Journal number 1 ∘ Rozeta Asatiani ∘

PUBLIC SECTOR ECONOMICS AND NEW NEOCLASSIC SYNTHESIS

Abstract Public sector economics as a theory of government’s functioning in a market economy unites public sector and the “third sector” (non-government and charitable organizations), i.e. the civil society. Public sector economics is a comparatively new branch of economics originated in the 1960s and it is a compulsory subject in universities which has been taught for several decades in the majority of developed and post-communist countries, but it is not taught in Georgia due to the absence of textbooks. Public sector economics studies the issues of strengthening socialization of economy, i.e. functioning of socially oriented market economy and in this connection it puts forward the government’s new role in economy. Social orientation made market economy politically viable. The precursors for emergence of the public sector economics originate in the 1940s and are associated with an increase in consumer demand at an inclusive level based on Keyn

Journal number 1 ∘ Teimuraz Beridze ∘ Elguja Mekvabishvili ∘

The “Thorny Road” of Economic Reforms in Post-Communist Georgia: Retrospective and Perspective

Expanded Summary For several decades the economy of Soviet Georgia was a composite part of the so-called integral economic complex. 26% of our products were sent to other allied republics, and 28% of the products produced there came into Georgia. In the economic development of Georgia, from the mid-1950s to the early 1990s, two periods are singled out. The first period (1950-1970) was marked by the backwardness of the main socio-economic indicators of Georgia relative to the median indexes of the Soviet Union. In the second period this retardation was largely overcome. In the Georgian economy in the 1970s and 1980s, certain reforms were focused on increasing effectiveness of management, but they had limited character and did not bring the desired results. After the restoration of state independence (April 9, 1991), two important tasks were posed before Georgia: Creation of independent state institutions and establishment of market economy. It was very difficult to fulfill these

Journal number 1 ∘ Vakhtang Charaia ∘

FDI MOTIVATION AND BENEFITS FOR GEORGIA[1]

Summary Article is devoted to the FDI motivations of foreign investors and the benefits brought by them. Based on the research goals study was based on well known Scott-Kennel’s model of local industry upgrading, which draws on the Investment Development Path (IDP) and OLI paradigm. The model applies the framework of the IDP at the micro level by proposing a typical process of local asset augmentation, as well as the contribution of inward FDI to industrial development as a continuum from enclave to full integration. Research was done based on deep interviews with the top management of companies listed in top 200 FDI making companies in Georgia. Keywords: Investments, MNE, FDI Motivations, Georgian Economy. INTRODUCTION Attractive investment climate is a key instrument for countries economic development, especially in developing and poor countries which are not able to develop their economy with the local resources. However, not always foreign investments are unil

Journal number 1 ∘ Madonna Gelashvili ∘

Human resources and its Development Tendencies in Georgia

Summary One of the perquisites of economical sustainable development is generating novel knowledge and human capital. It is obvious that knowledge and capital are mutually dependent categories: only highly qualified specialists have capacity of creating novel knowledge and effectively apply it to reality. Hence, human capital has one of the most important roles in innovative economics of human capital among the other factors, which affect on economical growth, as high level of human capital development determines high level of creativity, which on the other hand is important for creation of novel knowledge (innovation). Keywords: human capital, innovative economics, knowledge, education, production factor. Introduction New aims and objectives were put forward as a result of human developments in XXI, which are based on fundamentally new kind of developments, characterized by changes of technological structures. The advantages of education and science fields have been identif

Journal number 1 ∘ Joseph Archvadze ∘

ROLE OF THE AGE FACTOR IN THE FORMATION OF COUNTRY’S ECONOMY AND POPULATION’S INCOME[1]

Summary One of the crucial factors affecting the development of a country’s economy is the demographic structure and education level of its population. – Other things being equal, the more educated, qualified and capable of working individuals the country comprises, the higher its potential for economic development. As a result, it is highly important to consider participation of economically active population in the process of employment and creation of economic wealth according to their age. Moreover, it is noteworthy to pay attention to the correlation of wealth distribution and its final consumption with regard to various age groups – i.e., whether there is a correlation between the wealth, created by those age groups, and its actual consumption. Georgia belongs to one of those societies, which are founded on traditional values, where cultural-emotional, existential, material and economic connections between different generations are strong. The scale of inner fa

