After two decades of substantial foreign investment, Montenegro faces a crucial challenge: translating capital inflows into greater productivity, stronger exports and more resilient economic growth.
Two decades after regaining independence, Montenegro can point to significant foreign direct investment (FDI) inflows. Between 2006 and 2025, total gross inflows exceeded €15.7 billion, while net inflows amounted to approximately €10 billion. Yet an important question remains: to what extent has this capital strengthened the economy’s ability to produce, export and create high-quality jobs?
There is no doubt that foreign direct investment has significantly transformed Montenegro’s economy. It has contributed to the development of tourism and strengthened the country’s position on the international tourism map, particularly through luxury developments. Investment in telecommunications, banking and construction has introduced new technologies and improved business standards. However, my monograph, shows that progress has been uneven. Despite substantial capital inflows, the production and export base has not expanded sufficiently, while links between foreign investors and domestic suppliers remain underdeveloped.
The structure of investment also illustrates this challenge. In 2025, real estate accounted for 48.8% of total FDI inflows, while intercompany debt represented 31.4%. Investment in companies and banks accounted for approximately 13%. Although this latter category is only an approximate indicator of productively oriented capital, the distribution raises questions about the development potential of the existing investment model.
Purchasing property, building a hotel and establishing an export-oriented enterprise have different economic effects. This does not mean that real estate investment fails to stimulate economic activity or that intercompany loans cannot finance new capacities. Nevertheless, investment in manufacturing and export-oriented services can expand the export base, facilitate technology transfer and integrate domestic suppliers into international value chains. The contribution of investment should therefore be measured through employment, productivity and the added value it generates. Record capital inflows alone are not proof of a successful development policy.
The state must have a clear understanding of the types of investment it wishes to attract and ensure the conditions necessary for their implementation. Development priorities must be supported by transparent criteria and the consistent application of rules, while incentives should depend on a project’s economic contribution rather than preferential treatment of individual companies. Without a predictable business environment, it is difficult to expect long-term investment.
Priority should be given to energy and green technologies, digital and export-oriented services, manufacturing, agriculture and food processing, alongside the development of higher-value tourism. However, directing capital towards these sectors is not enough. If domestic businesses are also to benefit, supplier development, workforce training and cooperation with educational institutions must become integral parts of investment policy.
European integration offers an additional opportunity, but EU membership cannot replace domestic reforms. The experiences of Poland, Bulgaria and Croatia demonstrate that joining the European Union does not automatically guarantee increased investment inflows. What matters is how effectively a country uses the opportunities offered by the single market and how well prepared its businesses are to compete within it.
Over the past two decades, Montenegro has demonstrated its ability to attract substantial foreign capital. The challenge for the coming decade is to ensure that this capital, together with future investment, generates stronger exports, more productive enterprises and better-quality jobs, creating greater domestic value and an economy more resilient to future crises.
Ultimately, the success of Montenegro’s investment model should be judged not only by how much capital the country attracts, but by the lasting economic value that capital creates.
