Causes of Poverty in Montenegro

A Mediterranean nation located in the Balkan peninsula, Montenegro is a country with an average poverty rate of approximately 8.6 percent. The economy in the nation relies heavily upon energy industries, but it is considered to be one of the most inefficient users of energy and water. Although the country integrated into the European Union (EU) in 2012, which promoted the introduction of more rural and agricultural development and maintenance, environmental and economic strife still remain rampant.

Here are three main causes of poverty in Montenegro:

  1. Political and Economic Crises
    Wars in Montenegro, coupled with international isolation, has led to a decline in production levels in recent years. Between 1987 and 1992, the collapse of the Yugoslav federation directly implicated the nation in a series of conflicts—namely, the Bosnian and Serbian wars—that held serious ramifications for the economic opportunities in the country. As a direct product of conflict in the region, the GDP as of 2002 was approximately 63 percent of its 1989 rate. Reciprocally, unemployment skyrocketed by approximately 50 percent, and exports reduced by 65 percent. Although some improvement has been made since the start of the war, the long-lasting ramifications of the conflict linger as an ever-present reminder of the impact that the war had on the region.
  2. Energy Inefficiency
    Because it remains highly dependent on energy intensive industries, increasing resource prices contribute to the main causes of poverty in Montenegro. Due to a lack of information, awareness and financial means, the nation has not been able to make the transition toward renewable, efficient energy sources. As a result, they have continued to rely upon extremely expensive resources, limiting their capability to expand their economic resources.
  3. Ethnic Differentiation
    A 2005 study conducted by Christian Bodewig and Akshay Sethi shows that the majority of those living in poverty in Montenegro are within the Roma population. Both income and non-income determinants, such as social isolation, limited access to education and “othering,” contribute tremendously to this socioeconomic disparity.

The nation has recently been progressing in terms of its poverty reduction. Developing the success of their original Montenegro Institutional Development and Agriculture Strengthening Project (MIDAS), for example, the World Bank provided Montenegro with $3.5 million to assist the restoration of rural areas.

Still, though, the causes of poverty in Montenegro maintain a hold over the country’s economic development, limiting the opportunities, growth and progress that the country can undergo. It therefore is necessary for world powers to provide assistance to Montenegro to help combat some of these significantly influential contributors to poverty in order to ensure that the problems stemming from them do not metastasize.

Emily Chazen

Photo: Flickr