Foreign Direct Investment And Montenegrin Economy

The growth model which Montenegro has been applying for fifteen years of transition has proved useless in practice. Nowadays, after so many years and privatisations, the situation is much worse than at the very beginning. The Montenegrin economy has hardly any production of its own and is dependant on inflow of foreign direct investments (FDI), which are reduced globally due to the global economic crisis. Even before this crisis, we had high public expenditure, inefficient administration, unresolved property-legal relations which hinder tourism, poor investment in research and development, huge problems with quality education. The global economic crisis has only resulted in a furter decrease in gross national product (GNP), deficit growth, unemployment, a lack of liquidity of the real sector. Montenegro urgently needs a different transition, which would have to be based on a serious development strategy, creating international competitiveness of domestic products and an adequate legal and economic framework for investing in export-oriented sectors.