Journal number 2 ∘ Ramaz Abesadze ∘
THE MAIN DIRECTIONS OF THE INNOVATION DEVELOPMENT STRATEGY OF THE GEORGIAN ECONOMY

DOI:  10.36172/EKONOMISTI.2022.XVIII.02.RAMAZ.ABESADZE

Annotation. The pros and cons of innovative economic development in Georgia are studied and the main directions of the innovative economic development strategy of Georgia are identified.

Keywords: Innovation Development Strategy, Innovation Policy, Innovation System, Technology Transfer, Innovation Infrastructure.

Introduction

Every country, regardless of its level of development, should strive in modern conditions to have an effective innovation system based on its own research. To do this, the government must create the conditions to strengthen innovatio activities, to raise an innovative creator in the economy. First of all, the government should define the innovation policy of the country and on this basis establish the legal basis for innovation development and create an effective innovation system.

None of the previous governments in Georgia has taken effective measures for innovative development of the economy. Significant steps have been taken to form an appropriate institutional, basic and innovative system. However, documents that directly or indirectly meet the requirements of innovation development have been adopted before. Nor can it be said that the introduction of innovations in the Georgian economy did not take place at all. Some steps have been taken in this direction, especially in the introduction of information and telecommunication technologies. However, all this did not fully meet the requirements of state regulation of the processes needed to create and strengthen the innovation system. This is at a time when many post-Soviet countries have made great strides in this regard, with some paying close attention to the issue from the outset.Lithuania, Lietuva and Estonia, for example, have been able to create a fairly developed national innovation system, become members of the European Union, and these systems now operate within the EU's unified innovation system. In Russia, the first document expressing the government's innovation state policy was adopted in 1996 - the Federal Law on Science and State Scientific-Technical Policy, defining the main goals and principles of the state innovation policy. Ways to build an innovative economy were outlined. Innovation development of the economy is the main direction of the national strategy and policy of Kazakhstan. Important documents on this score were adopted in the country from the very beginning. Many documents on the innovation development of the country have been adopted in Ukraine. After that, many institutional documents were adopted in the country.

The strategy of innovation development of the economy should reveal the existing pros and cons, identify the main directions of the country's innovation policy and development of the innovation system. 

The current state of innovation development of the Georgian economy 

Among the positive measures taken in the direction of innovation development of the economy in Georgia can be distinguished: 1. Work has started to create a legal basis for innovative activities and in 2016 the Law of Georgia „The current state of innovative development of the Georgian economy’’; The Georgian Research and Innovation Council was established in 2017; In 2014, the Innovation and Technology Agency of the Ministry of Economy and Sustainable Development of Georgia was established; In 2016, the Ministry of Economy and Sustainable Development of Georgia established the "Department of Communication Information and Modern Technologies";The following technical parks, innovation centers, Fablabs and clusters were established: Tbilisi, Batumi, Zugdidi, Telavi, Kaspi and Gurjaani technoparks; Akhmeta, Rukhi, Kharagauli, Choport and Baghdati Innovation Centers; Fablabs of Ilia State University, Tbilisi Technopark, Academy of Arts, Tbilisi State University and Technical University, Batumi State University, Kutaisi Akaki Tsereteli University and Zugdidi Technopark. Fablabs also operate on the basis of vocational schools in Mestia, Gurjaani, Akhaltsikhe, Kobuleti, Tsalenjikha, Poti, Ambrolauri and Rustavi; Clusters: "Silicon Valley Tbilisi", Georgian Furniture Cluster, Georgian Film Cluster, Georgia Aisi Cluster. Clusters are being created in the direction of tourism. The project will work in Imereti and Kakheti, which aims to create three thematic clusters: Local Wine and Gastronomic Tourism Cluster, authentic hotel claster and a cultural heritage cluster; Kutaisi International University, whose educational programs are based on the programs of the Technical University of Munich; In 2014, in order to restore scientific research activities in the agricultural sector, the Agricultural Research Center was established; n 2016, a venture investment program was launched in Georgia - "Startup Georgia" to find financial support for innovative ideas of start-up businesses; Numerous examples can be given of the launch of new modern enterprises in various fields of economics or the introduction of advanced technologies in existing ones. For example: Gardabani thermal power plant equipped with the latest technologies with a capacity of 230 MW; Hydropower plant - Nenskrahes; Five-star tourist complex in Kakheti; Plant for composite parts of civil aircraft; Caspi European standard and high technology brick factory; Metekhi ceramic factory was equipped with modern production lines of the Spanish company; Georgian corn grain processing, oil receiving and combined feed production plant in accordance with modern standards in Samegrelo; Livestock breeding complex, equipped with machines manufactured by the famous company "Big Dutchman"; Rustavi Garment Enterprise - "Kartli Textile", which will eventually employ up to 4 thousand workers [Abesadze ... 2020] and so on.

