Summary

In the article the situation existing in villages in the Post-Soviet countries, in particular in Georgia from the point of view of state regulation of this sphere is reviewed. The existing problems are revealed, need of the state support of the village is proved and its main directions are defined.
Key words: rural economy, system of irrigational and drainage, systems of test and updating of breeds

Introduction

The crisis phenomena in economy of Georgia were observed even before restoration of its independence. After obtaining independence, situation has more worsened for the following reasons: destruction of old economic relations, non-competitiveness of economy of Georgia in the world market, a political tension and radical restructurings (transformational processes) of economic political system in the country.
From the point of view of economic backwardness 1991-1994 years were especially heavy when objectively existing economic difficulties have amplified internal wars and armed conflicts.
In the mentioned years the volume of the gross domestic product (GDP) sharply decreased in Georgia. The volume of GDP of 1994 made only 27,5% of an indicator of volume of GDP of 1990. The indicator of volume of industrial output even more decreased (this indicator in 1994 made only 16% of an indicator of volume of industrial output in 1990). Scales of construction catastrophically decreased. Power security level sharply decreased. Coal mining almost stopped, the volume of oil production fell to critical level, forestry and construction have practically stopped functioning, in the specified years the volume of agricultural production decreased twice. It might be said that quite difficult situation in villages even more worsened and lasted for years. Despite some measures of the new government, situation still remains heavy. The land reforms carried out in 1992 (continuing in the next years), somewhat improved matters of peasants, but distribution of grounds generally created small farm that does not give the chance for the subsequent development of agriculture, because of impossibility of use of highly effective technologies. Proceeding from it, rural production is focused on consumption. The products are made in small quantities.
Today 50% of labor force, which creates only 10% of the gross domestic product (GDP) are engaged at villages in Georgia.

Rural Economy

The rural area (countryside) represents the populated territory without the cities. From the economic point of view the rural areas include natural and antropogenous landscapes in which, besides agricultural production, can function: forestry; trade hunting; fish breeding; processing industries of agricultural products; extracting and processing (nonagricultural production) industry (as a rule, with the enterprises of rather small and medium sizes); agricultural infrastructure; cultural (movie theaters, recreation centers, libraries, the museums), recreational (tourism and excursions, rest houses, beaches, parks, etc.), the trade, educational, medical and other serving branches (the enterprises and the organizations). Also nature protection, communication and other activity can be carried out. Thus, we deal with rural economy, and not just with agriculture with which it is often associated. From here it is obvious what a large role is played by the village in the increase of power, safety and well-being of nation. Just therefore economic development, i.e. transition of economy to qualitatively new state, considerably depends on the level of rural development. Existence of the backward village means that as a whole is not developed in a due measure economy that the level of capital quality is low (both physical, and human), the level of technologies and technological knowledge, property forms and institutions are imperfect, resources are irrationally used (natural, labor, intellectual, etc.), state regulation of economy is inefficient, the structure of economy is not progressive i.e. the level of economic development is low, etc.

Agrarian production or industry?

There is a question what branch of economy has to be developed at anticipatory rates: agrarian sphere (agriculture, forestry, trade hunting, fish breeding) or industry?
Historical experience demonstrates that throughout the millennia exactly the village represented an area of resettlement and the main place of economic activity of the person. At the same time, throughout the same millennia labor productivity in the village until the origin and development of the industry was almost constant and very low, the elementary instruments of labor (a mattock, a shovel, the axe, a braid) were used and the economy had mainly natural character, economic relationship also remained archaic. Just development of the industry promoted the development of other branches of economy (construction, transport, communication, a services sector, etc.), including – agrarian branches. And today the industry is the main basis of development of other branches of economy; while all branches of economy combined are the basis of development of the village (the rural economy and increase in welfare of its inhabitants is meant). From here it is obvious that if in the country the industry is not developed, then it will not be able to provide also the development of other branches of economy including rural economy. However, in the conditions of globalization this condition is not necessary as rigidly as earlier, but it is unacceptable that such an important branch for safety of the country, as agriculture would completely be dependent on foreign countries.

Whether support of development of agrarian branches of the country is necessary?

