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Journal number 4 ∘ Vakhtang Burduli


The article deals with the problems connected with the improvement of the sectoral structure of the Georgian economy on the basis of its diversification and increase in the volume of exports, as well as the expansion of the scale of import-substituting production. In this connection, the understanding of the structural effect (primarily its structural and sectoral aspects) and ways of its evaluation, including the assessment of the level of self-sufficiency of the economy, is being studied. The level of self-sufficiency of the economy in the context of enlarged groups of industry has been studied and on this basis directions for improving the sectoral structure of the Georgian economy have been suggested (by outstripping growth of priority sectors).

Key words: sectoral structure of the economy, structural effect, level of self-sufficiency of the economy, formation of a progressive sectoral structure


Over 25 years have passed since the beginning of post-communist transformation of the economy in Georgia, but macroeconomic parameters of the country's economic development are still disappointing. Although in some years of the first decade of the 21st century relatively high rates of economic growth were observed, it should be borne in mind that the count began from the low level of production of the post-collapse period. At the same time, in the 1990s, production was curtailed in many sectors (including those that produced sufficiently competitive products), and throughout the transformation period, with few exceptions, new modern industries (industries) did not appear. Duaring a number of years until 2013 for some reasons[1], there was a strong decline in agriculture, and most importantly, the volume of imports of goods and services exceeded exports, and for a number of groups of industry – the entire volume of local production, which indicates an extremely low level of self-sufficiency of country economy.

In order to improve the situation, it is necessary to change radically the sectoral structure of the economy (based on the outstripping growth of priority industries), which will allow to achieve a high structural effect, determined by the improvement of the most important macroeconomic indicators. To ensure the dynamism of economic development essential for this, it seems necessary to assess in detail the shortcomings of the modern sectoral structure of the economy and outline ways to improve it (restructuring).

The “Structural Effect” and Its Evaluation

As it was noted at the beginning of this article, in Georgia, after the post-Soviet collapse of the economy, many necessary industries were lost. In a number of our works [Burduli, ..., 2013; Бурдули, 2012; Абесадзе, ..., 2014], some shortcomings of Georgia's modern sectoral structure were characterized and some ways of reanimation of traditional industries and the emergence of new ones were discussed. However, in a relatively small country, there is no way to reanimate all the lost industries and talk about large-scale production in a large number of new and traditional modernized industries. In some sectors (agriculture, food industry), all the detailed branches that are included in them should function fully in order to satisfy the needs of the population of the country to the maximum possible extent and, where possible, to export products in large quantities (in Georgia, for example, in the production of citrus, fruits and wine), in some other sectors (for example, light industry, construction materials industry) it is advisable to more or less evenly develop (or reanimate) the majority of the industries included in them, taking into account the growth of their export and import-substituting potential. But in Georgia, as in a small country (as in any other small or medium-sized country), there is no way to evenly develop all branches of energy, all branches of high technology. In these groups of industries, it is necessary to select priority industries and focus the efforts of entrepreneurs and state coordination on their accelerated development. Therefore, when the government makes decisions on the coordination of development, and business makes decisions on the allocation of investment, it is important to assess the situation as a whole in the context of the entire sectoral structure, and in the context of groups of industries.

At the same time, when implementing sectoral restructuring, it is necessary to focus on obtaining a "structural effect" that "must underlie the construction and implementation of the" national economic model "" [Беридзе, 2007: 69]. "Under the content of "the structural effect" (which requires further development on the part of economists)", by the definition of Professor T. Beridze, "we can mean an optimal combination of sectors and subsectors of the economy that determines maximum economic efficiency". "How can the “structural effect” be measure?" - the author raises the question - "There is no simple answer to this question. Evidently, it is a matter of deviniteness, the share of key (core) sectors in the total effect, with possible changes in the content of the "structural effect" in view of progress" [Beridze, 2007: 61].

