SARAJEVO, June 26 (Reuters) - Unless EU aspirant Montenegro adopts a new economic growth strategy that would boost productivity and human capital, its incomes will not converge with average EU levels in the next 40 years, the World Bank warned on Tuesday.
The bank said that stagnant productivity growth was caused by market inefficiencies in the service sector which represents over 70% of GDP, and that Montenegro needed to remove regulatory barriers for firms to enter markets and grow.
Most companies lack innovation and invest little in green technology which is needed to sustain tourism growth and develop Montenegro's comparative advantage in clean energy.
In addition, Montenegro must tackle its income inequality which shrinks the pool of future skilled workers and entrepreneurs and limits its labour productivity growth potential, the bank said.
"By implementing these reforms, Montenegro can expect a thriving private sector, significant job opportunities and ultimately improved wages and benefits for all its citizens," said Christopher Sheldon, World Bank Country Manager for Bosnia and Montenegro.
Persons:
Christopher Sheldon, Daria Sito, Christina Fincher
Organizations:
World Bank, European Union, Thomson
Locations:
SARAJEVO, Montenegro, Bosnia