Study Of The Challenges That Hinder MSME Development In Montenegro : Country Report for the British Council and Swedish Institute

In addition to this Study, a further six studies were produced. One for each of the countries, under investigation (Albania, Bosnia Herzegovina, FYR Macedonia, Kosovo & Serbia) and a Main Report, which was published in May 2018.The European Commission’s Enlargement Package Report (2015), concluded that Montenegro continued to make progress as regards the political and economic criteria, and improved its ability to take on the obligations of EU membership. Good progress was made in improving the legislative framework for the independence of the judiciary and the fight against corruption (rule of law chapters, 23 and 24). However, Montenegro was tasked to make further progress in strengthening the institutional framework and in establishing a solid track record in the fight against corruption and organised crime. In December 2015, Montenegro received an invitation to join NATO, which was a major achievement; it became a member in 2017.  With a gross domestic product (GDP) of US 4.1 billion (constant 2010 value), Montenegro is the smallest economy in the Western Balkans and growth has been variable in recent years. However, Montenegro continues to play a constructive role in regional cooperation, ratifying its border agreements with both, Bosnia & Herzegovina and Kosovo. It terms of economic criteria, Montenegro has made progress in developing a functioning market economy (e.g. investments in infrastructure and tourism support economic activity). It has also strengthened the administration of its financial and labour markets, as well as on improving the business environment.. However, rapidly rising public debt and high fiscal deficits, together with high external imbalances and high unemployment are of concern. The combined effects of large-scale public infrastructure investments and several new expensive social expenditure programmes challenge fiscal sustainability. Montenegro is moderately prepared in its capacity to cope with competitive pressure and market forces within the Union. Some progress was achieved in improving the quality of infrastructure, the energy market and the digitalisation of the economy. SMEs support is modest but developing gradually. Unemployment in Montenegro is high, approaching 18% of the working population. However, this is average for the region, and only Serbia and Albania have lower rates. Montenegro is, however, a major importer of short-term labour to service the needs of the tourism, construction and agricultural sectors, which are the main pillars of its economy. However, substantial efforts are still required to develop human capital and a competitive export-oriented industry. In common with many of its Western Balkan neighbours, Montenegro has a skills shortage, although not to the extent of other countries. This shortage mainly translates into a need to import seasonal workers for the tourist, construction and agricultural sectors. Montenegro has a well-developed and competitive ICT sector compared with other countries in the region, but development remains in its infancy and there is a lot of potential for improvement. Despite this, business faces internal constraints and barriers, linked to skills, competences, finance and human resources. They also had problems with lack of information about foreign markets and how to access them. To contribute to the process of internationalisation, businesses need a better introduction to foreign markets, including information and facilitating access through contacts, legal and technical assistance or promotion. Total inward investment in Montenegro from other countries was US 3.3 billion in 2016. This level is low in absolute terms, particularly compared to other countries in the region (behind Serbia, Bosnia, Macedonia and Albania), but relatively high on a per capita basis. We undertook a survey of aspiring entrepreneurs across Montenegro. The sample was largely self-selected based on previous telephone surveys where respondents had expressed an interest in entrepreneurship, plus a review of the commercial register and referrals from respondents. The age distribution of aspiring entrepreneurs was under represented in younger age groups but higher in the 25–34 year old group compared with the population. Entrepreneurship aspirations are positive. There are very few problems with structural issues such as ease of forming a company. For example, establishing a business in Montenegro can be a time-consuming process. According to the World Bank’s Doing Business Report (2018), Montenegro was ranked 42nd globally for ease of doing business, a clear improvement on its previous ranking of 51st. Results from our survey, indicate five key issues stand out: 1. Access to finance is very challenging and acts as a significant barrier to both innovation and entrepreneurship. There is a particular need for access to affordable seed capital. This is a similar to the challenge being addressed by some of the rural micro-finance programs in Asia. 2. Connection to markets outside Montenegro and the Western Balkans region is challenging for new entrepreneurs. 3. There is a considerable amount of energy and effort already being injected, but significant scope for improving the skills of entrepreneurial teams. 4. The trading channels and payment methods accepted suggest our entrepreneurs are using basic business models, almost entirely face-to-face and strongly cash-based. 5. Three quarters of all businesses in the survey supplied larger organisations, which may be accounted by the very large public-sector base

Study Of The Challenges That Hinder MSME Development In FYR Macedonia : Country Report for the British Council and Swedish Institute

