Expanded Summary

1. Priorities for the creation of the export strategies in Georgia: products vs. markets

Efficient export strategies always reviewed as one of the main indicators of the successful economic policy provided by Government. Successful export strategies improve many fundamental economic indices, such as balance of payments, employment, budget revenues. Thus due to the importance of the topic many authors researched different aspects. In the new reality of the globalization many things are changing. Export markets become the source for the survival for the firms, thus export opportunities aren’t considered as the ways of growth, now it’s the way to survive.

Different models for the export growth have been presented, as the well-known “Uppsala model”, also there are other different ideas re-firm growth. International Donor organization also were quite interested to introduce export growth models which lead to the poverty reduction or intensified economic growth of the least developed countries. In depth analysis give us opportunity to distinguish export promotion two major directions: export promotion based on the existing export models and export promotion through creation of the new export products. Export promotion strategies based on the existing export products are mainly oriented to approach new export markets, to find out opportunities of the higher price market niches on the existing markets or to produce higher value added export products on the base of the existing export products. These approaches are quite limited for Georgian export products. In the search for the new markets Georgian Government is trying to reach Free Trade Agreements with the world major players. Georgia already has FTAs with EU, CIS, EFTA and China. New Georgian Government seeks this opportunity with USA.

Should be noted that creation of the higher value added products always connected with the changes of the market counterparts, thus Georgian companies should increase transaction costs to reach deals with the new buyers. These activities always are painful for exporters. To have better understanding of the problem we need to look through export figures. 

Table I. World and Georgian Exports in Thousand $

Source: ITC

 Table II. World and Georgian service exports in thousand $

 Source: ITC

Detailed analysis of the export product groups and export geography lead as to the interesting conclusions. All export promotion concepts in Georgia have one fundamental problem. Georgian export promotion strategies are based on the economic models which loose relevance in the new realities. Successful export promotion models of the 60-th and 70^th of the 20^th century were based on the industrial development phase 2, with the stress on the relevant for that period low labor costs .From the 80^th and 90^th situation dramatically changed as the industrial development 3-rd phase appeared, with the stress on the robototechnics. Nowadays we are facing industrial development 4^th phase with the elements such as augmented reality, internet of things and cloud computing. In these realities successful export strategies should be dramatically changed.

Nevertheless Georgian Government should use some of the models from the previous phases, for example world ice cream and chocolate producers could be interested to grow hazelnuts in Georgia, jeweler and ferroalloy producers also should be attracted by special tax incentives in case they would increase production operations in Georgia.

Same time Georgian Government should promote re-export activities, by increasing sea port infrastructure and capacities in Georgia. Special attention should be paid for the investors seeking opportunities to increase service exports from Georgia.

 2.      Relation between export strategies and modern industrial policy in Georgian reality

Industrial policy should be used as the basis for the creation of the export policies. Industrial policies should acknowledge all changes going in the industrial world and be ready for new challenges. In nowadays competitiveness concept changed, now company should be competitive globally. Georgian reality which has the very heavy burden of the soviet period, almost negative experience of the 90^th (civil war, political instability) also was seriously damaged by the methodological mistakes. Mainly this lead to the misunderstanding of the modern development phase.

Ultraliberal economic views also didn’t lead to the any positive steps in order to make good connection between industrial policy and export promotion strategies. s of the modern realities even the infrastructure should be changed and priority should be given to the communication technologies, systems for the delivery of the information, internet opportunities. Digitization of the all spheres of economy changes the meaning of the competitiveness. Now competitive are companies which have high skilled workforce, who operates with the modern communication systems.

Thus Georgian Government should undertake steps to increase competitiveness in this direction. Also crucially important would be to find out potential investors, find out their preferences and build u solid base for their investments. Georgia needs to identify its own place in the new value chains. 3D printing technology making useless transporting systems, but increasing demand on the materials for 3D printers. Finding out competitive advantages should be based on the modern industrial policy. Export strategies also influence creation of the industrial policy, as they are identifying opportunities and accumulating some preferences. Export strategies also giving clear indications what type of preferences should be given to the exporters. Industrial policy should be oriented on the long lasting objectives, while export strategies are more oriented on the utilization of the existing market opportunities.

3.      Organizational Aspects of the Efficient export Strategies

As we already mentioned efficient export strategy should based on the modern industrial policy. Modern industrial policy should define the development of the higher education, research & development activities, structure of the learning process in Universities. Any industrial strategy would work if it’s based on the sufficient financial and managerial resources. Successful export strategies should be well-defined sector-regional approach. Following this logic Georgia should intensify relations with the regional trading blocs. In this case special attention should be paid to Gulf States, with the high living standards and special emphasis on the quality of the exported products.

Special interest should be paid for the Country rankings by different indices. World Economic Forum now introduced the new Enabling Trade Index, which could serve as the guide to find out best export opportunities and same time bottom necks in the exporting process. Special interest should be paid for the coordination of the activities provided by different Agencies and players. In different countries are their own traditions for the coordination. In Georgian reality the coordination should be provided by the structure which has high authority from both and private sector sides. In this case would be optimal to create Competitiveness Council based on the Higher Education Institutions. Competitiveness Council would investigate major problems of the competitiveness and same time serve as the platform for the dialogue between Government, non-governmental organizations and private sector.

Key words: export strategy; competitive advantage; modern industrial policy