The estimation of the structural effect, in our opinion, is possible with the help of indicators of growth of export potential and import substitution, growth of production of high-tech products and other similar indicators (including, based on the use of industry priority criteria), which are systematized, for example, in the first paragraph of our article [Burduli , ..., 2013]. However, in our opinion, the most important characteristics of the structural effect are the level of self-sufficiency of the economy, the main indicator of which is a high level of self-sufficiency in the context of groups of industries (in the food and light industries, construction materials and energy industries, the self-sustainment ratio is also important) and positive balance of volumes of export-import in the context of groups of industries

The self-sufficiency of the economy (which can be estimated by the indicator "local production, including exports minus imports") in some groups of industries must be achieved not through rapid growth in production in all industries of this group, but at the expense of several selected industries whose export of products will compensate for imports by commodity items of other branches of this group (or, better yet, exports of goods of this group will exceed imports). Therefore, in this article, an analysis of the state of the industry structure was made in the context of groups of industries (energy, agriculture and food industry, metallurgy, high-tech industries, etc.) and assessed the prospects for the development of individual industries in such groups of industries.

Thus, to achieve a structural effect, a purposeful transformation of the structural content of the Georgian economy is needed.

In this article, the shortcomings of the industry structure have been identified and discussed in the context of group of industry (taking into account local production, exports and imports for commodity items), and the estimated general directions for improving the sector structure are defined in such a way that a significant structural effect is achieved.

The relevance of the structural approach applied in this article, in particular, is evidenced by the publication on the Internet [ОЭСР ..., 2013], where in the same sequence (the accomplishment of the sectoral structure, structural changes in the coordination mechanisms), OECD recommendations are sent (in this case for Russia) on growth of GDP in the nearest period (2-3 years). A similar approach to determining development priorities based on the analysis of domestic production, exports and imports (but in a more enlarget aggregated aspect) was used in the article of the well-known scientist V. Obolensky [Оболенский, 2012]. Thus, the relevance of such a study is beyond doubt.

Analisis of the Economic Structure in Terms of Sectors (Groups of Industries) and Their Components

Sectoral structural analysis is carried out in the context of aggregated industries (i.e. sectors, groups of industries), with a comparison of output in products with exports and imports of products characteristic for the respective industries (in monetary terms), with a study of the level of self-sufficiency in groups of industries and, where it is appropriate, the level of self-sufficiency.

First of all, let's look at the energy sector. As is known, Georgia does not actually have its own oil and natural gas fields, so the share of imports of oil products and gas (natural and liquid) in the total volume of imports is very high and in 2011 it was 16.3% (12, 9 + 3.4%) (1503 million GEL + 390 million GEL[2]) [External ..., 2013: 136]. Moreover, at present, local production and processing of oil products in Georgia is negligible and their share in the total output of industrial products did not exceed 0.01%. In these conditions, it is very important to increase the local output of electricity, and the increase in electricity production should be achieved not through the use of imported energy resources, but through the use of renewable resources, primarily hydropower. The specific weight of "production and distribution of electricity, gas and water" in the total output of the entire industry in 2011 was 13.8% (888.3 million lari). Thus, in the energy balance of Georgia, own production is provided mainly through the production of electricity and the improvement of the country's energy balance in terms of equilizing the export-import balance is possible only with the help of advancing hydropower development. Meanwhile, currently in Georgia, more than half of the output of electricity is provided through the use of imported energy carriers (mainly gas), because during the entire post-communist period, the development of hydroelectric power generation has not received due attention. A certain role in the development of the electric power industry can also be played by the use of solar cells for its production, which should be noted when developing the structural and sectoral policy of Georgia, in particular, in determining the strategy for the development of energy industries.