Journal number 1 ∘ Solomon Pavliashvili ∘ Zurab Garakanidze ∘ Nata Garakanidze ∘

EARLY WARNING OF THE ECONOMIC SEPARATISM IN GEORGIA

Expended Summary According to the data in scientific literature, there are about 25 active separatist movements in Europe. In this term the demand for part of the rebel regions is the secession, while other part claims fiscal rights - economic independence. Collective economic interests in the condition of federal arrangement of state are primarily revealed in the fiscal interests of individual regions - administrative-territorial or ethnic-autonomous subjects of the federation. There are two types of fiscal separatism – “Poor” and “Rich”. Historical experience demonstrates that two major factors have a significant influence on provoking “Poor’s” separatism: support the region by a stronger foreign state and a dictate of the center over the region. Such separatism is more radical, because the poor usually act more radically rather than rich people for at least one simple reason: they do not have anything to lose. In terms of “Ri

Journal number 1 ∘ Emzar Julakidze ∘

Effective Decision-making and Modern Problems of the Growth of Productivity of Organizations

Expanded Summary Effective decision-making is the choice of the alternatives to which the organization achieves success. The desire to succeed is characteristic to all organizations. But in order to find out whether the organization has succeeded it is necessary to identify--what does the success mean? Naturally, many people will name the high image, giant companies on that question and they will be right. Although, with this position it means that only size of the organization and / or profit maximization is a success. However, every organization has a definite purpose and if the organization has achieved its goal, it is already successful. That is to say, success is not related to the size of the organization and everything, including small business, can have its success. The most important goal that the organization's management needs to achieve is to offer the product (service) that increases the productivity of this organization. That is, to make such decisions according to whic

Journal number 1 ∘ Revaz Javakhishvili ∘ Levan Jangulashvili ∘

Swedish Experience of Small and Medium Business Support

Expanded Summary The Swedish government has a deep understanding of the role of small and medium enterprises in the development of the country's economy, in recent years, the organizational, financial-taxation, information provision, scientific-technical cooperation, and the improvement of the labor market organization events had taken place. Small and medium enterprises are supported in Sweden within the framework of Common Industrial Regional and Innovative Policies, which focus on such enterprises. The Ministry of Industry, Employment and Communications, Swedish Agency for Entrepreneurship Development, Swedish Institute of Innovative Systems and Swedish Institute for Economic Growth Policy are responsible for it organizationally. There is a systematic improvement of legislative-normative basis for small and medium business development in Sweden. In 1998, the law was adopted that prohibits carrying out any economic development activities by central and local authorities that do no

Journal number 1 ∘ lina Datunashvili ∘

Measures to develop some cultures and fields of plant-growing in Georgia

Summary The article studies and analyzes real situation of some cultures of plant growing in Georgian agriculture: cereals (wheat, maize) and tech crops (sunflower, tobacco), potato, and fruit growing: - seedlings (apples, pears), kernel and nuts (hazel nuts, nuts and the factors that affect them). The focus is on the ways and measures proposed in the direction of further development of these cultures the consideration and practical realization of which will significantly increase in Georgia the production of planted products discussed in the article. Keywords: agriculture, cereals, wheat, maize, tech crops, sunflower, tobacco, potato, kernel, nut fruit. Introduction Agriculture in Georgia is a priority sector of the country's national economy, as it provides the country's population demand for food and the industry - for raw materials. For known reasons (military, economic and social processes) the field has not yet come out of the crisis. In addition, there are a num

Journal number 1 ∘ Nodar Khaduri ∘

Factors of Inclusive Growth and Challenges faced by the Economy of Georgia

Expanded Summary Currently, the world is going through a very interesting stage. Despite the post Financial Crisis progress, there are a lot of problems in the world economy. First of all, these problems are related to income distribution and availability of economic growth impact to all layers of human population. According to the World Bank, from 1995 to 2014, Population Prosperity grew up by 66%, from 690 trillion US dollars to 1 143 trillion US dollars; however, inequality level is still high. For example, in OECD countries prosperity is 52 times higher than in low income countries [see. www.worldbank.org]. The scientists write a lot about the problems of income distribution in scientific essays as well as articles, however a lot of them emphasize the threats that might arise from populism. The problem is so complicated and all-embracing that not only scientists but practicing economists and international financial institutions work on it. For example, the World Bank has two ma

