Policy area

Industrial policy and production

Sustainable development goals and international commitments

Montenegro’s key international commitments, in this area, include the following:

  • Fully-fledged membership in the World Trade Organisation (WTO), as one of the most importaint foreign policy priorities of the state economic development (the Protocol on Accession of Montenegro to the Marrakesh Agreement, establishing the WTO, 2012). Thus, Montenegro acceded to the multilateral trade system, in the area of liberalisation of trade in goods, services, customs, intellectual property and other WTO areas. Free trade agreements (FTA), aimed at creating an environment, conducive to investments and competitiveness of the economy, are of importance to the State.
  • Fully-fledged membership in United Nations Industrial Development Organisation (UNIDO). UNIDO policies are focused at: circular economy, industry (4.0), industrial parks, sustainable energy, employment of youth and entrepreneurship, gender equality. The objective is to achieve: common prosperity of all countries included in UNIDO, better economic competitiveness, preserved environment, enhanced knowledge and institutions, services, better standards for the next generations.
  • Central European Free Trade Agreement (CEFTA) – harmonised economic development among the signatories can be achieved through the membership (Moldova & Western Balkans countries (WB6): AL, BIH, MKD, MNE, SER, KS*).  Priorities of cooperation: trade in goods and services, commerce development, investments, employment, increase in productivity, financial stability. Montenegro fully implements CEFTA Agreement (2007).  A duty-free regime applies to all industrial products, originating from the signatory countries.  A free trade is implemented in agricultural products with Serbia, BIH, North Macedonia and Kosovo*, while the economic cooperation between Montenegro, Albania and Moldova is implemented through the agreed trade liberalisation. As foreseen in the Agreement, Croatia withdrew from CEFTA, following its accession to the EU, in 2013. [1]*UNSCR 1244/1999
  • Fully-fledged membership in North Atlantic Treaty Organisation (NATO), since 5 June 2017. This membership assumes, not only securing the defence system, under collective umbrella, but also a better standardisation of goods and services, secure investments and regional cooperation, in acc. with the Treaty obligations towards the members of the Alliance.
  • Stabilisation and Association Agreement between European Commission and their Member States and Montenegro[1] (SAA), entered into force on the 1st May, 2010.  SAA agreement aims to promote the modernisation and restructuring of industry. Preconditions: respect of democracy & rule of law, private capital, regional cooperation, free trade and political & economic stability.

[1] Summary, dated 2019, of: Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Montenegro, of the other part, 2010/224/. This version has been changed with the Consolidated text, Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Montenegro, of the other part, 2015.

  • Common EU trade policy – one of foreign affairs pillars of EU (Treaty of EU, Art. 206, 207). Aim of Montenegro is further harmonization with common rules of the Customs Union as well as with the customs’ duties; trade affairs with 27 Member States of EU.
  • Energy Union



Montenegro strives, as one of the UN member states, to contribute to the achievement of the 2030 Agenda, and relevant for this policy domain are the following:

SDG 2 – Zero hunger – to increase food production (micro & small enterprises) and revenues by 100%, sustainable food production;

SDG 6 – Clean water and sanitation – ensure access to water and sanitation (water and waste water management)

SDG 7 – Affordable and clean energy – share of renewable energy in final consumption; GHG emissions; energy import/export;

SDG 8 – Decent work and economic growth – clusters and MSMEs in industries boosting employment

SDG 9 – Industry, Innovation and Infrastructure infrastructure, sustainable industrialisation and innovation (key strategic goal)

SDG 11 – Sustainable cities and communities – conservation of environment in urban areas with sustainable economic development

SDG 12 – Responsible consumption and production – sustainable use of domestic resources; waste management; circular economy

SDG 13 – Climate action – share of renewable energy in final consumption; GHG emissions; decarbonisation

SDG 17 Partnership for the goals – export growth, elimination of trade barriers, trade cooperation with WTO

The National Sustainable Development Strategy 2016-2020 promotes the principles of sustainable production and consumption and sustainable use of resources, including electric power generation and supply, fostering resource-efficient use and production of construction materials. For the industrial sector in Montenegro it is important to gradually adopt and apply EU policy on products which, inter alia, includes (within the life cycle assessment) the optimisation of technological processes towards reducing waste generation, more efficient use of inputs and less by-products, less energy and water use, and lower GHG emissions.

The NSDS strategic goal Enable green economy through mobilisation of funding for sustainable development implies investment in developing capacity and mechanisms for sustainable agriculture and forestry, sustainable production and consumption for resource-efficiency and boosting competitiveness (processing industry, services, SMEs);

STRATEGIC GOAL 3.5 ENABLE RESOURCE-EFFICIENT USE OF METALLIC AND NON-METALLIC RESOURCES includes strengthening resource productivity of minerals and metals in construction industry, and product re-use models in circular economy for the same or different purpose, restored production or re-production.

STRATEGIC GOAL 4.1 REDUCE LEVEL OF GREENHOUSE GASSES EMISSIONS BY 2030 BY 30% COMPARED TO BASELINE 1990 includes the upgrading of the status of forests that should have better production of wood and non-wood products and forest ecosystem services as an outcome.

