The economy of Montenegro is currently in a process of transition, as it navigates the impacts of the Yugoslav Wars, the decline of industry following the dissolution of the Yugoslavia, and economic sanctions imposed by the United Nations.
Growth was hampered by its small population, lack of raw materials, an underdeveloped transport network, and a comparatively low rate of domestic and international investment.
The first industrial enterprises built in Montenegro were wood mills, an oil refinery, a brewery, salt works, and electric power plants.
Montenegro's economy was developed significantly after World War II, as the country was integrated into the Socialist Federal Republic of Yugoslavia and experienced a period of rapid urbanization and industrialization.
Its industrial sector included the generation of electricity, steel and aluminum production, coal mining, forestry and wood processing, textiles, and tobacco manufacturing, while international trade, shipping, and tourism became increasingly important by the late 1980s.
Following the dissolution of Yugoslavia in the early 1990s, Montenegro's entire industrial production system effectively collapsed, leading to shortages of many goods and skyrocketing prices for them.
Due to its political alliance with Serbia and favourable geographic location, with access to the Adriatic Sea and a shipping-link to Albania across Lake Skadar, Montenegro became a hub for smuggling activity during the 1990s.
[31] Following the independence referendum, Montenegro's economy has evolved to highlight its service sector, with a goal of becoming an elite tourist destination, and is navigating the process of joining the European Union.
In the 2007 Great Recession the economic growth slowed, as several infrastructure projects, such as the development of Velika Plaža, Ada Bojana, Buljarica, Jaz Beach, and the construction of the Bar-Boljare motorway and new power plants had to be postponed.
Its terminal is specialized in bulk shipment of bauxite and other ores, grain, wood products, acetic acid and petroleum derivatives.
[37] The 2007 recession was difficult for the Podgorica Aluminium Plant, which was initially built in 1969 and was the biggest single contributor to the Montenegrin gross domestic product.
[49] Montenegro became a member of the UN International Fund for Agricultural Development (IFAD) in 2015, which notes that the rural population represents one-third of the total.
"[49] Over the years 2009 to 2019 the World Bank contributed a development project called the Montenegro Institutional Development and Agriculture Strengthening Project, by which (amongst other highlights) the food safety system was upgraded in EU compliant manners, a Border Inspection Post with veterinary and phyto-sanitary controls was established in the Port of Bar, an electronic farm register was created, procedures for the classification of farm and food establishments were completed according to EU norms, and the Veterinary Diagnostic Laboratory in Podgorica was accredited in ISO 17025 analysis methods.