Journal number 1 ∘ Nanuli Arevadze ∘ Nana Bibilashvili ∘

INNOVATION SYSTEM OF THE REPUBLIC OF KOREA

Expanded Summary The article deals with the peculiarities of the creation and formation of the innovation system of the Republic of Korea and its development stages of 1962-2016. The success that the country has achieved in just a few decades and is known by the name of the "Miracle of Korea" is the immediate result of the innovative system functioning in the country, the history of creation and development of with is very interesting and completely different from other economically developed countries. This difference gives the ability to clearly see how much progress can be achieved, when the state, business and science are closely cooperating and trying to duplicate the efforts of formation of the national innovation system and the the successful development even in the unfavorable starting conditions (scarce resource potential, the hardest competition, technological backwardnees). Until the 60s of the last century, the country was in the ranks of states with agrarian economi

Journal number 1 ∘ Eter Kakulia ∘

Formation and Development of Small Business in Georgia

Summary The research article covers the issues of small business formation-development in Georgia. The period from the 90s until the present is presented in six stages. The main pursued activities are outlined and the advantages and shortcomings of each stage are briefly described. In order to overcome the shortcomings in the field of small business formation-development, suggestions and opinions are expressed in the form of conclusions in the research article. Key words: small business; strategy for development; innovative small business; stage; period. Introduction The role of small businesses is especially large during the transformation of the economic system, since it is an important factor in the reduction of unemployment and economic stabilization at all. These very opportunities for small businesses were the basic condition for avoiding the demonstrations of social character during the transformation of the economy in Georgia. The weakness of small b

Journal number 1 ∘ Shota Gulbani ∘

Comparative Analysis of Development of Georgian Financial Markets

Summary Existance of healthy financial markets is the important prerequisite for economice development of any country. It should be noted that the financial market consists of two very important segments, these are: Commercial banking sector and capital markets. These two segments are natural competitors. In Georgia commercial banking sector development is at a high level, but the capital market is still facing significant challenges, because, the stock market is monopolized by commercial banking sector. Key words: financial markets, capital markets, commercial banking Introduction Over the past decade the state economic policy makes focus on creating strong foundations for shaping open and free market economy. This policy promulgates guaranteed protection of private property. [strategy 2020. 2013]. At the same time, valuable and efficient operation of market economy, based on private property principles, may be ensured through a constant supply of financial reso

EKONOMISTI The international scientific and analytical, reviewed, printing and electronic journal of Paata Gugushvili Institute of Economics of Ivane Javakhishvili Tbilisi State University

