[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-108260-en":3,"doc-seo-108260-105":30,"detail-sidebar-cat-0-en-105":92},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":21,"is_downloadable":21,"audit_status":21,"page_count":22,"language":23,"language_code":24,"site_id":25,"html_lang":24,"table_of_contents":26,"faqs":27,"seo_title":13,"seo_description":14,"update_tm":28,"read_time":29},108260,8796095360427,"Lucas Martin","https://ap-avatar.wpscdn.com/davatar_994ba38a5ba835b3df7d355c54d3ed8d",8,"Research & Report","Montenegro Country Economic Memorandum - Towards a resilient growth strategy - Igniting Montenegro’s productivity growth","The Montenegro Country Economic Memorandum analyzes the country’s weak productivity growth over the past two decades and identifies missed opportunities for development. It links disappointing performance to market frictions and inefficiencies that misallocate resources, reduce firm dynamism, and increase firms’ market power. The memorandum argues that productivity growth is central for higher wages, poverty reduction, and financing social, health, and education policies. Policy priorities focus on lowering barriers to entry, strengthening competition, and improving enforcement to support entrepreneurship and investment.","Public Disclosure Authorized Public Disclosure Authorized  \nMontenegro Country Economic Memorandum: Towards a resilient  \ngrowth strategy  \nIgniting Montenegro’s productivity growth  \n-Background Note-  \nLead Author: Nicolo Dalvit  \nwith inputs from Besart Avdiu  \nTable of Contents  \n1. Igniting Montenegro’s productivity growth.......................................................................................... 3  \n1.1 Missed opportunities to grow........................................................................................................ 4  \n1.1.1 Over the last two decades Montenegro’s productivity performance was disappointing.......4  \n1.1.2 Montenegro’s economy is increasingly oriented towards services ....................................... 6  \n1.1.3 Firms in Montenegro are becoming more productive but operate in inefficient markets ..... 7  \n1.2 Understanding Misallocation: Barriers to Entry, Inefficient Markets, and Increasing Market  \nPower 11  \n1.2.1 The dynamics of entry, exit, and growth of new firms show signs of frictions and market inefficiencies ....................................................................................................................................... 11  \n1.2.2 Firms’ market power is Increasing in Montenegro ............................................................. 16  \n1.2.3 There are signs of a declining business dynamism among incumbent firms ......................20  \n1.2.4 Policies should reduce market frictions and inefficiencies ................................................. 22  \n1.3 Firms’ Capabilities: Firms in Montenegro Have Ample Margins to Upgrade ...........................23  \n1.3.1 Firms in Montenegro lag in terms of innovation ................................................................ 23  \n1.3.2 The quality of management in Montenegrin firms is far from the frontier.........................27  \n1.3.3 Policies Should Promote Investments in Innovation and Managerial Capabilities.............28  \n1.4 Productivity, Job Creation, and Wages: Wage-Productivity Premiums, but Declining Average  \nWages 28  \n1.5 Policy Implications: Reducing Market Inefficiencies to Promote Growth ................................. 30  \nAppendix A. Montenegrin Firms Perceive Informality as an Important Obstacle ............................... 32  \nAppendix B. Tourism is rapidly growing, but remains a low productivity sector ............................... 33  \nAppendix C. Zombie firms are common in Montenegro and can be a source of misallocation .......... 37  \nBibliography ............................................................................................................................................... 39  \n1. Igniting Montenegro’s productivity growth  \nMontenegro’s productivity growth over the past two decades has been disappointing and represents a missed opportunity for the country’s development. Over the last two decades Montenegro was unable to catch up with the productivity frontier, showcasing the lowest productivity growth in the region. As a result, a worker in Montenegro remains almost 5 time less productive than the average German worker.1 This sluggish productivity performance represents a missed opportunity for Montenegro’s development.  \nFirm-level data points to the presence of important market frictions and inefficiencies that misallocate productive resources and limit the productivity potential of Montenegrin firms. Signs of these frictions are visible at different points of firms’ life cycle and result in an insufficient number of firms operating in the market, chronically weak dynamics of entry and exit, a declining dynamism among incumbent firms, and a rise in market power. This low―and weaking―dynamism reduces the relocation of resources towards firms with the highest productivity potential exerting a high toll on the aggregate productivity of Montenegro’s economy.  \nIgniting robust productivity growth should be among the top priorit","cbCaiqIogFK0qmtj","https://ap.wps.com/l/cbCaiqIogFK0qmtj","pdf",837122,5,1,39,"English","en",105,"# Igniting Montenegro’s productivity growth\n## Missed opportunities to grow\n## Understanding Misallocation: Barriers to Entry, Inefficient Markets, and Increasing Market Power\n## Firms’ Capabilities: Firms in Montenegro Have Ample Margins to Upgrade\n## Productivity, Job Creation, and Wages: Wage-Productivity Premiums, but Declining Average Wages\n## Policy Implications: Reducing Market Inefficiencies to Promote Growth\n# Appendix\n## Appendix A: Montenegrin Firms Perceive Informality as an Important Obstacle\n## Appendix B: Tourism is rapidly growing, but remains a low productivity sector\n## Appendix C: Zombie firms are common in Montenegro and can be a source of misallocation","[{\"question\":\"Why has Montenegro’s productivity growth been considered disappointing?\",\"answer\":\"Over the last two decades Montenegro failed to catch up with the productivity frontier, leading to the lowest productivity growth in the region and a large productivity gap versus top performers.\"},{\"question\":\"What mechanisms are described as causing misallocation in Montenegro?\",\"answer\":\"Firm-level evidence points to market frictions across firms’ life cycles, weak entry and exit dynamics, declining dynamism among incumbents, and rising market power that prevent resources from reaching the most productive firms.\"},{\"question\":\"What policy actions does the memorandum recommend to ignite productivity growth?\",\"answer\":\"Policies should reduce barriers to entry, tackle both direct and indirect obstacles, improve antitrust enforcement, remove market privileges in regulated markets, and reduce uncertainty and the length of bankruptcy 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has Montenegro’s productivity growth been considered disappointing?","Question",{"text":76,"@type":77},"Over the last two decades Montenegro failed to catch up with the productivity frontier, leading to the lowest productivity growth in the region and a large productivity gap versus top performers.","Answer",{"name":79,"@type":74,"acceptedAnswer":80},"What mechanisms are described as causing misallocation in Montenegro?",{"text":81,"@type":77},"Firm-level evidence points to market frictions across firms’ life cycles, weak entry and exit dynamics, declining dynamism among incumbents, and rising market power that prevent resources from reaching the most productive firms.",{"name":83,"@type":74,"acceptedAnswer":84},"What policy actions does the memorandum recommend to ignite productivity growth?",{"text":85,"@type":77},"Policies should reduce barriers to entry, tackle both direct and indirect obstacles, improve antitrust enforcement, remove market privileges in regulated markets, and 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