Dr Nina Drakić, President of the Chamber of Economy of Montenegro
The next phase of development calls for diversification, stronger industry and energy, digital transformation, and sustainable investment – all as pillars of resilience and competitiveness
Two decades after Montenegro regained its independence, the country’s economy stands at a crossroads – marked by modernization, foreign investment, and closer ties with Europe, yet still challenged by vulnerability to global shocks and structural weaknesses. In this interview, Dr Nina Drakić, President of the Chamber of Economy of Montenegro, reflects on the nation’s progress, the lessons learned, and the priorities for building a more resilient, diversified, and sustainable future.
How do you assess Montenegro’s economic development today, two decades on from the restoration of independence, and which changes would you single out as the most significant?
In economic terms, the twenty years of restored independence have been marked by significant progress and modernisation, but also by numerous challenges that show we are still searching for a balance between development, sustainability and a better standard of living for our citizens. Over the past two decades, Montenegro has undergone significant institutional and economic changes that have largely transformed the domestic economy. Compared with 2006, today we have a more open market, a more developed financial sector and considerably stronger integration with European and international economic flows. During this period, a large number of investments were also realised, particularly in tourism, energy, infrastructure and real estate, spurring economic growth and the development of individual branches of the economy. It is especially significant that, over the years, the private sector has taken on the dominant role in generating economic activity and new jobs, while at the same time the number of registered enterprises and entrepreneurial initiatives has grown. In parallel, improvements to the regulatory framework and business procedures have gradually created more favourable conditions for investment, company growth, and the strengthening of the economy’s overall competitiveness. Nevertheless, despite this evident progress, the Montenegrin economy still faces numerous challenges that affect its competitiveness, resilience and the long-term sustainability of its development. A particular problem is the pronounced sensitivity of the Montenegrin economy to external shocks – including disruptions in global markets, inflationary pressures, and geopolitical crises – which, in recent years, has further underscored the vulnerability of small, open economies to outside influences. At the same time, the economy continues to display numerous internal weaknesses that affect its competitiveness and resilience.
How much more competitive and attractive for investment is the business environment in Montenegro today than it was in 2006?
Over two decades, the business environment in Montenegro has changed significantly and is today, in many respects, more modern than in 2006. The banking sector is more developed, infrastructure has been improved, connectivity with European and regional markets has increased, and foreign investment is considerably higher than in the period immediately following the restoration of independence. Business operations are partly digitalised, administrative procedures have been simplified compared with the earlier period, and the private sector has become more flexible and more oriented towards services, tourism and international cooperation. Montenegro today is a far more open economy, more exposed to global economic flows than it was two decades ago.
How has the European integration process affected the improvement of the business environment and the development of the economy?
The European integration process has had an important influence on the improvement of the business environment through reforms in finance, market competition, business legislation, and public administration. The introduction of European standards has contributed to greater transparency and to aligning the domestic market with European Union rules, further strengthening investor confidence. The COVID-19 pandemic further accelerated the digitalisation of business and the development of electronic services, but it also exposed the vulnerability of the Montenegrin economy, particularly due to its heavy reliance on tourism and external sources of revenue. Despite numerous challenges, today’s business environment is characterised by greater market openness, more modern ways of doing business and stronger ties with the European economic area. Montenegrin companies are already reaping significant benefits from the European integration process. First and foremost, alignment with European standards increases their competitiveness and eases access to a market of almost 450 million consumers. It also opens up additional opportunities to draw on EU pre-accession funds, to participate in European programmes supporting innovation, digitalisation and human resource development, and to connect with partners from member states. It is especially important that the accession process brings greater legal certainty, a more predictable business environment, and stronger confidence among foreign investors – all of which directly drive the growth of investment and business opportunities for domestic companies. From a regional perspective, since the restoration of independence in 2006, Montenegro has been among the most open economies in the Western Balkans. Its liberal regime for foreign investment, the use of the euro, NATO membership and the greatest progress in the EU accession process are its most important comparative advantages. The use of the euro is a particular advantage, as it has contributed to macroeconomic stability, reduced currency risk and made doing business with European partners simpler.
