource extraction, extracting coal from the ground. Coal is valued for its Energy value of coal, energy content and since the 1880s has been widely used to generate electricity. Steel and cement industries use coal ...
,
forestry Forestry is the science and craft of creating, managing, playing, using, conserving and repairing forests, woodlands, and associated resources for human and environmental benefits. Forestry is practiced in plantations and natural Stand level m ...
and wood processing, textiles, and tobacco manufacturing, while international trade, shipping, and tourism became increasingly important by the late 1980s.


Post-Yugoslavia

Following the dissolution of Yugoslavia in the early 1990s, Montenegro's entire industrial production system effectively collapsed, leading to shortages of many goods and skyrocketing prices for them. Due to its political alliance with Serbia and favourable geographic location, with access to the Adriatic Sea and a shipping-link to Albania across Lake Skadar, Montenegro became a hub for smuggling activity during the 1990s. The smuggling of petrol and cigarettes, in particular, became a de facto legalised practice within the country.


Dissolution of Serbian alliance

In 1997, Milo Đukanović took control of Montenegro's ruling party, the Democratic Party of Socialists of Montenegro, and began severing political ties with Serbia. He blamed the policies of Serbian President Slobodan Milošević for the overall decline of the Montenegrin economy. Resurgent inflation led the Montenegrin government to "dollarize" the economy, adopting the German mark as its dominant currency. These economic policies also led to a revision of the relationship between the two countries from a federal republic to a much looser political union of Serbia and Montenegro, in which the Montenegrin government assumed responsibility for its own economic policies. Montenegro subsequently opened up many of its economic sectors to privatization and introduced a value-added tax (VAT) to raise funds for public projects. It would later replace the German mark with the Euro as its Montenegro and the euro, legal tender, despite objections from Brussels. However, the implementation of these economic "reforms" did not significantly improve the living standard of Montenegrins during this period. The Montenegrin government blamed its problems on Serbia, which suffered from a higher level of foreign debt and unemployment, as well as an investigation by the International Criminal Tribunal for the former Yugoslavia, Hague war crime tribunal and controversy over Kosovo status process, the independence of its province of Kosovo. These factors hampered Montenegro's attractiveness to investors and delayed its progress toward full membership in the European Union and NATO. On May 21, 2006, the people of Montenegro voted by 2006 Montenegrin independence referendum, referendum to declare independence from Serbia.


Post-independence

Following the independence referendum, Montenegro's economy has evolved to highlight its service sector, with a goal of becoming an elite tourist destination, and is Accession of Montenegro to the European Union, navigating the process of joining the European Union. Attempts to attract foreign investors for large infrastructure projects are ongoing, as these projects are integral to its development as a tourist destination. Montenegro experienced a real estate boom in 2006 and 2007, with wealthy Russians, United Kingdom, Britons and others buying property on the Montenegrin coast. As of 2008, Montenegro received more foreign investment per capita than any other nation in Europe. However, the Late 2000s recession, Great Recession did slow economic growth, as several infrastructure projects, such as the development of Velika Plaža, Ada Bojana, Buljarica, Jaz Beach, and the construction of the A-1 motorway (Montenegro), Bar-Boljare motorway and new power plants had to be postponed. The recession was also very difficult for the Podgorica Aluminium Plant, which was initially built in 1969 and was the biggest single contributor to the Montenegrin gross domestic product. The plant, first privatized in 2005, declared bankruptcy in 2013 and was sold to private investors in 2014. In the first half of 2012, Montenegro exported goods, mostly metals, worth €182.3 million, which was 14.6% less than in the same period of the preceding year. Its major export partners include Croatia, Serbia, Bosnia and Herzegovina, and Hungary. Montenegro's imports in the first half of 2012, mostly food, oil, and electrical energy, were worth €864.9 million, which was 2.6% more than the same period in 2011. Its major import partners include Serbia, Greece, and Bosnia and Herzegovina. The banking sector of Montenegro is highly concentrated with a significant share of foreign capital. Banks in Montenegro provide both retail and corporate banking products under one roof, and most offer non-resident accounts, usually to both natural persons and legal entities.


Taxation

In addition to VAT, a tax rate of 9% is applied to monthly personal gross income below €751 per month, and a tax rate of 11% is applied for income above that. Montenegrin municipalities also apply an income tax surcharge equivalent to 15% of the federal tax rate. Additional income reported in an annual tax return is also subject to a 9% tax rate.https://home.kpmg.com/xx/en/home/insights/2015/11/montenegro-income-tax.html


See also

*History of Montenegro *Economy of Serbia and Montenegro *Economy of Europe


Notes


References


External links


Montenegro Economy and Financial NewsThe Njegoskij Fund Public Project >> Country Profile on MontenegroCIA World Factbook - Montenegro
a slideshow by ''The New York Times''. {{Economy of Europe Economy of Montenegro, Economies of Europe by country, Montenegro