Now consider the structural parameters in the sphere of food. The volumes of export and import of food products in the context of the harmonized system of commodity groups in statistical reporting are given in four positions (lines): 1) livestock and products of animal origin; 2) products of plant origin; 3) fats and oils; 4) ready-made foods, beverages, tobacco [Statistical ..., 2013: 250-255]. In order to have an approximate idea of ​​the balance in the respective branches of output and exports and imports of the corresponding goods, it is necessary to compare the output produced in agriculture (together with fisheries, forestry and hunting) with the amounts of exports and imports of the first and second of these positions ), and the volumes of output in the food industry (together with beverages and tobacco) compare, respectively, with the amounts of exports and imports from the third and fourth of these positions (groups of goods). In 2011, the output in agriculture was 2674 million lari [Statistical ..., 2013: 153], including plant production - 1237.9 million lari, and livestock - 1336.8 million lari. The volume of imports correspondingly to the first two of these positions was 910 million lari (7.8% of the total volume of the country's imports), and the volume of exports - 374.9 million lari, i.e. imports by these positions were 2.4 times higher than exports. In the food industry (along with beverages and tobacco products), the output was 2161.6 million lari (33.6% of the total output in industry), compared with the share of the food industry in 1990 it was 38.9% [Абесадзе, .. ., 2011: 236-237]. By the amount of the third and fourth positions, imports amounted to 1059.6 million lari, which is 49% of the local output (9.1% of total imports), while exports amounted to 364.2 million lari (10, 1% of total exports.) Thus, the volume of food imports constitutes a significant proportion (17.9%) of the country's total imports, and the export of food products produced in these sectors does not compensate for the costs of food imports: food imports are 2.6 times higher than exports.The strong decline in production in food-producing industries, of course, came in the early 90s. But gradually the situation in agriculture began to improve and by 2005 a level of production acceptable to the existing conditions was reached. But after the tax reform of 2005, a number of mistakes were made in the coordination of production in agriculture and the food industry, in particular, in tax regulation and pricing coordination, and when the food security policy was implemented, there was a disregard for the requirements of the relevant EU organizations. All this led to a sharp decline in local production of food products. A relatively large proportion of the volume of output of food products in the total volume produced by industry can be explained, firstly, by the fact that the volume of production in industry as a whole is not yet sufficiently high (for example, compared with 1990), secondly , many food products are made from imported raw materials, often of poor quality and with low consumer characteristics. That is, there is a substitution of locally produced raw materials by imported, which narrows the possibilities of the local agricultural producer.

During the post-Soviet recession of the economy in the early 90s, production in the light industry was greatly curtailed. In 1990, the specific weight of the output of products in the total volume of manufactured products in the industry was 23.6% [Абесадзе, ..., 2011: 236-237], but then very quickly curtailed to almost zero. The reasons for the decline in the production of clothing and footwear are quite understandable: as we know, the products of these industries were not completely competitive and after free admission of foreign products to the country's market, the population practically stopped buying domestic products. But for a number of reasons, the production was curtailed also at those light industry enterprises that produced competitive products, in particular, at some large textile enterprises. The entire technological cycle for the production of silk has curtailed. Let's see what the situation in light industry is now. In the statistical yearbook in the table, reflecting the output in industry [Statistical ..., 2013: 140-141], light industry is represented in three lines: 1) production of textiles; 2) the production of clothing, etc .; production of leather, leather goods and footwear. In 2011, the total output of these lines (i.e., output in the light industry) was 92.9 million lari, which is 1.4% of the total output in industry. That is, for 23 years, at least partial resuscitation has not occurred on the basis of new technologies of these industries. Therefore, a significant volume of imports of corresponding products in the amount of 637.5 million lari is not surprising (several lines of the corresponding table are summarized) [Statistical ..., 2013: 250-255], naturally, in conditions of insignificant export volumes (54.4 million lari). ., imports exceed exports by 11.7 times, and local production - in 6.9 times.

During the post-Soviet economic collapse, the chemical industry suffered to a lesser extent than some other key sectors of the economy (in 1990, the share of products produced in the chemical and petrochemical industries accounted for 4.9% of the output in the industry as a whole), since it managed to keep the production association "Azot" (although later it was closed) and some other smaller enterprises. For the last period the plant of metal-plastic has started its work[3]. In 2011, the output in this sector was 457.3 million lari (7.1% of the total production of the industry). The volume of exports (which, naturally, was mainly taken into account in the indicator of output) amounted to 377 million lari, and imports - 841.6 million lari. Local production of rubber and plastics amounted to 116.8 million lari, imports of polymer materials - 486.6 million lari, while exports - only 7.6 million lari. Thus, in terms of chemical and polymeric products, the balance of exports and imports is also very unfavorable, but at the same time, the volume of imports in these industries also significantly exceeds its own (local) production.

The metallurgical industry has a comparatively large share in the total volume of production of industry. Together with the production of finished metal products, the output of this industry in 2011 was 996.3 million lari (15.5% of the total output in industry). Imports of base metals and wares from them amounted to 942.5 million lari, and exports - 877.2 million lari. Thus, it is noticeable that, from the point of view of the balance between exports and imports and the level of self-sufficiency in this sector, the situation is comparatively more favorable in comparison with other sectors, but this sector, too, needs to be expanded and modernized, in particular, under certain conditions, a number of metal products are being replaced by products from metal plastic, therefore, in this direction it is necessary to create new production capacities.

