DESTRA, SINISTRA, FUTURO
Qual è il fantasma che si aggira
per l’Europa?
Maja Drakic
Institute for Strategic Studies and Prognoses,
Podgorica, Montenegro
Rome, June 12th 2007
Individual –human life, freedom, property
Map of economic freedom
Balkan – European Union
• In 1945 when “whole world turned left”
Balkan (and few others) went the furthest
• Crash of socialism – Balkan went the
furthest again
• Importance of cultural inheritance and
history
• Transition
• Political transition
–
–
–
–
Democracy
Parliamentary elections
Multiparty system
Freedom of speech and media
• Transition of economic system
– Which way to go?
– Transaction costs of transition
– Toward welfare state or toward free market
economics
Balkan’s story on success
Economic Reforms In Montenegro
•
•
•
•
Openness;
Access to sound money;
Low level of business regulation;
Low level of taxation.
Pillars of the Reforms in Montenegro
Openness
• Free trade
• Low Tariff rates (on average 6%, pressure of EU to raise
the tariff rates from average level of 2.8%
• “National treamant of foreigners”
• Capital and Current Transaction Law
– No restriction regarding capital and current transaction with
abroad
– Free flow of capital (repatriation of the profit, possesion of the
current account abroad)
• WTO accession
Pillars of the Reforms in Montenegro
• Euro as legal tender – no monetary policy
Pillars of the Reforms in Montenegro
• Taxation in Montenegro:
– Corporate Income Tax – 9% (flat)
– Personal Income Tax – flat rate of 15% (2008 –
12%, 2009 – 9%)
– VAT – 17%
Pillars of the Reforms in Montenegro
• Privatization and protection of property
rights
Value of capital at the beginning of
privatization process
Privatized
Non-privatized
4,695,490,243.37
3,991,166,706.86
704,323,536.51
Ownership structure in companies in Montenegro
15.00%
85.00%
Privatized
Non-privatized
%
85.00%
15.00%
Pillars of the Reforms in Montenegro
Montenegro
Business environment
Pillars of the Reforms in Montenegro
Capital market
Market capitalization/GDP
160%
140%
120%
100%
80%
60%
40%
20%
0%
2001
2002
2003
2004
2005
BiH
Montenego
Croatia
Macedonia
Slovenia
Serbia
2006
Pillars of the Reforms in Montenegro
Capital market
Stock Exchange Turnover / GDP
25%
20%
15%
10%
5%
0%
2001
2002
2003
2004
2005
BiH
Montenegro
Croatia
Macedonia
Slovenia
Serbia
2006
Results of the Reforms in Montenegro
Unemployment rates
35.00%
32.70%
30.40%
30.00%
26.90%
30.80%
29.50%
26.80%
25.00%
22.30%
25.40%
20.00%
18.40%
15.00%
15.00%
10.00%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Results of the Reforms in Montenegro
Average disposable wage by activity
Result of the Reforms in Montenegro
FDI (in millions EUR)
600
500
400
300
505
383
200
100
76
44
53
2003
2003
111
0
2002
2004
2005
2006
Result of the Reforms in Montenegro
• FDI per capita in Montenegro (2006) – 825 EUR
FDI/GDP
Montenegro
Serbia
Croatia
Bosnia and Herzegovina
Macedonia
Albania
Bulgaria
Romania
2005
23.3%
5.90%
4.60%
5.20%
1.73%
3.37%
14.20%
6.60%
2006
28.9%
14.40%
8.30%
3.70%
5.63%
3.43%
16.40%
9.30%
Result of the Reforms in Montenegro
Ranking - 2005 (86th/127); 2006 (64th/130)
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Thank you for the attention!
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