| Sumario: | This study aims to explore the impact of the different political statuses of Montenegro within Yugoslavia from 1918 to 1990 and the state-led development strategies in the process of intensive postwar industrialization on its economic development. This study investigates the possible causes of the lower level of development of Montenegro in relation to other parts of Yugoslavia. The research shows that, after gaining the status of an equal federal member in Yugoslavia after World War II, in combination with the state-led model of accelerated industrialization, it achieved the best economic results in its history. This emphasizes the positive effects of state-led development in regions with a weak capitalist tradition and underdeveloped political and market institutions. By applying the growth accounting method, we estimated the annual growth rates of TFP in Montenegro and Yugoslavia from 1952 to 1988. The results show lower TFP growth in Montenegro than in Yugoslavia because of the lower development of its determinants (education, infrastructure, market efficiency, innovation, and institutions).
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