In Georgia, before the post-Soviet recession was well developed industry of building materials. In 1990, the share of products produced in this industry in the total volume of industrial output amounted to 5.3% [Абесадзе, ..., 2011: 236-237]. At present, in the statistical data, such an industry is not directly allocated. In "production of other non-metallic mineral products" [Statistical ..., 2013: 140-141], in addition to building materials, some other items, for example, crockery, are taken into account. Despite this, there is an opportunity to assess the balance of this local production industry (including exports) and of exports-imports. In 2011, the output by position "production of other non-metallic mineral products" amounted to 606.6 million lari (9.4% of the total output in the industry). At the same time, imports for the item "stone, gypsum, cement, asbestos, etc., ceramic products, glass and glassware" amounted to 167.3 million lari, while exports - 12.6 million lari. Thus, the situation is relatively favorable for this sectors (production of construction materials) and, in the case of purposeful structural and sectoral policies, a positive balance of the export-import can be achieved in the near future.

Also unfavorable is the situation in the industries associated with the processing and processing of forest materials. In the table of output volumes of the products produced in the context of industries [Statistical ..., 2013: 140-141], the output of such products is presented in three positions: in 2011 the output for the item "Timber processing and production of wood and bark products, except furniture" was 88.5 million lari (in 2010 - 26.6 million lari); output on position "Production of paper pulp, paper, cardboard and products made of them" - 45.0 million lari (in 2010 - 27.6 million lari); output on the position "production of furniture and other products in other groupings" (unfortunately the data on furniture is not separately identified) - 84.6 million lari. In all three positions in 2011, a jump in production growth was recorded. Approximately according to these positions, we grouped (summarized) export [External ..., 2013: 37-29, 58] and import data [External ..., 2013: 85-88, 121] for 2012 (conversion of the cost of products in GEL): "Processed timber, slabs, plywood, cardboard, building materials from wood, bark products, etc." - exports 38.6 million lari and imports 172.2 million lari; "Paper, cellulose, paper products (other than printed products), etc." - exports 17.6 million lari and imports 158.3 million lari; "Furniture" - exports 19.1 million lari and imports 179.8 million lari. As can be seen in this group of industries the situation is also very unfavorable. Despite the fact that local production indicators (including exports) are presented for 2011, and export-import indicators – for 2012, we can conclude that for these positions, imports are several times higher than local production and, naturally, export. Thus, due to these positions, the negative export-import balance in the country's economy as a whole also increases significantly.

An interesting situation is in the export-import of vehicles. In conditions of low level of local production (in the "other vehicles" position, the output was 157.7 million lari [Statistical ..., 2013: 140-141], the export of vehicles amounted to 901.8 million lari (24.5% of total exports), imports while the value of 2228.7 million lari (19.1% of total imports) .The fact is that in exports and imports data, the cost of re-exported cars was taken into account, which in 2011 amounted to 444.8 million US dollars [External ..., 2013: 137 ], that is, about 733.9 million lari. Therefore, a more objective assessment of total exports and imports (both in this sector and economy as a whole), we will obtain in the case, if we subtract from the corresponding export and import data the value of re-exported vehicles.

This is, as for vehicles, the most of which relates to high technology. What is the situation in other high-tech industries in Georgia, that is, in the production of high-tech consumer products or the provision of such services, or high-tech means of production? In the table of volumes of output in the context of industries (types of economic activity) of industry [Statistical ..., 2013: 140-141], the release of high technologies (besides vehicles) is presented in the following positions: "production of machinery and equipment", "production of office equipment and computer (0 GEL), "production of electronic machines and electrical equipment", "production of apparatus for radio, television and communications", "production of medical equipment, measuring instruments, optical devices and ecuipment, hours". The total issue volume for these items is only 94.7 million lari, which is only 1.47% of the total output of industry. Indicators of exports and imports for similar products in the relevant table [Statistical ..., 2013: 250-255] are given in the following positions: "machines, equipment, mechanisms; electronic equipment, etc."; "various tools and equipment". The total import for these positions is 1297.2 million lari (11.1% of total imports), while exports are 87.8 million lari (2.2% of total exports). From these data, it is obvious that in the sphere of high-tech industries in the economy of Georgia the most unfavorable situation is, the level of self-sufficiency is very low: every year it is necessary to import IT and other high-tech products and equipment on a large scale, however, it is impossible to compensate (to balance) the costs of this import by output and exports of the same class (ie high-tech) products. Those high-tech products that were produced in 1990 were mostly obsolete even for that period. But the products that were competitive at that time, for example, trucks, airplanes, television sets, etc., were also produced. However, by now, most of the high-tech industries of that time and the products manufactured at that time are hopelessly obsolete (for example, tape recorders, televisions, computers etc.). Many products are produced now on a new technological basis. There are also many completely new types of products. At the same time, there is a serious competition between the countries with the aim of placing modern high-tech enterprises on their territory. In addition, Georgia until recently did not have sufficiently favorable conditions with the aim of attracting capital (both national and foreign) for locating high-tech enterprises in the country.