It is also important to find out, is it necessary or not to support the development of agrarian branches and increase in the standard of living in rural areas, or it has to be reached in the course of action of the free market forces.

Today in the world there are two main types of agriculture. The first, agrarian sector of the developed countries, high-intensity commodity agriculture which uses not only mechanization and chemicalixation, but also all arsenal of automation, the latest developments of selection, genetics, biotechnologies that provides the high efficiency of work comparable to labor productivity in the industry. In these countries rather small amount of farmers provides with necessary products all country. The principles of functioning of farmers almost correspond to the principles of functioning of firms. The second, underdeveloped agrarian sector of developing countries where traditional (natural) consumer agriculture with large farms prevails and sphere poorly mechanized production takes place which still relies on use of the primitive instruments of labor causing its low productivity. In the developed countries in villages there is high-quality infrastructure that causes merge of borders between the city and the village. In the developing countries the opposite situation is observed. A large number of the population lives in insanitary conditions, lack of water, gas, etc. Today the level of development of the village in some Post-Soviet countries including Georgia is low.
Most of politicians and scientists (including the Georgian scientists) [For example: Abesadze 2011; Butduli 213; Koguashvili 2002; food... 2010; Kavtaradze 2010; Dobrosotski V. 200; Revishvili 2011; Khaduri 2011; Кoguashvili 2011] consider necessary support (assistance) of development of the village on the part of the state.
Need of the help to the village for the postcommunist countries with the low level of agrarian production and life is caused by the following circumstances:
1. Throughout the previous long period the development of agriculture (unlike the industry and other branches) on the part of the state less attention was paid. Collectivization could not create a condition for development of agrarian sector. In spite of the fact that collective itself admitted collective property, it actually was state ownership and was operated by the same methods, as the usual Soviet enterprise. Therefore labor productivity in the farmsteads being in personal property was much higher, than in collective farms, and, not at the expense of higher level of mechanization and agrotechnology (on the contrary higher level of mechanization and use of an agrotechnology was in collective farms), but due to existence of stronger incentives. Of course, farmers could not increase mechanization level in personal subsidiary farms because of the low income (in collective farms their income was insignificant). Therefore the level of mechanization remained very low, and economic incentives in collective farms were at zero level and almost forced labor was used. Rather the best situation was in the Soviet farms (higher level of mechanization and compensation), however the use of the latest technologies, involvement of high incentives here too did not work well, because of existence of public property. In the conditions of the Soviet system village infrastructure was also underdeveloped, (though the state in this direction carried out many actions). The abyss between the city and the village gradually went deep and the detention of the population in the village worked well only on the basis of a rigid passport system. However population fluidity after all took place. In this aspect more advantage was in Poland and Yugoslavia (lands in these countries were almost in personal property), but because of practice of noneconomic intervention of the state, the level of development of agriculture remained low here too. Thus, the postcommunist countries in the village had heavy inheritance.
2. Immediate elimination of collective farms and state farms after transition to market economy has destroyed also that technical potential of agriculture, which existed at that time whereas there was a possibility of the gradual organization of farms.
3. Privatization of the earth, together with positive results, has caused excessive smashing of the land plots. On small lands even in case of use of the latest technologies, commodity production of agricultural production is impossible and the income of rural families won't be made even to the income of similar city families.
4. Finally today the country has received semi-natural (in Georgia 90% of farms have natural character) and therefore the low-productive, having undeveloped infrastructure village. In this regard, though as a result of privatization of the land incentives of managing have increased, but, because of extremely severe initial conditions, rural residents are not able to overcome all difficulties and provide formation of the developed agriculture. Therefore a part of members of rural families is forced to migrate abroad or to the city and, generally due to changeable work to provide families.
5. From abroad low-quality often cheap food production which sharply reduces demand for domestic agricultural production in the local markets is delivered.
6. Attraction of the capital in agriculture, in view of his strong dependence on external conditions (a flood, a hail, a drought etc.), is very risky. Therefore banks generally finance construction and trade. Besides, because of backwardness of rural system of insurance, private business is less interested.
7. Additional expenses are demanded by preservation of soils for use in the agricultural purposes that even more complicates position of the farmer (peasant).
8. Reduction of agricultural lands and use of grain in the power purposes not only raises the price of agricultural production, but also threatens mankind of global food crisis. In these conditions development of national agricultural production is even more necessary for safety of the country.
It is obvious that without the aid to the village in developing country not only the development, but a bigger recession of agricultural production takes place as in the conditions of globalization and fierce competition (when one party has high-mechanized and automated farms, and for another – the village which is on the decline) an increasing number of farmers will leave the village and it, perhaps, will come to the end with his accident. Therefore, the state support of the village is obligatory. Providing with food and other products made in the village has to be carried out by all society under the auspices of the state.
Such policy is carried out in many countries of the world, in developing and in developed countries, the European Union [Grishikashvili 2005], Japan [Aliev], the USA [Maltseva] etc]. Even in Poland (represenative of which a famous scientist and statesman of this country Leshek Baltserovich considers that the village does not need specific approach, that here is not special production and it is possible to achieve success in this sphere as well only with free market, liberal methods) [Baltserovich 2004], village supporting policy is succesfully being implemented.
We believe that agricultural production is special as the country can transfer any difficulties, but not hunger and in today's conditions the village needs specific approach as it appeared before need of overcoming complex difficulties which are impossible to overcome independently and in this regard he thinks that the state support of agriculture might grow into state interventionalism which is a source of many negative phenomena.