Despite some success in the direction of innovation development of the economy, there are still unresolved problems, the most notable of which are: Measures taken towards the innovative development of the economy are of a relatively fragmentary and intermittent nature; Not in good condition the scientific potential of the country; Despite some growth, the salaries of scientists are low, which has alarmingly reduced the nuber of scientists and made the field of science unpredictable; The grant system is underdeveloped, the share of science funding from the state budget to the gross domestic product is almost the lowest in the world. The material-technical base of science is in bad condition etc; The system of secondary, higher, vocational training and continuing education requires a serious transformation. It is not yet fully focused on the demands of knowledge and economics. Getting an education could not be a guaranteed way to increase your income in the future. The staff training system is underdeveloped and inefficient, etc; The system of service of scientific research and transfer of research results in production is underdeveloped; There are no mechanisms to facilitate the diffusion of technologies; Low is level of small and medium business development. There is no SME support infrastructure and innovative SMEs; There is no clear innovation policy - appropriate strategy and mechanism of state regulation, appropriate comprehensive institutional framework and incentive system for innovation development, incentive financial, tax and other mechanisms; There is no further support for the implementation of projects by donors, which reduces their activities to zero; There is almost no connection between science, business and the state, which is a major requirement of an innovative economy; There are almost no orders from the state and business for scientific research;

10. Innovations based on own research are almost non-existent, innovations are relatively imported only in the field of communications and information technologies; infrastructure Innovative system (business incubators, technoparks, consulting and technology transfer centers, clusters, innovative networks, etc) is underdeveloped; Rural breeding test and consulting stations, consulting centers, hydrometeorological, geological, geodetic, metrological, seismological, modeling, quality management, scientific-technical information, standardization and other services are purely developed; There are many factors hindering the introduction of new technologies: lack of knowledge, lack of political will and institutional support, scarcity of financial resources, political and social tensions; 

The main directions of Georgia's innovation policy 

The strategy of innovation development of the country's economy should include the directions of the state's innovation policies and the ways of their implementation. First of all, it is necessary for the innovation development policy to be continuous and complex. The main directions of Georgia's innovation policy can be distinguished: 

I. Improving Georgia's Innovation System:                

1. Formation of the five-link model of the innovation system.In the developed countries of the world, the three-link model of the innovation system (spiral) - science-state-business - was preferred, but today it is being replaced by a four-link model - science-state-business-civil society. Another link is added and a five- link model is formed - science-state-business-civic society-environment. This model, unlike the three- link model, implies the principle of openness of innovations, ie the significant involvement of civil society in innovation processes, as well as the existing environment, ie. Consideration of ecological factors, where the environment refers to ecological factors that contribute to the sustainable development and stable functioning of other components [ЦИРЕНЩИКОВ В. 2019].

2. Strengthening scientific potential. For which it is necessary to increase their funding in order to increase the funding of scientists and strengthen the material and technical base of science. Which will allow us to increase the productivity of scientists, and the interest of young people in science. At the present stage, the principle of openness of science is also introduced, according to which scientists freely cooperate with each other both inside and outside the country. This requires involvement in the global scientific space. It is critically important to expand the country's grant system. Grants should exist at all levels (state, university, business level) It is necessary to improve the legal framework of science, which will reflect the modern requirements. Reliable infrastructure for storage, processing and dissemination of scientific data must be established.

3. Improving the education system. Higher education institutions should be funded from the state budget, and be gradually increased. This will help to increase the demand for students and, consequently, to raise the level of knowledge gained. It is necessary to intensify the educational function at all levels of education, which will help reduce people's aspirations towards crime, drug addiction and gambling in the country. The education system must meet the needs of the innovation development of the country's economy

4. Strengthen the import of innovations. Initially, an innovation system should be focused on importing especially the latest technologies and high technologies. This requires the training of appropriate staff and the creation of mechanisms to facilitate the diffusion of technologies. Many factors hindering the introduction of new technologies must be eliminated: lack of knowledge; Lack of political will and institutional support; Scarcity of financial resources; Political and social tensions; Improving the investment environment to attract innovations from outside, etc. 