General Directions for the Formation of a Progressive Sectoral Structure in Georgia

In preferable conditions for attracting both national and foreign investors to the real production are the following countries: 1) Countries in which prices for food and other vital products (clothing, footwear, housing, electricity) are lower in the domestic market than the world average, because in this case companies make savings on wages and, therefore, when selling products in different countries, they get a big profit (in order for the country to have lower agricultural prices than on average in the world, it is important to achieve high self-sufficiency in basic foodstuffs in the country is also gradually increasing the value of high-energy self-sufficiency) has been achieved; 2) More and more attractive for companies are countries that have a high potential for producing relatively cheap electricity; 3) Those densely populated countries that have capacious markets for the purchase of goods produced in newly built enterprises (this condition in particular becomes relevant for attracting TNC enterprises); 4) Countries that have effective mechanisms of assistance and incentives for local entrepreneurs, in particular those aimed at absorbing new technologies and promoting stable production of relevant products (and the availability of stable exports of manufactured products is of great importance); 5) Countries in which there are preferential tax and favorable organizational conditions (which are either established by law or determined by the terms of contracts concluded between the government and the management of corporations). But this last condition currently works with less efficiency (many countries in the competition for attracting modern enterprises of TNC offer such preferences, although in the EU it is forbidden to establish separate tax preferences for TNC enterprises), therefore, for corporations in order to locate enterprises, are preferable countries the first three conditions are met.

 1. In the industries producing energy and energy-carriers, Georgia has significant opportunities (the implementation of which can make a positive difference in correcting the export-import balance of the country's economy) only in the electric power industry. At the same time, the generation of electricity through the use of coal from our own fields is not currently relevant (due to the comparatively high cost of production in this case). That is, in the energy sector in Georgia, one can maily focus only on the development of hydropower (if you do not take into account the possibility of using solar batteries, the share of electricity generation by which, with the use of modern technologies, can be within 10%). At the same time, it should be taken into account that the cost of electricity produced at HPPs is much lower than the cost of electricity produced by burning fossil fuels. Moreover, as we noted above, no attention was paid to the development of hydropower engineering from 1990 to 2012. At present, the new government is developing a strategy for the development of hydropower and its gradual implementation has actually begun. At the same time, only the construction of new small and medium-sized hydropower plants, the total capacity of which can reach 500-700 megawatts (those projects that meet environmental requirements), will not be able to meet the country's growing demand for electricity. (For comparison: some nuclear power plants with a capacity of 4800 megawatts are being constructed in Turkey). Therefore, in our opinion, it is necessary to return to the construction of the Khudoni hydroelectric power station. On the territory of Georgia, there is no other economically justified option for the construction of a large-capacity HPP. (on the river Rioni it is hypothetically possible to build hydroelectric power plants of very high capacity, but the emergence of the necessary reservoir would cause very large economic and environmental damage, in particular, a number of significant settlements and many excellent agricultural lands would be found on the territory to be flooded). You can also find places for the construction of 1-2 HPP of medium capacity (150-300 MW). Meanwhile, the construction of the Nenscra HPP with a capacity of 280 megawatts has already been started in Georgia.

