One of the most famous definitions of economics is that it is the science that studies how society manages scarce resources. Starting from the definition itself, it is clear that resources are the basis, that they exist in limited quantities and that “all science is about” how they are managed. Modern economic theories, unlike traditional ones, understand resources much more broadly and go beyond the importance of raw materials themselves, but the importance of resources in a broader sense remains unquestioned.
If we understand energy as a science that deals with the management of energy resources and the provision of energy, it is clear how important it is in theoretical and practical terms for the economy. It can be said that the economy and energy are fundamentally connected. Analyzing only one part of energy that relates to energy consumption and its connection with economic growth, several modalities are observed. The growth of energy consumption can be the cause of economic growth, it can be its consequence, but it can also be determined that there is a two-way feedback loop or that the connection does not exist at all. Which of the defined modalities is valid is crucially influenced by the characteristics of the implemented economic model, i.e. it depends on the way we use energy resources.
In the period before the war in Ukraine, interest in energy was predominantly driven by ideas to find ways to eliminate negative externalities, primarily pollution and CO2 emissions, while development motives were in second place. However, today it is clear that in addition to energy being the basis and foundation for the development of a successful economy, it can also be the driver of future economic progress. Montenegro must see its opportunity in this paradigm shift.
The participation of the energy sector in the Montenegrin economy through direct contribution to GDP is about 5%, the multiplicative importance of this sector is many times greater, and the potentials are such that the energy sector can have a twice as large role. The export of electricity in total exports has in some years reached 30%, but the real potentials will be realized only when electricity is used for the development of domestic production. The energy sector is not only a necessary factor of the existing system, but it should be understood as the foundation on which a new Montenegrin economy can be built.
For a long time, the key economic risk for a country was the increase in the cost of financing public debt, but today the increase in the cost of providing sufficient energy represents a significantly greater risk that can trigger a spiral of further costs and be a cause of systemic instability.
In conclusion, energy can be a generator of economic progress in Montenegro and a focal point of the transformation process, but also a key cause of serious macroeconomic instability. In order to achieve the desired results, it is necessary to use energy resources optimally, and in this process, human resources play a critical role, as they alone have the power to activate all other resources.
The author is a teaching assistant at the Faculty of Economics of the University of Montenegro
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