5. Forming an innovation system based on your own research. It is true that the import of innovation will always take place, but in order to increase the country's competitiveness, it is necessary to gradually form an innovation system based on its own research, which requires complex measures: improving science and education, as well as low-level scientific research services and transferring  to production research results; Strengthening the layer of entrepreneurs and inventors; Improving the efficiency of the staff training and retraining system, etc.

6. Improving the infrastructure of the innovation system. Work on infrastructure elements (scientific research institutes; technoparks; business incubators; clusters, small innovative enterprises; innovative technology centers; consulting firms; telecommunication networks; financial instruments, including venture capital, etc.) should be strengthened, in the direction of growth in quantity and efficiency. Creating an environment conducive to innovation (subsidies, tax breaks, risk insurance, etc.); Establish mechanisms to support the implementation of project results implemented by donors. Strengthen rural variety testing and consulting stations, consulting centers, hydrometeorological, geological, geodetic, metrological, seismological, modeling, quality management, scientific-technical information, standardization and other services.

7. Accelerate the development of medium and small businesses. Small and medium-sized enterprises play a key role in: reducing unemployment and poverty; To increase the entrepreneurial potential of the country and thus increase its competitiveness; In the formation of the middle class and thus in the strengthening of the economic, social and political stability of the country, in the reduction of internal migration, since the expansion of medium and small enterprises is practically unlimited. They can be operated anywhere in the area. However, due to their small size, they need significant support from the state. It is necessary to adopt the law "On Small Business Support", which exists in almost every country in the world. This law should create a small business support body (for example, in the United States, such a body is called the Small Business Administration) with appropriate infrastructure-boosting tools (tax breaks, cheap credit, risk insurance, ease of home procurement, etc.). Special attention should be paid to the development of innovative small businesses. In developed countries, such enterprises implement a more innovative idea than large enterprises. Small business has been a priority area of ​​concern for all advanced countries. An exception could be the South Corea, where big business favored big business because of a strong lobbying group, but when they saw that the middle class and social equilibrium were threatened, billions were spent on small business development. 

8. Establishment of support mechanisms for further implementation of projects by donors.It is necessary to create a certain subdivision in the Ministry of Economy and Sustainable Development, which will organize the period after the implementation of projects by donors - the introduction of the results obtained.

II. Innovative development of the regions of Georgia 

For the innovative development of the economy of regions (districts) it is necessary:

1. The gravity of the innovation development of the regional economy must shift from the center to the regions.

2. The leadership of the regions should turn the regions into attractive areas for foreign investment.

3. The innovation system of the region should be gradually strengthened with the relevant infrastructure (venture funds, technology transfer centers, breeding test stations, consulting centers, hydrometeorological, geological, geodetic, metrological, seismological, model, quality management, scientific and other services). ;

4. The economy of the regions of Georgia is mainly agrarian in nature, so it is important to stimulate the creation of innovative farms;

5. Identification of natural resources of the districts and their effective use;

6. Establishment of structural funds, the main purpose of which will be to provide financial assistance to overcome backwardness through innovative development of the economy;

7. Development of bio-agriculture, promotion of production of ecologically clean and production of organic products and harmonization with their international standards;

8. Development of modern technologies for storage and processing of agricultural products;

9. Establishment and development of regional extension centers within the framework of knowledge dissemination, etc.

III. Creating a market for scientific and technical products 

 Innovation development of the economy is based on the development of science and, on this basis, innovation. The course should be based on the production of science-based products. For this, it is necessary to increase funding for research and development (which means a combination of work aimed at creating new knowledge and using it to create new products or technology), on the basis of which it will be possible to create a market for scientific and technical products. The consumer in the scientific-technical market is an entrepreneur who wants to increase the competitiveness of his enterprise. The supplier is the organization that creates the new product or technology. The size of this market depends on the volume of innovations created and the activity of introducing these innovations. The commodity form of products is limited in the market of scientific and technical products. The market is supplied with products for individual consumption, thus wholesale trade here usually does not take place. The structure of the market can include both large and medium and small enterprises: higher education institutions, scientific research institutes, research laboratories, project and design bureaus, scientific and technical departments of enterprises and other organizations engaged in scientific and technical activities [Самсонова М.В. 2008]. 

IV. Economic security of Georgia

The main content of economic security lies in the fact that the country must ensure the constant protection of the vital economic interests of the individual, society and the state and the dynamic development of the economy, both in peaceful and internal and in extreme external situations. It is implemented internationally, nationally, regionally, enterprisely and on a personal level. Its most important interests are based on the innovative development of the economy and increasing its competitiveness: socio-economic and military-political stability; Efficient use and allocation of resources; Protection and realization of the national priorities of the state; Sustainable development; Increasing the welfare of the population and the defense capacity of the country.

