President of the Republic of Montenegro

November 20, 2009

Sarajevo, Address by H.E. Mr. Filip Vujanović - Regional economic forum south - east Europe

COMPETITORS AND PARTNERS ON THE WAY TO EUROPEAN UNION IN TERMS OF WORLD ECONOMIC CRISIS

Dear Chairman,
Your Excellencies,
Ladies and Gentlemen,

It is my pleasure to participate at the 6th, already traditional, Regional Economic Forum of the countries of our region, which are committed to cooperation in responding to the economic and overall social challenges that we are facing.

An especially inspiring topic of this forum is: political dimension of the current economic crisis and the issue of competitiveness in the light of our regional cooperation.

Global economic crisis has, without a doubt, affected all national economies, which resulted in large-scale state interventionism in the leading Western countries, especially in the banking sector. This led to skepticism regarding functioning of free markets, to the extent of posing the question – whether competition and economic stability can coexist at all and which are the global standards on which competitiveness of economies and international business dialogue will rest in future.

I have to emphasize that reactions of the countries of our region to these challenges are encouraging, as well as the optimism which prevails at our economic policy-makers and business communities regarding recovery of the real economy and continuation of reforms, inlcuding initiatives for better coordination, connecting of our markets, ideas and information, as well. In that context, I wish to convey to you my impression regarding global economic trends from the aspect of competitiveness, and reflections from the standpoint of Montenegro which could be interesting for the entire region in the following period.

- After a year since the beginning of a global economic crisis and a reaction to it by large economic and regional systems – the USA and EU, international financial institutions, IMF and World Bank, all the analysis are suggesting that the exit strategy leads towards a new economic order in which intergovernmental co-ordinations and regionalism take especially significant place. It is clear that such a new order entails the conducting of economic policies under higher risk conditions, but also more dynamic connections between financial, commodity and energy markets;
- Financial competitiveness will be accompanied by more efficient implementation of a regulation and control; and this combination will represent a framework of a future market functioning. Markets have rules which provide a basis for economic growth, but the complexity of globalized economies imposes stronger and more careful balancing between state and market instruments;

- European Union is affirmed as a vital leverage of support and stability for countries of Central and Eastern Europe on this occasion as well. Efficient cooperation between the central banks and synchronized action of the national governments that are the EU members and the USA on correcting financial distortions and putting in place the financial regulation has strengthened, and not weakened, European cohesion and cooperation.

This is an important message and encouragement for the region of Western Balkans whose fragmented markets, although severely influenced by the current crisis, must be further connected and prepared for competition against stronger, sophisticated and more organized EU markets. This is our joint and long-term task on the way towards full membership in the EU. In realization of this task, our region already has a good starting point in the institutions of CEFTA (Central European Free Trade Agreement) with a multilateral agreement whose goal is a promotion of members’ markets competitiveness – Albania, Bosnia and Herzegovina, Croatia, Macedonia, Serbia, Moldova, Montenegro and Kosovo. CEFTA, in addition to good results, is yet to undergo its full implementation through the enforcement of harmonized rules from the EU framework and WTO rules and through broader business transparency in the region, business networking, better supply and higher rate saving for ultimate consumers – citizens of our states.

Starting from the vision that competitiveness yields prosperity, Montenegro has defined improvement of competitiveness and regional development as most important tasks of the economic policy for next year. Therefore, we rapidly prepare comprehensive revision of legislation in certain sectors – at national and local levels – which have direct impact on the level of business competitiveness. Among them are – reducing barriers for launching business, revision of laws which improve competitiveness, stimulating cooperation and co-regulation among the same producers for the benefit of ultimate consumer, identification and analysis of best options of competitiveness and others. Indeed, we know that this part of work is only one element of competitiveness. The basis of growing competitiveness includes more complex indicators in the long term – macroeconomic stability, infrastructure quality, institutional efficiency, commodity and financial market efficiency, labour market efficiency, the quality of education and medical services, innovative capacities as well as other conditions for the development of competitiveness.

Measured by these indicators according to the surveys of World Economic Forum (WEF) for the year of 2009/2010, Montenegro is ranked 62nd out of 133 countries, which is encouraging having in mind that the surveys are made in the period of economic crisis, and in the region Montenegro is 2nd, right after Slovenia. Study shows that we have to work more on strengthening institutions, domestic business environment and offer, therefore those elements which do not depend, most directly, on external factors but on our domestic reforms and economic policies.

Also, one indicator more from this study is important for our region and for individual markets, which means that market size is not crucial for competitiveness but its overall quality and sophistication. Thereby, an assessment, concerning this important developmental issue, that is expressed in some political and professional circles that small markets are not attractive for business operating and investing and cannot represent a magnet for development and progress of its neighbours does not stand. Namely, according to the study of the World Economic Forum, Swiss market is the first and most competitive market ahead of the USA, followed by Singapore, Japan, the Netherlands that are rather small markets. Therefore it is certain that with the enhancement of infrastructure, capacity of institutions and education in particular and exchange of knowledge and innovation, comparative advantage and overall competitiveness of our region would be highly improved.

It is encouraging that Montenegro is ranked 23rd out of 43 states in fulfilling conditions of competitiveness from the Lisbon Strategy, among which are 27 European Union states. The value of this is proven by the fact that in 2006, within the State Union of Serbia and Montenegro, it was the last ranked out of totally 31 countries. This information shows how important the individual economic ranking proved to be for Montenegro.

It is gratifying that the global competitiveness indexes ranked in the report of our forum for Montenegro, regarding most indicators, are more favorable in comparison to indexes from the previous year.

In this context, I use this opportunity to state that in 2010 and 2011 Montenegro will be the centre of the most important initiatives of the economic and political cooperation of our region – it will hold the presidency of the Central European Initiative, Adriatic–Ionian Initiative, and the South East European Co-operation Process. These are the frameworks within which the regional cooperation gains special importance for Montenegro and Montenegro will be responsibly dedicated to all specific projects of regional connecting.

In this belief, I invite you all to unite our potentials and efforts in regional cooperation in order to increase competitiveness of every individual state, as well as the region as a whole.

Thank you for your attention.

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