Which sectors have made the greatest progress over the past twenty years, and where do you see the greatest potential for future growth?
Speaking of economic development, over the past twenty years, the greatest progress has been made in tourism, construction, trade, and the services sector, which today are the main drivers of the Montenegrin economy. Tourism has undergone significant expansion through the development of luxury hotels, marinas, tourist complexes, and major investment projects along the coast. Over the past two decades, Montenegro has come to be recognised as an attractive tourist destination on the Mediterranean, contributing to growth in revenue, employment and foreign capital inflows. In parallel, the construction sector has developed – above all thanks to investment in real estate, road infrastructure and tourist facilities – while trade has grown on the back of increased consumption and market development. In the past few years, there has also been notable growth in the IT sector, in digital services and in interest in energy, particularly renewable sources such as solar and wind. This development has been further encouraged by the European Green Agenda and the process of aligning with European Union standards, which creates space for new investment and the modernisation of the economy. At the same time, the COVID-19 pandemic showed how sensitive an economy can be when it relies heavily on a single dominant sector, above all, tourism. This is why there is increasing discussion of the need to diversify the economy: to strengthen manufacturing, energy, the IT sector and other activities that could, over the long term, contribute to more stable and more sustainable economic growth.
What are currently the greatest challenges facing Montenegrin businesses, and what needs to be done to overcome them?
The challenges that businesses face are a combination of long-standing structural problems and the consequences of the global crises that have marked the recent period, which makes operations and long-term planning more difficult for companies in Montenegro. For years, businesses have cited the shortage of a workforce with the appropriate knowledge and skills, the grey economy, and unfair competition as their greatest barriers. A particular challenge is also the difficult access to favourable sources of financing, especially for the micro, small and medium-sized enterprises that form the backbone of our economy. The economy is further burdened by inefficient administration, frequent regulatory changes, parafiscal charges and underdeveloped infrastructure. Even so, it is important to note that the 2022 tax reform significantly reduced the tax burden on labour and contributed to greater formalisation of employment, representing an important step forward for the business environment. The conclusion is that the economic system is more stable and more developed today than it was two decades ago, but long-term sustainable growth requires further improvements in the economy’s competitiveness and resilience, along with a partnership between the state and the economy and the continuation of reforms that will improve the business environment. Stronger economic diversification is particularly important, as developing sectors that create new value can contribute to a more stable, more resilient economy to external shocks. In the next phase of development, the focus should be on strengthening productivity, developing industry and energy, digitalisation, and sustainable investment.
Has Montenegro managed to harness the potential of foreign direct investment for the long-term development of its economy?
Independence was certainly an important factor in positioning Montenegro as an investment destination. After 2006, a significant rise in foreign direct investment was recorded, particularly in tourism, real estate, banking, and energy, with the total FDI inflow reaching approximately €16 billion by the end of 2025. Over that period, Montenegro established itself as an open economy with a clear European orientation and the capacity to attract significant international capital. Today, however, it is equally important to speak not only of the volume of investment but also of its quality, and of its long-term effects on the economy. The quality of investment is measured by its contribution to new jobs, the development of domestic companies, the strengthening of infrastructure, the transfer of knowledge, and the country’s overall competitiveness – together with the responsible and sustainable management of space as a limited resource. In recent years, we have recorded strong growth in real estate investment, which confirms Montenegro’s appeal as a destination for living, tourism and investment, with such investment making a significant contribution to the development of construction, tourism and related services. Even so, the long-term development question remains how, alongside the existing investment model, to simultaneously strengthen sectors with higher added value, higher productivity and greater export potential. Investors are drawn not merely by a country’s political status, but above all by the quality of the business environment – legal certainty, efficient institutions, a stable tax policy, developed infrastructure and the predictability of the system, particularly amid pronounced global uncertainty and ever-greater competition among investment destinations. In other words, independence created space for a stronger investment cycle, but the sustainability and quality of future investment depend, above all, on the state’s ability to continue reforms and keep improving the business environment.