STRATEGIC GOAL 4.7  INCREASE THE COMPETITIVENESS OF MONTENEGRIN ECONOMY FOR SUSTAINABLE DEVELOPMENT AND GREEN JOBS includes the improvement of product and service quality as an area for generating green jobs, through clusterization for production and proper product branding (clusters: furniture, wood raw materials, construction material, stone, metal structures, honey, dairy, processed meat, wine, bottled water, mushrooms, trout, sea fish and shellfish, olives, buckwheat, citrus, tourism services, etc.)

[1]  UN SDG indexes are shown in the Eurostat indicator base (EU). Key UN targets about industrial development applicable to Montenegro are stated in the NSDS and the Industrial Policy by 2023.

Obligations in the EU accession process

An overview of obligations from negotiation chapters

Chapter 20 – Enterprise and industrial policy The key obligation stemming from chapter 20 is the drafting of the Industrial Policy of Montenegro by 2023, to build on the activities towards fulfilling the closing benchmark concerning the drafting and implementation of a comprehensive industrial policy strategy, with the support of the system of evaluation, indicators and benchmarks, as suggested in the EU integrated industrial policy. With the adoption of the Industrial Policy 2019-2023 the key activities on meeting the closing benchmark were completed, with the obligation of fully implementing it and constantly aligning it with the revised EU industrial framework.

Indirectly relevant for the competitiveness policy are also chapters 1, 6, 7, 15, 25 and 27, particularly the implementation of the Smart Specialisation Strategy (S3), whose main aim is to increase Montenegro’s competitiveness through innovation and research.

An Outline of the EU Strategic Framework

The EU highlights entrepreneurship and industry as priorities for its future and increased competitiveness. In line with the principles and guidelines from the Europe 2020 strategy for growth and employment, the focus is on creating the environment conducive to business, increasing domestic and foreign investments, improving SMEs, increasing industrial production and boosting competitiveness.

List of strategies:

[1] Programme for transitions of local economies, from carbon to climate neutral, while ensuring the transition is just.


[1]  Climate & Energy Framework, 2021-2030, in acc. with UN Paris Agreement, 2015



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Industrial policy and production in Montenegro’s strategic framework

Industrial policy falls under the domain of Economic Growth and Environment, and, additionally, under the Transport, Energy and Information Infrastructure, in terms of the Decree on development of strategy documents, (Official Gazette Montenegro, no.  54/18, dated 31/07/2018).

Montenegro’s industrial policy aims at building competitiveness of Montenegrin economy, with primary focus on the industrial sector, and includes the activities of ore and stone extraction, processing industries (food, pharmaceuticals, etc.), power supply, water supply, waste water management, waste disposal.

The Development Directions for Montenegro 2018-2021, in the Sustainable Growth section, underscores putting in place the assumptions for extending renewable power generation capacities, greater investments in modernising wood processing facilities, and incentivising youth for engaging in agriculture. The key measures include the Incentives Programme for Processing Industry Modernisation 2018-2020, the Programme to Foster Cluster Development with a view to increasing company competitiveness through clusterisation and integration in industrial value chains. The target is for gross value of agriculture, forestry and fisheries production to reach 2% by 2021.

The Economic Reforms Programme 2020-2022 sees as priorities the reform measures in technological modernisation of processing industries and investments in food production. The processing industry is forecast to see 4.2% growth in the upcoming period, particularly food and meat processing industries, wood processing, metal processing industry and tobacco products.

When it comes to the production of major industrial products in Montenegro, over the period 2011-2018, industrial production recorded growth in 2013, 2015 and 2018 (in 2015 the growth was accounted for by processing industries, while in 2013 and 2018 it resulted from power generation)In 2018, the industrial production index was record-high with 22.4%, primarily due to over 62% increase in power generation, 12% increase in processing industries, but also the decrease in ore and stone extraction of 21%. As regards exports over the same period, apart from metal products as the traditionally most important export products, agricultural and food products, raw materials and processed wood accounted for a significant share. A major drawback of Montenegrin industry is the lack of diversification in terms of the number and type of export products, and the number of countries exported to.

The key challenges for the increase of Montenegrin competitiveness in the context of its industrial policy, as recognised by the Industrial Policy 2019-2023 include the following: De-industrialisation; Predominance of traditional sectors in exports – basic metals, wood and food industry products; Low utilisation of the research potential; Regional disparities with the northern region lagging behind; and Insufficient investment in SME development

The Industrial Policy 2019-2023 sets the following goals:  

  1. Improved framework for more efficient industrial development driven primarily by energy, transport and ICT infrastructure;
  2. Investments and financing industry modernisation through better access, availability and affordability of funding;
  3. Foster innovation, technology transfer and entrepreneurship; and
  4. Better access to markets by streamlining trade procedures.

The Industrial Policy 2019-2023 sees development opportunities in greater diversification of the processing industry, energy, transport, setting priorities for industrial development that will add to the tourism appeal of the country. This includes gradual introduction of circular economy, with integrative approach to the overall policy.

Montenegro 2021 Report, European Commission Staff Working Document of the 2021 Commission Communication on EU Enlargement Policy: Progress was made on tobacco control; pensions; industrial policy, smart specialization, vocational education and training, and trade facilitation.

At the 2019 Ministerial Dialogue, the EC, among other things, gave recommendations for Montenegro concerning the need to link vocational education and training of work-able individuals with the industries, involve women, improve business regulatory environment, curb informal economy, increase public-private partnerships, and invest in economic development through concessions.

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