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Journal number 3 ∘ Giorgi Miqeladze Mariam Okruashvili
Asymmetry of economic development of Georgia

Expanded Summary

The article discusses the asymmetry of the development of the Georgian economy in terms of territory and the main sources of financing the economic policy of the self-governing territorial units: the budget, central budget assistance, and the support fund of international donor organizations. The aim of the paper is to assess the current situation at the level of relatively small territorial units of the country based on relevant empirical data and determine the necessary statistical characteristics through which it is possible to estimate statistically reliable indicators of the standard of living. Based on the statistical analysis of the main economic characteristics, the article substantiates that the volume of public goods at the regional level of Georgia is very different.

This is supported by the following facts:

1) Based on the analysis of statistical characteristics, it is determined that the values of the main economic indicators at the regional level are very different, and the concentration of public goods in one area of the country is observed;

2) The budget of the local self-governing bodies is relatively small since the majority of the population of Georgia lives in several regions, including the capital, where the share of the population constitutes one-third of the total population of the country.

Based on the mentioned facts, other territorial units are characterized by little economic activity. Consequently, the regions of the country differ greatly in terms of economic status. This is revealed by the distribution of the gross domestic product by regions. It is worth noting that the maximum value of the gross domestic product per capita in 2021 at current prices is 21,866 GEL in Tbilisi, which is 1.5 times higher than the average value of the country and 2.6 times higher than the average value of the region with the lowest indicator.

The article confirms the validity of the hypothesis: "The size of regional asymmetric development is inversely proportional to the growth of the country's territorial scale", based on the results of the research conducted by the World Bank on poverty indicators in 2019 and the analysis of the average monthly values of Households Incomes and Expenditures. The article includes recommendations for further research in efforts to overcome the shortcomings of high marginal relative error caused by small sample sizes through the empirical implementation of small area unit evaluation (SAE) and time series analysis models.

Additionally, the article discusses the role of state policy in improving of the economic situation of municipalities in the country. It should be noted that a) the state policy, which provides for financial assistance to local self-governing units from the central budget, as well as b) the Municipal Development Fund of Georgia, which cooperates with all major investment banks and financial institutions operating in the country, aims to strengthen local self-government, invest in infrastructure and services, and improving both the economic and social conditions of the local population.

In addition to the above, the involvement of international organizations is essential to ensuring the improvement of governance, policies, and services in municipalities. Currently, projects are being held in six municipalities of Georgia, with the support of the European Union, the United Nations Development Program, and the National Association of Local Self-Governments. These projects contribute to the promotion of urban transformations in the same municipalities, the protection of historical and cultural heritage, the rehabilitation and arrangement of public spaces, the improvement of pre-school education, and the development of quality municipal services.

Furthermore, the ambassador of the European Union and the representative of the United Nations Development Program in Georgia play important roles as they support local projects that are aimed at meeting people's needs and expectations, which will naturally help to create an equal environment. The minimization and elimination of social and economic inequality between regions ensures integrated territorial development, leading not only to the creation of an equal environment but also to the improvement of individual well-being.

Key words: equal public goods, asymmetry of regional and municipal development in Georgia, statistical indicators of the standard of living in a small area.

JEL Codes: P 20, P 31, P 40, P 52