Role of the state

As experience of many countries of the world testifies, the synergy effect is reached when in economy the private property dominates, freedom of managing, the competition, healthy finance, the balanced budget, optimum size of taxes etc. take place. In normalization of these processes the major role belongs to the state. Just his correct policy has to provide formation in economy of the mentioned conditions and eradication of paternalism, etatism, nepotism, corruption and any other manifestations of the negative phenomena. It is that the state has to carry out those duties which are assigned to it not only concerning other branches and the city, but also concerning the village and its economy which it, for example, in our country, almost so far, soundly didn't carry out that has led rural economy almost to accident. Realization of some additional functions is necessary for correction of situation today. Really, competition existence – is one of the main elements of market economy, but often arises the moment (because of market collapses) when not smaller value has a mutual aid factor, in particular the help from the state. Of course, it is not about that the state gave help to any enterprise and anyway, but render it when it is necessary for the benefit of development of all economy and safety of the country when danger of emergence of the negative phenomena to all economy appears. Today's condition of agriculture in Georgia just testifies to it. Therefore the state has to provide development of such strategy which will make possible formation of agriculture with highly effective commodity farms development of other rural branches and city approach to living conditions in the village as much as possible. For this purpose, the state has to provide with carrying out a number of the actions supporting the village: such institutional changes which will stimulate integration of the land plots (by sale of land or stimulation of rent); improvement of rural infrastructure (highways of the state and local value, access roads to lands, system of irrigational and drainage and strengthening coast of the rivers); gradual increase in level of mechanization and automation; supply water, natural gas, eelctric energy, with fertilizers, pesticides and chemicals; restoration and updating seed and nursery farms, systems of test and updating of breeds; increase in level of health care, education, culture; introduction of new technologies (mechanization, automation, biology) on the basis of granting the cheap credits, receiving the help from abroad and, in certain cases, direct subsidizing; support of product sales by means of carrying out policy of moderate protectionism and anti-dumping actions, stimulations of export, creation of system of insurance; support of creation in rural areas, proceeding from specifics of concrete areas, the enterprises of other branches (the canning and tourist enterprises. Enterprises processing agricultural production, warehouse farms, poultry-farming factories, farms, the miniplants on production of cheese, the wine-making plants, sawmills, shops, car service, construction, production of construction materials, flour and bakery, sausages etc.); creation of the state reserves of agricultural production; acquisition by farmers of qualitative seed and landing materials; creation of systems of an extention; formation and development of base of rural service (tractors and other equipment, cars, installations of agricultural purpose); the acceptable reduction of the prices of pesticides and fuel; development and implementation of programs of preferential crediting; creation of veterinary and agronomical services; development of control systems of quality of production; development of cooperative modes of production; development of forestry, hunting and fishery etc. 

