Montenegro and BRI Initiative: Between Economic Performance and Global Political Challenges

Montenegro and BRI Initiative: Between Economic Performance and Global Political Challenges

Nikola Martinović (Faculty of Economics, University of Montenegro, Montenegro) and Nikola Milović (Faculty of Economics, University of Montenegro, Montenegro)
DOI: 10.4018/978-1-7998-8021-9.ch010
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The focus of this chapter is the analysis of economic relations between Montenegro and China and the implications that the intensified economic cooperation may have on the political, regional, and global levels. Special attention is paid to the construction of the priority section of the Bar-Boljare highway and the financial arrangement concluded on those grounds between Montenegro and the Chinese Exim Bank. China's presence in the Western Balkans has gained importance recently through the Belt and Road Initiative project. Therefore, this chapter seeks to answer how Montenegro can use all the benefits of this initiative to strengthen its national economy and increase its citizens' living standards. That can be crucial as Montenegro is facing economic consequences of the COVID-19 pandemic, and FDI inflows are a precondition to reduce the infrastructure gap within the convergence criteria in the EU accession process.
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Stimulating economic development in Asia, Europe, and Africa, which make up 64% of the world's population and almost a third of the world's GDP, is one of the main goals of the Belt & Road initiative that the People's Republic of China has been implementing since 2015 (Huang, 2016). Naturally, there is a growing interest in the background of such an ambitious economic plan, especially in the context of strong polarization and growing geopolitical tensions and pretensions in the modern economic “war” that is being fought continuously. Despite the exceptional GDP growth rates for 25 years before the launch of this initiative, which according to the World Bank, amounted to almost 10%, there was a noticeable slowdown, too (Brandt et al., 2020). High economic growth rates have not solved all the economic challenges the country was facing, so poverty reduction in China and the focus on better management of financial assets became medium-term priorities of monetary authorities (Johnston, 2019). For these purposes, the country needs new sources and drivers of economic growth and development to enable further prosperity of its economy (Li & Lin, 2017). One of the BRI initiative goals was for Chinese companies to achieve better results in foreign markets through the growth of investment activities. Available data indicate that Chinese companies are well on their way to attaining these interests (Zakić & Radišić, 2019).

Key Terms in this Chapter

Western Balkans (WB): Are a group of countries that are targeted by the European Union enlargement policy. This group is originally constituted by Albania, Croatia, North Macedonia, Montenegro, Bosnia and Herzegovina, Serbia, and Kosovo.

Belt and Road Initiative (BRI): Also known as the New Silk Road, is a plan by the government of the People's Republic of China to build infrastructure for transportation, from China to other countries in Asia, Europe, and Africa.

Debt Trap: Is a situation where the debtor will not be able to repay the debt incurred. Debt trap situation may arise due to the higher interest rates or change in terms and conditions of debt incurred

National Economy: The economy of a nation as a whole that is an economic unit and is usually held to have a unique existence greater than the sum of the individual units within it.

National Competitiveness: Is a relative concept. It is an approximation of a country's ability to grow and to compete with other countries for human capital, investments, and other resources.

Economic Development: Is the creation of wealth from which community benefits are realized. It is more than a jobs program, it's an investment in growing your economy and enhancing the prosperity and quality of life for all residents.

Foreign Direct Investment (FDI): Is a category of cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in another economy.

Geopolitics: A study of the influence of such factors as geography, economics, and demography on the politics and especially the foreign policy of a state.

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