Rožaje, located in Montenegro’s northeast near the borders of Serbia and Kosovo, is one of the country’s most distinctive economic micro-regions. Its identity has been shaped for centuries by mountainous geography, forestry, craftsmanship, trade routes and a strong diasporic culture. Today, Rožaje stands at the intersection of traditional industries and new economic opportunities — with its future tied closely to regional trade, tourism, cross-border commerce and the power of its globally dispersed community.
The forested slopes of Hajla, Turjak and the upper Ibar valley define the economic reality of Rožaje. Forestry and wood processing have long been the municipality’s primary industries. Sawmills, carpentry workshops, furniture manufacturers and timber exporters form the backbone of the local economy. The local workforce has deep expertise in woodcraft, from basic timber processing to high-quality furniture production. This tradition gives Rožaje a competitive advantage in both domestic and export markets.
However, the forestry sector is undergoing significant transformation. Sustainability concerns, environmental restrictions, and changes in market demand require new approaches. Modernisation — including more efficient machinery, certification, and value-added production — is essential for long-term viability. Moving from raw timber exports to finished products such as furniture, interior elements, modular houses and premium wood goods can significantly increase earnings and create stable jobs.
Rožaje’s other economic pillar is trade. Its proximity to border crossings makes it a natural hub for commerce between Montenegro, Serbia and Kosovo. Local merchants have strong connections in Novi Pazar, Tutin, northern Kosovo and diaspora centres in Western Europe. The trading culture is deeply rooted: small import-export businesses, retail shops, food distributors, and construction-material suppliers are active throughout the town.
The diaspora economy is one of Rožaje’s strongest forces. Thousands of families live in Germany, Switzerland, Luxembourg, Austria and the Nordic countries. Remittances are substantial and contribute to construction, retail, hospitality, and property development. Diaspora investors often fund new houses, apartment buildings, restaurants, cafés, workshops and businesses, giving Rožaje one of the highest levels of private construction relative to its population size.
Tourism represents an underdeveloped but promising sector. Rožaje’s mountainous environment is ideal for hiking, skiing, adventure sports, eco-tourism and rural stays. The Hajla mountain area, if properly developed, could become one of Montenegro’s leading high-altitude destinations. Investments in lodges, ski lifts, mountain huts, wellness facilities and cross-border tourism routes would position Rožaje as a niche adventure-tourism hub connected to both Montenegro and Kosovo.
The service sector is expanding as well. Education, healthcare, hospitality, retail and construction provide employment for much of the population. Construction, in particular, is driven by diaspora-funded projects. Local companies are active across Montenegro and Serbia, offering carpentry, interior design, electrical work and stone masonry.
Rožaje faces significant challenges: population decline, youth emigration, limited industrial diversification, and insufficient large-scale investments. Infrastructure improvements are needed, especially on the main roads toward Serbia and Kosovo. Industrial zones remain partially undeveloped.
Yet Rožaje’s long-term potential is considerable. The diaspora’s economic strength ensures steady inflows of capital. The forestry and wood-processing sector has strong potential if upgraded to higher value production. Tourism, if developed sustainably, could anchor new economic cycles. And its cross-border position gives Rožaje a strategic advantage in regional commerce.
In the next decade, Rožaje is likely to evolve into a hybrid economy of:
• wood processing and furniture manufacturing
• diaspora-driven construction and services
• cross-border trade
• boutique mountain tourism
Its success will depend on sustainable forestry, industrial modernisation, improved connectivity and strategic cooperation with neighbouring regions.
