THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Montenegro

Ranked 58th of 149

At a glance

Ranks

58 th on the Legatum
Prosperity Index™

96th
52nd
59th
52nd
69th
35th
54th
117th
125th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Montenegro performs best on Safety & Security and Education and scores lowest on the Natural Environment sub-index.

Visit our Rankings table to see how Montenegro compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Montenegro continues to have a prosperity deficit, though the size of this deficit has decreased since 2007. It is held back by especially poor performance in the Economic Quality, Social Capital, and Natural Environment sub-indices.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Montenegro’s biggest improvement over the past decade is seen in the Business Environment sub-index with the country moving up 39 ranks to 52nd. Following independence from Serbia, Montenegro stepped up its efforts to transition into a more service-based economy with tourism being positioned as the main driver of growth and foreign investment. Given the government’s emphasis on growing the tourism industry, steps were taken to improve Montenegro’s business climate and make it more efficient. Labour market flexibility has been improved, intellectual property protection has increased, and it is easier to get credit in Montenegro than in its regional peers. According to the World Bank, the average time taken to receive a construction permit has decreased from six months to two, making it far easier for foreign investors to develop real estate projects in the country. This is positive because as is the case in much of the region, infrastructure continues to be underdeveloped. While Montenegro has made some progress in this respect, it still lags far behind EU standards for infrastructure development. There are no motorways in the country, though one is currently being built and a further one is in the planning stages. Better infrastructure is important for uniform economic development throughout the country, helping to integrate the more agricultural regions, and would also facilitate greater tourism development.

Strong performance in the Business Environment sub-index has not necessarily translated across to the Economic Quality sub-index. Montenegro has moved down 14 ranks to 96th here since 2007 and has made little progress overall. This is not particularly surprising: Montenegro’s economy entered a recession following the global financial crisis of 2008 from which it has since recovered. It was the only country in the Western Balkans to not see a fall in foreign direct investment following the crisis thanks to its stable business climate and strong tourism development. While there has been modest progress made on strengthening anti-monopoly polices, there has been little movement in the removal of trade barriers. Unemployment has remained high, at around 19%, for the past decade, though it remains lower than in FYR Macedonia and Serbia. Likewise, there has not been a reduction in those living at the national poverty line, which affects approximately 8.6% of the population. Of concern is a rise in those living at the absolute poverty line: at 1.69%, it is the highest rate among its regional peers.

Poverty rate at the absolute poverty line (% of the population)
Montenegro has the highest incidence of those living at the absolute poverty line in the region.

Ranked 52nd, Montenegro lags behind the majority of its regional peers in the Education sub-index. Working with the World Bank, Montenegro has made education a development priority and has invested heavily in primary and secondary education in recent years. The Prosperity Index sees a 20% increase in the primary school completion rate over the past decade. Around 34% of the population are secondary vocational students, which is above average for the region. However, access to and the quality of tertiary education remains low and must be addressed to improve delivery of prosperity.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.