In addition to this Study, a further six studies were produced. One for each of the countries, under investigation (Albania, Bosnia Herzegovina, Kosovo, Montenegro & Serbia) and a Main Report, which was published in May 2018.The Former Yugoslav Republic of Macedonia (to be referred to as FYR Macedonia from herein) is a landlocked country. It has made considerable progress since 2000 and the end of the Balkan Wars, but would still greatly benefit from raising its rate of economic growth. It has an interesting population profile with a dip in the economically important 25–34 years age range. We undertook a survey of aspiring entrepreneurs across FYR Macedonia. The sample was largely self-selected based on previous telephone surveys where respondents had expressed an interest in entrepreneurship, plus a review of the commercial register and referrals from respondents. The age distribution of aspiring entrepreneurs was under represented in younger age groups but higher in the 25–34 year old group compared with the population. Increased economic growth needs to be achieved against a background of relatively modest inflows of foreign direct investment, and disappointingly flat levels of gross domestic capital formation, contrasting with sustained increases in consumption. There has been significant progress in stabilising the trade balance. FYR Macedonia has a significant informal economy, a sizeable unemployment rate and a worrying loss of skills as qualified people migrate overseas. There have been sustained efforts to improve the skills training systems, but the vocational training system still needs support. Entrepreneurship aspirations are positive. There are few problems with structural issues such as ease of forming a company, although important regulatory simplifications (for example in property registration) are still needed. Five key issues stand out: 1. Access to finance is very challenging and acts as a significant barrier to both innovation and entrepreneurship. There is a particular need for access to affordable seed capital. This is a similar to the challenge being addressed by some of the rural micro-finance programs in Asia. 2. Connection to markets outside FYR Macedonia and the Western Balkans region is challenging for new entrepreneurs. 3. There is a considerable amount of energy and effort already being injected, but significant scope for improving the skills of entrepreneurial teams. 4. There may be a need to raise the entrepreneurial appetite of young people (under 25 years old). 5. FYR Macedonia seems to have incubated a significant number of opportunity-seeking entrepreneurs, rather than involuntary entrepreneurs seeking family incomes, but the support structure is limited. They might benefit from a focused event to bring together industries from across FYR Macedonia.Final Published versio

Study Of The Challenges That Hinder MSME Development In FYR Macedonia : Country Report for the British Council and Swedish Institute

In addition to this Study, a further six studies were produced. One for each of the countries, under investigation (Albania, Bosnia Herzegovina, Kosovo, Montenegro & Serbia) and a Main Report, which was published in May 2018.The Former Yugoslav Republic of Macedonia (to be referred to as FYR Macedonia from herein) is a landlocked country. It has made considerable progress since 2000 and the end of the Balkan Wars, but would still greatly benefit from raising its rate of economic growth. It has an interesting population profile with a dip in the economically important 25–34 years age range. We undertook a survey of aspiring entrepreneurs across FYR Macedonia. The sample was largely self-selected based on previous telephone surveys where respondents had expressed an interest in entrepreneurship, plus a review of the commercial register and referrals from respondents. The age distribution of aspiring entrepreneurs was under represented in younger age groups but higher in the 25–34 year old group compared with the population. Increased economic growth needs to be achieved against a background of relatively modest inflows of foreign direct investment, and disappointingly flat levels of gross domestic capital formation, contrasting with sustained increases in consumption. There has been significant progress in stabilising the trade balance. FYR Macedonia has a significant informal economy, a sizeable unemployment rate and a worrying loss of skills as qualified people migrate overseas. There have been sustained efforts to improve the skills training systems, but the vocational training system still needs support. Entrepreneurship aspirations are positive. There are few problems with structural issues such as ease of forming a company, although important regulatory simplifications (for example in property registration) are still needed. Five key issues stand out: 1. Access to finance is very challenging and acts as a significant barrier to both innovation and entrepreneurship. There is a particular need for access to affordable seed capital. This is a similar to the challenge being addressed by some of the rural micro-finance programs in Asia. 2. Connection to markets outside FYR Macedonia and the Western Balkans region is challenging for new entrepreneurs. 3. There is a considerable amount of energy and effort already being injected, but significant scope for improving the skills of entrepreneurial teams. 4. There may be a need to raise the entrepreneurial appetite of young people (under 25 years old). 5. FYR Macedonia seems to have incubated a significant number of opportunity-seeking entrepreneurs, rather than involuntary entrepreneurs seeking family incomes, but the support structure is limited. They might benefit from a focused event to bring together industries from across FYR Macedonia.Final Published versio

Corruption as an Obstacle for Doing Business in the Western Balkans: A Business Sector Perspective

This paper investigates business people’s perceptions of corruption as an obstacle for doing business and their attitudes towards corruption. It is based on a survey conducted on the sample of over 1800 business owners and managers in the Western Balkans region. Using the original survey data collected in 2010 for seven countries – Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYR Macedonia, Montenegro and Serbia – the paper explores business people’s views on the ways in which the business sector is dealing with corruption as well as on the perceived role of private and government agents in curbing corruption. The factor analysis produced three distinct factors: (1) Understanding corruption as “grease in the wheels”; (2) Individual action can contribute to the curbing of corruption; (3) Corruption is a government-related issue. The main research question was whether the respondents’ attitudes towards corruption are related to the following variables: country of origin, their own corruption experience, perceptions of corruption as an obstacle for doing business and the general corruption prevalence trends. The results of the analysis of variance show that the country of origin strongly determines business people’s attitudes on corruption. Respondents with corruption experience tend to justify corruption as “grease in the wheels” more than “clean” respondents. Business people who believe that corruption is on the rise or that it poses a big obstacle for their business put greater emphasis on the government dealing with the issue of corruption than on individual or private anti-corruption initiatives. The findings provide useful policy recommendations for countries in the Western Balkans region to design a more entrepreneurship-friendly environment.corruption, business sector, attitudes and perceptions, corruption experience, Western Balkans

