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Fear of flying

Fear of flying
Published date: 04.03.2011 12:49 | Author: Ivona Mihajlović

Ispis Print


I’ve used the title of the cult novel by Erica Jong finding a symbolic parallel and the resemblance to the observations and opinions provided in the text bellow.

For quite some time, the professional and the unprofessional public is dealing with the exhaustion of Montenegrin development model based on FDI. Not entering the legitimacy of these initiatives, although with unclear proposals with regard the possible development funding, this article is aspiring only to provide for some observations on the relevant dimensions of the problem.

Montenegrin economy, being an open system, in the absence of a domestic accumulation, naturally, is strongly exposed to the fresh capital inflow from the external market. In the light of the above, the overall measures aimed at supporting the economic activity are directed to the creation of the conditions for attracting the investors to invest in the capital infrastructure – related projects and other projects through the form of the public – private partnership, concession arrangements, etc. Furthermore, in a stable macroeconomic environment, during last couple of years, boosting FDI growth being justifiably estimated as an expression of trust and prosperity in Montenegrin economy. On the basis of the aforementioned, Montenegro development prospectus was benefiting from the strong incentives and inputs for reaching the respectable economic growth rates.

The question is whether the model has exhausted its generic potentials and whether its implementation is grounding the dependence mechanisms and limitations in reference to the economic and development policy implementation?

The firm foundation of the open orientation and market economy, with all benefits and risks that the process brings, is an additional reaffirmation of deeply held belief that the strengthening of the foreign capital inflow is bringing new technologies, technological processes and telecommunication services boosting integration into the worlds’ market and capital, subsequently reducing the dependence on the current knowledge. Of course, remarks advocating the increase in the greenfield investments share are realistic. The current data are implying the changes in FDI structure with the strengthening of investments in banks and companies against real estate that in past couple of years represented above 50,0% of the total FDI amount. In this regard, fiscal policy mechanisms with significantly higher tax burden on the real estate turnover and measures aimed at business environment improvement may trigger the significant changed in the allocation of capital and investments structure. Contrary to the development options threatening to jeopardize the financial system stability performances with an unrealistic and excessive borrowing, or the introduction of more autocratic models mostly relying on its own power, results of which would generate problems to the future generation. New options should be used in reference to engaging the capital within the European path and perspective, linked with the pre – accession assistance funds. The EU candidate status obtaining enabled the use of incentives from the IPA Components III, IV and V related to the regional, human resources and rural development. In the light of the above, the economic and development policy instruments are directed to the harmonization with the European and the regional policy.

What is the essence of a modern development model of Montenegrin economy?

With no intention to remain at the level of wage interpretation of knowledge as the basis of development, system openness enabling the foreign capital inflow and all other impacts, represents at the same time a major challenge in terms of competitiveness in a permanent race of adopting and applying the new knowledge. It seems that the awareness has reached an adequate level in Montenegro in reference to the importance of knowledge boosting development. This is encouraging primarily because the current EU requirements in reference to the requirements fulfillment in the economic sphere, representing the requirement for obtaining the membership negotiations date, are being based on the need of strengthening the human capital potential. Of course, this is the basis for improving the higher quality economic factors shaping the ability to accept the market conditions and standards and competitiveness at the EU level. In the light of the above, important activities aimed at institutional mechanisms strengthening for the free market and the labor force market development are yet to come, impulse of which should represent a crucially important demand and successfulness indicator.


To be competitive in every way, as a basic requirement of life in the global world, involves acquiring of more sophisticated knowledge and technologies. Thus, Montenegrin strategic development vision being promoted in the document »Montenegro in XXI Century – in the Competitiveness Era" is basically grounded on the integration into the world processes of progress by applying the new knowledge. In the light of the above, announced support of the Ministry of Science, is of crucial importance, to the new scientific research projects and practice to make available the most modern achievements being based on the educational system and competition principle.

In this context, the idea of creating a national innovation system that could generate, one can freely say, a strong genetic predisposition and the potential for new ideas and lucid solutions contributing the improvement of the technical, technological and other processes seems to be intriguing.

Where is the objective basis of fear of the openness of the system and the investments of powerful international companies?

This may be insufficiently selective and transparent investments arrangements, incomplete control of the execution of contracts in privatization projects and inconsequential implementation of sustainable development postulates with a possible far - reaching implications. With no intentions to identify those risks with the practice, it seems that the insisting on the strengthening of policies and procedures, public processes and systematic support of the market impact and its legality, the framework leaving lesser room for an imaginary resistance to the new and future effects of the powerful businesses sphere. Of course, it is natural in such circumstances to keep own interest, but it is even more important to understand that we live in a different world that is integration, consciously assigning a part of its sovereign rights to this idea.

Therefore, we shouldn’t fear of the system openness and the messages that we receive from market and the developed competition world, new investments of foreign investors and their wish to gain a profit. We should be trained to master new skills and knowledge fostering our competitiveness using our own specifics generating a comparative advantage. We are committed in attaining the Copenhagen criteria and correcting internal and external economic imbalances, that objectively and in a long run, may represent a balance of a more dynamic development. For this reason, the expectations regarding the implementation of balanced regional development policy, deficit reduction in the foreign trade balance, current account balance of payments deficit and the elimination of the budget deficit. As a competitive and stable system we can pledge on the objective commitment to the European integration and integration into the world community of nations. Isn’t it an genuine general and personal interest of every person?