The European Bank for Reconstruction and Development (EBRD) has presented its 2024-2025 Transition Report titled Navigating Industrial Policy. This year’s report focuses on industrial policies in the regions where EBRD operates and beyond.
EBRD’s Country Director for Montenegro, Remon Zakaria, reminded attendees that the bank operates in 36 countries and expanded last year into six Sub-Saharan African countries. He emphasized the bank’s goal of fostering economies with open and sustainable markets in countries committed to democratic principles.
During the event, Zakaria highlighted EBRD’s achievements from the previous year, noting that their investments in 2024 reached a record high. “We invested approximately 16 billion euros in the countries where we operate. Since our foundation, we have cumulatively invested over 215 billion euros. In Montenegro, last year was our second most successful year since opening our office here, with investments totaling 104 million euros across nine projects. 89% of these projects were green initiatives, and 78% incorporated gender inclusivity in the economy,” Zakaria stated.
He further emphasized that EBRD is not only focused on investments but also combines discussions about laws, technical support, and investments to help develop economies and markets. “Regarding legislation, in recent years we’ve worked on the renewable energy law, and in August of last year, the new law was adopted. There is continuous support to establish international auction standards for renewable energy. We believe the regulatory framework for renewable energy is crucial for the country’s economic development. We’ve also continued work on the draft law for the establishment of a Credit Guarantee Fund. This instrument can unlock liquidity currently held in banks and help commercial banks target riskier clients in Montenegro. We also support public-private sector dialogue, and as part of that, drafts of two new laws have been prepared, and we hope they will be adopted soon,” he said.
EBRD Director of the Department, Zsoka Koczan, presented key findings from the Transition Report, highlighting the significant growth of industrial policies in recent years. “It is important to note that these policies are not traditionally industrial in the conventional sense. Many of them in the Western Balkans target agricultural businesses, tourism, or other service sectors rather than manufacturing. Three-quarters of new industrial policies have multiple goals, and these can lead laws in various directions, making it difficult for lawmakers to be accountable for the failure of industrial policy. It also makes it harder for them to take credit for the success of industrial policies,” Koczan explained.
She pointed out that industrial policies focused on productivity growth, investments in human and physical infrastructure, and innovation still dominate, but in recent years, there has been a shift towards other goals. “Regional development is an important goal for industrial policies in the Western Balkans. Environmental objectives are also present in the Western Balkans and advanced European economies. We see stability in the percentage of industrial policies focused on security and supply, which are particularly present in East Asia, China, and the Eastern Bloc. Employment saw an increase in 2022 as a result of policies implemented during the COVID-19 pandemic that aimed to create or protect jobs,” she added.
Koczan concluded by noting that growth policies are the most widespread across all regions. “One of the downsides of industrial policies is the potential for creating dependency. Relying on subsidies, especially when there is no clear deadline, can lead to dependency, making it difficult to wean off them,” she said.
