Montenegro is working towards its goal of joining the European Union by 2028, with notable advancements in aligning its legal and institutional frameworks with EU standards. The country has made progress in opening and advancing negotiation chapters across various policy areas, enhancing its credibility in the accession process.
However, a critical question arises: can Montenegro achieve economic convergence without a robust industrial sector? This issue is particularly pressing for Montenegro, where the economy heavily relies on services, which constitute over 75% of GDP. The dominance of tourism, real estate, and related activities has contributed to growth but raises concerns regarding long-term sustainability.
Historically, nations that have successfully aligned with EU income levels have done so through industrialization, export expansion, and productivity improvements. The manufacturing sector and tradable goods are essential for driving income convergence, yet Montenegro’s current economic model does not fit this paradigm.
The primary drivers of growth—tourism and real estate—are not easily scalable like industrial production. Additionally, these sectors face limitations due to capacity constraints and environmental factors, creating a structural divide between Montenegro and more industrialized EU nations.
Accession to the EU presents both opportunities and challenges. Integration into the single market provides access to a vast economic area that can enhance trade, investment, and the movement of capital and labor. Furthermore, EU funding aids in infrastructure development and institutional reforms necessary for growth.
Conversely, joining the EU also means facing competition from more productive economies. Without a solid industrial foundation, Montenegro risks remaining at the lower end of the value chain within the European market.
The importance of infrastructure cannot be overstated in this context. Initiatives such as the airport concession, road improvements, and energy investments are vital for enhancing connectivity and fostering economic activity. However, infrastructure improvements alone will not suffice.
The growth of productive sectors demands comprehensive policies encompassing education, innovation, and regulatory support. In terms of energy potential, Montenegro’s renewable resources—especially hydropower and wind—could facilitate export-oriented growth amid Europe’s energy transition.
Logistics and transport sectors also present significant opportunities. Montenegro’s strategic location along the Adriatic coast provides access to both regional and European markets, contingent upon enhanced infrastructure and integration into EU transport networks.
To capitalize on these opportunities, active development is essential. The banking sector can contribute by increasing lending to productive industries, which will require viable project demand and an investment-friendly risk environment.
EU funding mechanisms like IPA III offer additional resources for infrastructure development, innovation, and capacity building. While these funds alone may not be transformative, they can stimulate broader investments.
The central challenge lies in establishing a strategic direction. Montenegro has successfully cultivated a service-oriented economy that attracts investment; however, the next phase necessitates building a productive base capable of sustaining economic convergence.
This shift does not aim to replace tourism but rather to complement it. Without such a transition, Montenegro may experience institutional convergence without achieving full economic integration into the EU framework. Consequently, productivity and income level disparities could persist even after accession.
The opportunity for change remains available but is diminishing as the date for accession approaches.