The implementation of economic security means the development and implementation of a system of measures that will ensure the independence, identity, development of the country's national economic system, the prevention of internal and external threats, and the adoption of precautionary measures. 

To avoid imminent danger, an  appropriate organizational structure is needed to implement economic security.

Economic security is based on the following basic principles: taking into account the historical challenges and threats of development; Defining long-term strategic goals and interests; Protection of the vital interests of the individual, society, state; Compatibility of national and international security.

The components of economic security are: financial security, energy security; Food security, as well as security of its separate field or sector, such as industry, transport, communications, tourism, transit, small business, etc. 

Government, sectoral and scientific-technical programs should be developed according to all directions of the strategy. At this stage, it is advisable to develop: "Science and Education Further Development Program", "Industrial Innovation Development Program", "Agricultural Innovation Development Program", "Energy Innovation Development Program", "Small Business Further Development and Support Program"

It is as a result of radical progressive changes in science and education that it is possible to establish an effective innovation system and an innovative economy. It is also important to ensure the innovative development of the industry, as it is an advanced sector of the economy and without its development it is impossible to develop other sectors. It is the innovative development of industry that should lead to the innovation development of the whole economy. Innovative development of industry should be based on the creation and development of science-extensive productions.

In agriculture households (based on production safety of country) it is necessary to accelerate the creation of households (commodity) on the basis of new technologies. In this area, it is necessary to attract investments of Georgian businesses. Energetics must develop rapidly than others sectors. Essentially, in essence, there is an increase in alternative energies (on the basis of renewable sources of  energy). Obstacles, related to the construction of the HES on the part of  population, should be removed in a timely manner. Renewable energy is needed not only in the short-term perspectives, it is energy that never exhausted. Without the development of a small business it is impossible to form middle class in the country , decrease unemployment and misery significantly. 

Conclusions

1. No previous government in Georgia has taken effective measures towards innovative development of the economy. That is why the formation of the legal basis for innovation and the development of the innovation system starts mainly from 2013.

2. Despite the measures taken, the problems remain today. First of all, innovative development has not taken on a complex and continuous character. There is also almost no innovative system based on its own behaviors. Between science and so on.

3. It is necessary to work out an innovative development strategy and relevant programs for the country. The main directions of innovation policy should be:

1. Improving the innovation system of Georgia. It includes: establishing a five-link model of an innovation system; Strengthening scientific potential; Improving the education system; Strengthening the import of innovations; Formation of an innovation system based on own research; Improving the infrastructure of the innovation system; Accelerating the development of medium and small businesses; Establish mechanisms to further support project implementation by donors;

2. Innovation development of the regions of Georgia.

3. Creating a market for scientific and technical products

4. Economic security of Georgia. It includes financial, energy and food security, as well as security of a particular sector or sector of the economy.

4. State, sectoral and scientific-technical programs should be developed according to all directions of the strategy. At this stage, it is advisable to develop: "Science and Education Further Development Program", "Innovative Industry Development Program", "Agricultural Innovative Development Program", "Energy Innovation Development Program"

referense

1. Abesadze R. 2020. Innovation Policy and Innovation System Georgia. Proceedings of the Institute of Economics TGU im. Paata Gugushvili. Tbilissi, University Publishing, Vol. XIII.Timonina I. Л. 2017. (in Georgian)
2. Matias Braun, Sebastián Bustos, Luis Felipe Céspedes. Innovation Strategy and Economic Development https://www.cgdev.org/sites/default/files/WP590-Innovation-strategy-economic-development.pdf
3. Timonina I. Л. 2017. Strategy of Innovation Development Яponies: on the way to the fourth proven revolution. Vostok 2017, № 4 (Russian)
4. TSIRENSCHIKOV V. 2019. STRATEGY FOR INNOVATIVE DEVELOPMENT OF THE EUROPEAN UNION: NEW GOALS AND INITIATIVES, Modern Europe, No. 6, p. 138‒148 (Russian)
5. Samsonova MV 2008. FEATURES OF FORMATION SCIENTIFIC SCIENTIFIC-TECHNICAL PRODUCTS IN CONTEMPORARY CONDITIONS OF HOZSTVOVANIC (Russian). https://cyberleninka.ru/article/n/osobennosti-formirovaniya-rynka-nauchnotehnicheskoy-produktsii-v-sovremennyh-usloviyah-hozyaystvovaniya 

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