Technological Trends in the Manufacturing and Service Sectors. The Case of Montenegro

Abstract Technological efficiency is one of the main factors of economic growth in modern history. Technologies have traditionally been important for manufacturing sector, but the age of digitalization has also made service sector increasingly rely on modern technologies. There are not many studies measuring the technological trends of these two sectors. This study uses the micro approach of the dynamic panel to measure productivity of the manufacturing and service sectors in Montenegro during 2010 to 2019, between the two global economic crises, using firm level data. The results indicate a clear upward technological trend in manufacturing but not in the service sector. Divergent technological trends are found amongst the manufacturing and service industries that require different level of technologies and knowledge in their production processes. The study concludes that there is a room for further technological improvements in both sectors and proposes concrete policy measures for further development.