Each lari invested in rural structures has long-term effect and it will pay off in a tenfold size as a result of development of agrarian production.
These actions should not weaken the farmer's incentives, on the contrary,must strengthen them. The state support has to be embodied not in direct subsidizing (though it is impossible to do without it), and, mainly, in implementation of such projects which will be focused on long-term result (carrying out external and internal roads, development of a services sector, gasification, development of systems of an irrigation etc.). It is represented that the state budget has to go not only for improvement of infrastructure of the city, but also I have sat down on development of infrastructure. The main accent has to be done for that the farmer provided increase in production, introduced new technologies, to turn the farm into the modern commodity enterprise. Abroad decades were necessary for achievement of such state. But we have the advantage to apply those achievements directly which in the developed countries already exists. For Georgia in particular it is easy because it is the small country and the West gives her significant assistance.
It is also necessary to interest local business. The national companies can get farms and carry out investments

Role of general economic development

The state has to have opportunities for implementation of the listed actions. Just therefore the level of agriculture is high in those states the countries where the level of general economic development is high. In Georgia in the course of an initial stage of reforms in industries and other branches of economy there was more considerable recession, than in agriculture. As a result of gross blunders made reforms the level and rates of economic development remained at a very low level. The state budget was so small that it was impossible to give serious help to the village. However, today, together with the subsequent development of economy, essential strengthening of assistance to the village (but not on dependence) and gradual improvement of the situation are possible. The new political situation allows doing the encouraging forecast.

Once again we will note that the state help to the village will bring result only if the correct policy is pursued in economy as a whole in that the agriculture strongly depends and corresponds to development of all economy (in particular of industry). That success achieved in the developed countries just is predetermined by the general development of economy. Thus, problems of development of agriculture have to be considered in close interrelation with development of all economy.

Conclusion

Thus, development of rural economy strongly depends and corresponds to development of all economy (in particular, the industries). Existence of the backward village means that all economy develops inadequately that the quality of the capital (both physical, and human), the level of technologies and technological knowledge are low, forms of ownership and institutes are not satisfactory (natural, labor, intellectual etc.) resources are not used rationally, the structure of economy is not progressive, and state regulation and business coordination of economy are inefficient. There are many important reasons that without the aid of villages in Georgia not development, but a bigger recession of agricultural production will take place as in the conditions of globalization and fierce competition (when one party has high-mechanized and automated farms, and another – the village which is on the decline) an increasing number of farmers will leave villages and it, may, will come to the end with its catastrophy. Therefore, the state support of the village is obligatory. Providing all society with food and other products made in villages has to be carried out under the auspices of the state.
The state support to the village first of all has to be embodied not in direct subsidizing (though it is impossible to do without it), but, mainly, in implementation of the projects (carrying out external and internal roads, development of a services sector, development of systems of an irrigation, upclassing of lands etc.) focused on long-term result. such institutional changes which will stimulate integration of the land plots (by sale of land or stimulation of rent); improvement of rural infrastructure (highways of the state and local value, access roads to lands, system of irrigational and drainage and strengthening coast of the rivers); gradual increase in level of mechanization and automation; supply water, natural gas, eelctric energy, with fertilizers, pesticides and chemicals; restoration and updating seed and nursery farms, systems of test and updating of breeds; increase in level of health care, education, culture; introduction of new technologies (mechanization, automation, biology) on the basis of granting the cheap credits, receiving the help from abroad and, in certain cases, direct subsidizing; support of product sales by means of carrying out policy of moderate protectionism and anti-dumping actions, stimulations of export, creation of system of insurance; support of creation in rural areas, proceeding from specifics of concrete areas, the enterprises of other branches (the canning and tourist enterprises. Enterprises processing agricultural production, warehouse farms, poultry-farming factories, farms, the miniplants on production of cheese, the wine-making plants, sawmills, shops, car service, construction, production of construction materials, flour and bakery, sausages etc.); creation of the state reserves of agricultural production; acquisition by farmers of qualitative seed and landing materials; creation of systems of an extention; formation and development of base of rural service (tractors and other equipment, cars, installations of agricultural purpose); the acceptable reduction of the prices of pesticides and fuel; development and implementation of programs of preferential crediting; creation of veterinary and agronomical services; development of control systems of quality of production; development of cooperative modes of production; development of forestry, hunting and fishery etc.

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