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Ministry of Economy of Montenegro, Directorate for development, initiated cluster development process in 2009 when and together with the United Nations Industrial Development Organization (UNIDO) has introduced the concept of cluster development in Montenegro with the aim to support small and medium enterprises in overcoming barriers. More specifically, UNIDO has provided support to the Ministry of Economy in building local capacity for cluster development, mapping of existing clusters in the country and the development of a national strategy for the development of clusters.

What are clusters? 
The term cluster, or at least its synonym, expressing the socio-economic phenomenon was first elaborated by English economist Alfred Marshall at the end of the nineteenth century in his book Principles of Economics, who noted that the companies belonging to the same sector tend to group together in the same geographical territory with goal to optimize their economic activities. He called this phenomenon “industrial districts”. The theory of industrial districts was later developed in 1979 by an Italian professor Giacomo Bacatinija and then of course the theory of clusters is widely accepted and used among those who have been responsible for industrial and regional development. In addition American Professor Michael Porter from Harvard University in his book "Competitive advantage of Nations” uses clusters as a mean of increasing the competitiveness of the regions.
According to UNIDO definition, developed based on the implementation of the program of cluster development in more than 40 countries around the world, clusters are a natural phenomenon which is defined as a group of companies and institutions located in a particular geographic region, which produce and provide the same or similar services and encounter with the same or similar problems. As some authors say clusters are natural manifestations of specialized knowledge, skills, and infrastructure in order to increase and sustain growth in certain localities.

Ministarstvo ekonomije
A performing cluster is well organized with strong linkages betwen a multitude of actors

Clusters & Competitiveness 
Clusters are part of a broader competitiveness framework. If we compare the definitions of clusters and competitiveness, will note that actually they are interconnected. So Porter defines competitiveness as the way in which a nation uses its people, capital, and natural resources. Or if a nation is using people, capital, and natural resources on a better way the competitiveness of the economy will be higher. That’s where Clusters come up, they help decision makers to use people, capital and natural resources more efficiently. The benefits of clusters are coming from three directions:

1. Clusters enable higher productivity. Companies can operate with a higher efficiency, drawing on more specialised assets and suppliers with shorter reaction times than when working alone;
2. Companies within the cluster exchange innovation and knowledge on better way, because best environment for knowledge exchange is local level; 
3. Business formation tends to be higher in clusters. Clusters can spread the cost of failure, as entrepreneurs can fall back on local job opportunities in the many other companies in the same field.

Clusters in Montenegro
Montenegrin cluster map (given below) shows the location of the identified clusters. Points on the chart represent the individual clusters in different municipalities. If the clusters are on the border line, it means that the cluster includes several border municipalities. The asterisk represents the color of the cluster that spans the territory of several municipalities that do not share a border. Tourism clusters are integrated white circle.

There are 63 identified potential clusters in Montenegro in the field of agricultural production and food processing, wood processing, construction and tourism, which makes a total of 6,200 companies with 26,000 employees.