DOI: 10.36172/EKONOMISTI E ISSN 2346-8432 Print ISSN 1987-6890	Journal number 1 ∘ Rozeta Asatiani ∘ PUBLIC SECTOR ECONOMICS AND NEW NEOCLASSIC SYNTHESIS Abstract Public sector economics as a theory of government’s functioning in a market economy unites public sector and the “third sector” (non-government and charitable organizations), i.e. the civil society. Public sector economics is a comparatively new branch of economics originated in the 1960s and it is a compulsory subject in universities which has been taught for several decades in the majority of developed and post-communist countries, but it is not taught in Georgia due to the absence of textbooks. Public sector economics studies the issues of strengthening socialization of economy, i.e. functioning of socially oriented market economy and in this connection it puts forward the government’s new role in economy. Social orientation made market economy politically viable. The precursors for emergence of the public sector economics originate in the 1940s and are associated with an increase in consumer demand at an inclusive level based on Keyn Journal number 1 ∘ Teimuraz Beridze ∘ Elguja Mekvabishvili ∘ The “Thorny Road” of Economic Reforms in Post-Communist Georgia: Retrospective and Perspective Expanded Summary For several decades the economy of Soviet Georgia was a composite part of the so-called integral economic complex. 26% of our products were sent to other allied republics, and 28% of the products produced there came into Georgia. In the economic development of Georgia, from the mid-1950s to the early 1990s, two periods are singled out. The first period (1950-1970) was marked by the backwardness of the main socio-economic indicators of Georgia relative to the median indexes of the Soviet Union. In the second period this retardation was largely overcome. In the Georgian economy in the 1970s and 1980s, certain reforms were focused on increasing effectiveness of management, but they had limited character and did not bring the desired results. After the restoration of state independence (April 9, 1991), two important tasks were posed before Georgia: Creation of independent state institutions and establishment of market economy. It was very difficult to fulfill these Journal number 1 ∘ Vakhtang Charaia ∘ FDI MOTIVATION AND BENEFITS FOR GEORGIA[1] Summary Article is devoted to the FDI motivations of foreign investors and the benefits brought by them. Based on the research goals study was based on well known Scott-Kennel’s model of local industry upgrading, which draws on the Investment Development Path (IDP) and OLI paradigm. The model applies the framework of the IDP at the micro level by proposing a typical process of local asset augmentation, as well as the contribution of inward FDI to industrial development as a continuum from enclave to full integration. Research was done based on deep interviews with the top management of companies listed in top 200 FDI making companies in Georgia. Keywords: Investments, MNE, FDI Motivations, Georgian Economy. INTRODUCTION Attractive investment climate is a key instrument for countries economic development, especially in developing and poor countries which are not able to develop their economy with the local resources. However, not always foreign investments are unil Journal number 1 ∘ Madonna Gelashvili ∘ Human resources and its Development Tendencies in Georgia Summary One of the perquisites of economical sustainable development is generating novel knowledge and human capital. It is obvious that knowledge and capital are mutually dependent categories: only highly qualified specialists have capacity of creating novel knowledge and effectively apply it to reality. Hence, human capital has one of the most important roles in innovative economics of human capital among the other factors, which affect on economical growth, as high level of human capital development determines high level of creativity, which on the other hand is important for creation of novel knowledge (innovation). Keywords: human capital, innovative economics, knowledge, education, production factor. Introduction New aims and objectives were put forward as a result of human developments in XXI, which are based on fundamentally new kind of developments, characterized by changes of technological structures. The advantages of education and science fields have been identif Journal number 1 ∘ Joseph Archvadze ∘ ROLE OF THE AGE FACTOR IN THE FORMATION OF COUNTRY’S ECONOMY AND POPULATION’S INCOME[1] Summary One of the crucial factors affecting the development of a country’s economy is the demographic structure and education level of its population. – Other things being equal, the more educated, qualified and capable of working individuals the country comprises, the higher its potential for economic development. As a result, it is highly important to consider participation of economically active population in the process of employment and creation of economic wealth according to their age. Moreover, it is noteworthy to pay attention to the correlation of wealth distribution and its final consumption with regard to various age groups – i.e., whether there is a correlation between the wealth, created by those age groups, and its actual consumption. Georgia belongs to one of those societies, which are founded on traditional values, where cultural-emotional, existential, material and economic connections between different generations are strong. The scale of inner fa Journal number 1 ∘ Solomon Pavliashvili ∘ Zurab Garakanidze ∘ Nata Garakanidze ∘ EARLY WARNING OF THE ECONOMIC SEPARATISM IN GEORGIA Expended Summary According to the data in scientific literature, there are about 25 active separatist movements in Europe. In this term the demand for part of the rebel regions is the secession, while other part claims fiscal rights - economic independence. Collective economic interests in the condition of federal arrangement of state are primarily revealed in the fiscal interests of individual regions - administrative-territorial or ethnic-autonomous subjects of the federation. There are two types of fiscal separatism – “Poor” and “Rich”. Historical experience demonstrates that two major factors have a significant influence on provoking “Poor’s” separatism: support the region by a stronger foreign state and a dictate of the center over the region. Such separatism is more radical, because the poor usually act more radically rather than rich people for at least one simple reason: they do not have anything to lose. In terms of “Ri Journal number 1 ∘ Emzar Julakidze ∘ Effective Decision-making and Modern Problems of the Growth of Productivity of Organizations Expanded Summary Effective decision-making is the choice of the alternatives to which the organization achieves success. The desire to succeed is characteristic to all organizations. But in order to find out whether the organization has succeeded it is necessary to identify--what does the success mean? Naturally, many people will name the high image, giant companies on that question and they will be