In the western and southern reaches of South-East Europe, three smaller economies—Montenegro, Bosnia and Herzegovina, and North Macedonia—carry industrial legacies that once defined their national economies. Each hosts remnants of significant industrial capacity, yet all face the same strategic challenge: can these legacy assets find relevance in Europe’s new materials economy, or will they fade into obsolescence?
The answer increasingly points to the limits of legacy alone. Without cluster gravity—dense engineering ecosystems, integrated processing, and aligned energy infrastructure—industrial assets struggle to maintain strategic relevance.
Montenegro: Aluminium Legacy Under Energy Pressure
Montenegro’s industrial history is dominated by aluminium. Its smelter once anchored the country’s industrial base and energy system. Today, it embodies a strategic dilemma. Aluminium remains critical for Europe’s electrification, yet primary smelting is among the most energy-intensive industrial processes.
Montenegro’s hydropower-based energy system provides a foundation but lacks the scale, reliability, and low-cost consistency required for competitive aluminium production under modern environmental and economic standards. As a result, Montenegro’s future relevance in aluminium lies in downstream or adjacent activities: logistics, port-based handling, semi-fabrication, or recycling integration with regional systems. Without engineering and processing clusters, the aluminium smelter remains a legacy asset rather than a growth engine.
Bosnia and Herzegovina: Fragmented Heritage in Steel and Aluminium
Bosnia’s industrial narrative reflects a fragmented steel and aluminium sector. Capacity exists, but institutional, regulatory, and infrastructural fragmentation undermines cluster development. Energy constraints, grid fragmentation, and political complexity increase execution risk, while engineering talent is dispersed or exported.
Bosnia can maintain isolated operational assets, but it lacks the concentration needed to attract complementary investment. Processing leadership requires clustering of engineers, suppliers, energy, and logistics—conditions Bosnia currently struggles to achieve. Without deliberate regional integration, its industrial role will remain marginal.
North Macedonia: Niche Potential Without Scale
North Macedonia’s ferroalloy and metal-processing activities connect it to European supply chains, but energy exposure and scale limitations constrain expansion. The country can host specialised operations, yet it lacks the engineering density and processing infrastructure to evolve into a regional hub. Its future lies in niche integration, not cluster leadership.
What unites Montenegro, Bosnia, and North Macedonia is not the absence of industry, but the absence of cluster dynamics. Modern materials industries thrive in integrated ecosystems, where engineering talent, processing facilities, energy systems, and logistics reinforce each other. Without this cohesion, individual plants struggle to adapt to evolving market and technological demands.
Supporting Roles Within South-East Europe Networks
This does not render these countries irrelevant. On the contrary, they can play supporting roles within broader SEE networks:
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Montenegro: strategic port and logistics functions
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Bosnia: labour supply and legacy capacity
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North Macedonia: specialised processing nodes
Expecting these nations to independently anchor Europe’s materials transition misunderstands modern industrial dynamics.
Investor and Policy Implications
For investors, this distinction is crucial. Projects in these countries carry higher execution risk unless tightly integrated into regional clusters led by stronger engineering hubs. Stand-alone investments based solely on legacy narratives are unlikely to deliver sustainable returns.
For policymakers, the lesson is clear: reviving legacy assets without building cluster gravity results in repeated cycles of stagnation and decline. Long-term relevance requires integration, not isolation.