Convergência econômica dos Bálcãs Ocidentais à UE-15

This paper aims to analyze the beta convergence of Western Balkan countries towards the EU-15 Member States in the period 2004-2016, and two sub-periods: 2004-2008 and 2009-2013. Beta convergence is based on the neoclassical growth theory and tests the hypothesis that poor countries tend to grow faster than rich countries, in per capita terms. The empirical findings support the economic convergence hypothesis, with convergence rates ranging from 1.1% to 2.3%. The results show that the recent financial crisis negatively affected the absolute and conditional convergence process, when economic variables are included. The main limitation of the research is the availability of data.El objetivo de este estudio es analizar la convergencia beta de los países de los Balcanes Occidentales hacia los Estados miembros de la UE-15 en el periodo 2004-2016 y dos subperiodos: 2004-2008 y 2009-2013. La convergencia beta se basa en la teoría del crecimiento neoclásico y pone a prueba la hipótesis de que los países pobres tienden a crecer más rápido que los países ricos, en términos per cápita. Los hallazgos empíricos apoyan la hipótesis de convergencia económica, con tasas de convergencia que van del 1.1% al 2.3%. Los resultados muestran que la reciente crisis financiera afectó negativamente el proceso de convergencia absoluta y condicional, cuando se incluyen variables económicas. La principal limitación de la investigación es la disponibilidad de datos.O objetivo deste estudo é analisar a convergência beta dos países dos Bálcãs Ocidentais aos Estados-membros da UE-15 no período de 2004-2016, e dois subperíodos: 2004-2008 e 2009-2013. A convergência beta está baseada na teoria do crescimento neoclássico e coloca à prova a hipótese de que os países pobres tendem a crescer mais rápido do que os ricos, em termos per capita. Os achados empíricos apoiam a hipótese de convergência econômica, com taxas de convergência que vão de 1,1% a 2,3%. Os resultados demonstram que a recente crise financeira afetou negativamente o processo de convergência absoluta e condicional, quando são incluídas variáveis econômicas. A principal limitação desta pesquisa se encontra na disponibilidade de acesso aos dados

The Rockefeller Brothers Fund's Western Balkans Program: Midterm Impact Assessment

The Rockefeller Brothers Fund (RBF) commissioned an impact assessment of its Western Balkans program from 2010 to 2015. As the team who carried out this assessment, our overall conclusion from the assessment is that the RBF program in the Western Balkans is having meaningful positive impact, and it is relevant to the developments in Serbia, Montenegro, Kosovo, and the rest of the region. We believe the program is well designed and is achieving a lot with a relatively small amount of money

Assessing regional integration and business potential in the Western Balkans

This paper extrapolates the patterns and volume of business development within the Western Balkans region. This is a war-torn area with social, cultural, religious and political specificities. Despite noticeable institutional and growth progress of the individual countries, regional business is still lagging as persistent state rigidities create trade distortions. We argue that intra-regional business clusters, embedded in shared socio-cultural characteristics, can be the alternative to underdevelopment. Political willingness is the prerequisite, as market forces in transitional areas seem to be of secondary importance to regional business development and integration. New analytical approaches are needed to capture the complex reality.Regional development; business clusters; transition economies

Italian FDI integration with Southeast Europe: country and firm-level evidence

Southeast European countries have experienced significant economic integration into the world economy since 2000, through international capital flows and especially foreign direct investment (FDI). The present work sheds light on recent trends in Italy-Western Balkans economic integration through FDI. The methodology is based on a country level analysis and on case studies, designed to ascertain Italian firms’ underlying motives for investment in the area. Evidence suggests that the phenomenon is broader than official statistics would indicate: Italian firms often set up subsidiaries without formal or direct capital control. As integration in the area is a recent phenomenon, it is not surprising that the main determinants of Italian investments are cost reductions and new market opportunities, typical of initial stages of penetration in a foreign country. What is interesting in this context is that local entrepreneurs regard efficiency-seeking investments as profitable only if they are connected to market-seeking goals. We find evidence also of localized industrial development stimulated by the entry of Italian firms which is activating subcontracting relationships with existing firms in the host region.Southeast Europe-Italy integration,case study,foreign direct investment

Workers of the World, Unite! Franchise Extensions and the Threat of Revolution in Europe, 1820-1938

This paper tests the hypothesis that the extension of the voting franchise was caused by the threat of revolution, as suggested by Acemoglu and Robinson [Quarterly Journal of Economics 115, 1167-1199, 2000]. We approximate the threat of revolution in a given country by revolutionary events happening in neighboring countries. We investigate the relationship between this new measure of the threat of revolution and measures of su¤rage reform in two samples of European countries covering the period from 1820 to 1938. We find strong support for the 'threat of revolution theory'. We also find some evidence that war triggered suffrage reform, whereas other theories of the extension of the franchise, including 'modernization theory', receive little support