right. Although, with this position it means that only size of the organization and / or profit maximization is a success. However, every organization has a definite purpose and if the organization has achieved its goal, it is already successful. That is to say, success is not related to the size of the organization and everything, including small business, can have its success. The most important goal that the organization's management needs to achieve is to offer the product (service) that increases the productivity of this organization. That is, to make such decisions according to whic Journal number 1 ∘ Revaz Javakhishvili ∘ Levan Jangulashvili ∘ Swedish Experience of Small and Medium Business Support Expanded Summary The Swedish government has a deep understanding of the role of small and medium enterprises in the development of the country's economy, in recent years, the organizational, financial-taxation, information provision, scientific-technical cooperation, and the improvement of the labor market organization events had taken place. Small and medium enterprises are supported in Sweden within the framework of Common Industrial Regional and Innovative Policies, which focus on such enterprises. The Ministry of Industry, Employment and Communications, Swedish Agency for Entrepreneurship Development, Swedish Institute of Innovative Systems and Swedish Institute for Economic Growth Policy are responsible for it organizationally. There is a systematic improvement of legislative-normative basis for small and medium business development in Sweden. In 1998, the law was adopted that prohibits carrying out any economic development activities by central and local authorities that do no Journal number 1 ∘ lina Datunashvili ∘ Measures to develop some cultures and fields of plant-growing in Georgia Summary The article studies and analyzes real situation of some cultures of plant growing in Georgian agriculture: cereals (wheat, maize) and tech crops (sunflower, tobacco), potato, and fruit growing: - seedlings (apples, pears), kernel and nuts (hazel nuts, nuts and the factors that affect them). The focus is on the ways and measures proposed in the direction of further development of these cultures the consideration and practical realization of which will significantly increase in Georgia the production of planted products discussed in the article. Keywords: agriculture, cereals, wheat, maize, tech crops, sunflower, tobacco, potato, kernel, nut fruit. Introduction Agriculture in Georgia is a priority sector of the country's national economy, as it provides the country's population demand for food and the industry - for raw materials. For known reasons (military, economic and social processes) the field has not yet come out of the crisis. In addition, there are a num Journal number 1 ∘ Nodar Khaduri ∘ Factors of Inclusive Growth and Challenges faced by the Economy of Georgia Expanded Summary Currently, the world is going through a very interesting stage. Despite the post Financial Crisis progress, there are a lot of problems in the world economy. First of all, these problems are related to income distribution and availability of economic growth impact to all layers of human population. According to the World Bank, from 1995 to 2014, Population Prosperity grew up by 66%, from 690 trillion US dollars to 1 143 trillion US dollars; however, inequality level is still high. For example, in OECD countries prosperity is 52 times higher than in low income countries [see. www.worldbank.org]. The scientists write a lot about the problems of income distribution in scientific essays as well as articles, however a lot of them emphasize the threats that might arise from populism. The problem is so complicated and all-embracing that not only scientists but practicing economists and international financial institutions work on it. For example, the World Bank has two ma Journal number 1 ∘ Nanuli Arevadze ∘ Nana Bibilashvili ∘ INNOVATION SYSTEM OF THE REPUBLIC OF KOREA Expanded Summary The article deals with the peculiarities of the creation and formation of the innovation system of the Republic of Korea and its development stages of 1962-2016. The success that the country has achieved in just a few decades and is known by the name of the "Miracle of Korea" is the immediate result of the innovative system functioning in the country, the history of creation and development of with is very interesting and completely different from other economically developed countries. This difference gives the ability to clearly see how much progress can be achieved, when the state, business and science are closely cooperating and trying to duplicate the efforts of formation of the national innovation system and the the successful development even in the unfavorable starting conditions (scarce resource potential, the hardest competition, technological backwardnees). Until the 60s of the last century, the country was in the ranks of states with agrarian economi Journal number 1 ∘ Eter Kakulia ∘ Formation and Development of Small Business in Georgia Summary The research article covers the issues of small business formation-development in Georgia. The period from the 90s until the present is presented in six stages. The main pursued activities are outlined and the advantages and shortcomings of each stage are briefly described. In order to overcome the shortcomings in the field of small business formation-development, suggestions and opinions are expressed in the form of conclusions in the research article. Key words: small business; strategy for development; innovative small business; stage; period. Introduction The role of small businesses is especially large during the transformation of the economic system, since it is an important factor in the reduction of unemployment and economic stabilization at all. These very opportunities for small businesses were the basic condition for avoiding the demonstrations of social character during the transformation of the economy in Georgia. The weakness of small b Journal number 1 ∘ Shota Gulbani ∘ Comparative Analysis of Development of Georgian Financial Markets Summary Existance of healthy financial markets is the important prerequisite for economice development of any country. It should be noted that the financial market consists of two very important segments, these are: Commercial banking sector and capital markets. These two segments are natural competitors. In Georgia commercial banking sector development is at a high level, but the capital market is still facing significant challenges, because, the stock market is monopolized by commercial banking sector. Key words: financial markets, capital markets, commercial banking Introduction Over the past decade the state economic policy makes focus on creating strong foundations for shaping open and free market economy. This policy promulgates guaranteed protection of private property. [strategy 2020. 2013]. At the same time, valuable and efficient operation of market economy, based on private property principles, may be ensured through a constant supply of financial reso