There is not one single policy that fosters innovation, improves competitiveness, accelerates growth, and, ultimately, creates a professional perspective and income for Montenegrins. Especially when a country does not have at its disposal macroeconomic policy instruments (such as exchange-rate or monetary policies), when it finds itself in a situation where a more expansionary fiscal-policy stance risks to undermine macroeconomic stability, pro-growth policies are—in the end—a series of measures aimed at strengthening public institutions and making more efficient the services that the public administration provides.
Today’s public presentation of the One Stop Shop Business Registration Center is such a measure. It helps to remove disincentives to prospective entrepreneurs and bureaucratic obstacles placed in front of men and women who detect market opportunities, who have ideas of innovative services and unavailable products, men and women who have the courage to take their money, accept the risk, and make it happen, businessmen and –women who have the courage to become their own bosses.
The public debate in Montenegro during recent years has tended to center around large companies—and and not all of them have done all that well. In today’s world, the economic environment changes fast, and firms need to adapt quickly to these changes. If we analyze the situation in successful economies, it is the small and medium-sized enterprises that tend to be more agile and innovative than larger and more established enterprises. They can detect niches more quickly and exploit new opportunities. Therefore, the oft-quoted statement that SMEs are the backbone of any healthy economy withstands a closer look at what makes some economies more successful than others.
In the European Union, for instance, SMEs—which are defined as companies with less than 250 employees and a turnover of no more than €50 million—represent more than 99 percent of all businesses. They provide two-thirds of private-sector jobs and contribute to more than one-half of the total value-added created by businesses. Their activities have created income and wealth, fostered economic growth, and played a key role in innovation, research, and development. Maybe even more interesting is the fact that nine out of ten SMEs in the EU are—what is defined—a “micro enterprises”, i.e., firms with less than 10 employees. On average, these micro firms provide work and income for two persons. This is, to a large extent, the context, in which arguments are made that SMEs—and, in particular, the really small SMEs—are the backbone of economies in Europe.
Montenegro is no different. As World Bank Group—that is, the International Finance Corporation and the World Bank—follow with a great deal of interest the progress that is being gradually made to facilitate entrepreneurship and improve the business climate in Montenegro, and we are happy to support further steps in this direction. It is a multi-faceted challenge, with the One Stop Shop being an important—but only one—step in this direction. It will complement previous reforms already reflected in the annual Doing Business exercise. For the sub-category Starting a Business, Montenegro has already seen a very considerable improvement this year, improving its standing from 81st last year to 51st of altogether 183 countries, showing that, on average, it takes 10 days to complete 7 required procedures.
With the One Stop Shop, for which establishment I congratulate the Government, Montenegro has taken another very important step to become “competitive” in what Germans refer to as Standortwettbewerb. There is no English equivalent for this concept often referred to in the internal debate in Germany, which refers to the competition among countries over international capital, know-how, skills, and technology by providing investors with a legal framework, public goods, infrastructure, and a labor force at a sufficiently high level of quality so as to generate permanently higher rates of economic activity and levels of social welfare.
With the One Stop Shop, I hope—no, I am convinced—that it will become a whole lot easier for innovative minds to translate good ideas into businesses and, ultimately, into employment and income.