2. As it was mentioned above, at present the production of high-tech industries in the total output of products in the country takes a small share, whereas before the post-Soviet economic collapse it was significant. Of course, in a relatively small country it is impossible to create a large number of large enterprises of high-tech industries. But it is necessary to choose several priority directions and within these directions to develop and implement a development strategy. At the same time, it is necessary to identify both the ways of resuscitation on the new technological base of pre-existing high-tech industries (for example, in machine tool construction) and the way of establishing enterprises of some new industries. The attraction of modern production technologies and the development on their basis of a full production cycle for the release of certain products is a very complex process that needs not only business coordination, but also the assistance of the state. In particular, it is difficult at present to establish own large enterprises for the production of IT products, since even between countries that are sufficiently saturated with such enterprises, there is a serious competition for the expansion of industries operating on the basis of such technologies. But this does not exclude the possibility of establishing and functioning in a relatively small country a very large high-tech company (for example, the Finnish "Nokia" is one of the largest companies in the world). The involvement of high technologies by placing the leading TNCs in the country has become very complicated at the present time, as there is strong competition among those countries wishing to place them.

It can be seen from this that the expansion of production of high-tech industries in modern conditions in a small country is a very difficult task, and to achieve this goal, it is necessary to have a structurally industrial (in the earlier terminology of the "industrial") policy, the conduct of which must be the relevant state organizations, and also - representatives of business circles or large private structures.

As was mentioned, it is necessary to resuscitate some traditional high-tech industries on a new technological basis. Among the new industries, along with the choice for the development of some areas of IT technologies (for example, resuscitation of the production of TV sets with parallel production of computer monitors that are close in technology, there used to be a TV production plant in Georgia, but since they are currently manufactured on a new technological basis , the relevant industry can be considered a new industry), in our opinion, more attention should be paid to such high-tech products, the production of which has not yet become widespread in the world (ie. e. the sphere of production in the world is not yet saturated with the respective companies), but in some countries there is a trend of the increasing consumption of such products. For an example, we give the following argument. As was mentioned above, in some developed countries, a certain increase in the share of energy (in particular, electricity) obtained with the help of solar batteries has begun, especially in the FRG. Therefore, in our opinion, it would be expedient to establish a modern type of solar cells in the country, based on the appropriate stimulation of entrepreneurship and parallel state propaganda aimed at the use of solar cells by the population (as, for example, in the USA and Germany).

In Georgia, the creation of this type of new enterprises is all the more important given the fact that there is a significant shift in the world from financing the development of fossil fuels mainly to financing the development of ecologically clean energy (renewable energy sources). For example, representatives of the Rockefeller Brothers Foundation a day before the opening of the UN summit on climate change (2014, September 23) announced their intention to sell the fund's assets invested in fossil fuels ($ 800 million) and invest it in an environmentally friendly power engineering. Together with the Rockefeller Brothers Foundation, 180 organizations and 650 private individuals joined the alliance of investors who decided to get rid of their investments in fossil fuels (worth $ 50 billion). They took this step in the framework of the international initiative Global Divest-Invest, which is an economic platform with the help of which it is possible to deduce own assets from industries connected with "dirty" minerals and then place them in environmentally friendly projects [Рокфеллеры ..., 23.09. 2014; Рокфеллеры ..., 2014].

In our opinion, along with technologies that produce electricity based on the use of environmentally friendly sources, the key technologies of the new technological structure that need to be oriented in the design of new industries in the country will include: the  technologies of production of "super-capacitive" batteries and the technologies of production of composite materials.

An important direction of modern technological development, which must be borne in mind when implementing an industrial restructuring is the production of composite materials (including metal plastic) and products made of them. For example, A. Aganbegyan notes: "Gradually, synthetics - polymers, composite materials in terms of their technical parameters and costs are close to good types of steel and non-ferrous metals. From composite materials begin to produce supercomplex equipment. Already today the corpus of Boeing-787 is practically made of composite materials, and not of titanium-aluminum alloys. Aircraft appear 20% lighter than their counterparts, with a capacity of up to 300 people, a flight range of up to 16 thousand km at an altitude of 14 km, they consume 20% less fuel. The European Airbus-750 is also made of composite, these are the first swallows of a synthetic revolution. Concern BMW also in a turn of innovators" [Абел Аганбегян, 2014].

Hence it is obvious that the creation of composite materials and complex products from them is currently a topical direction of economic development. Therefore, for the business of Georgia suchconditions should be created that, for several selected profiles it should be included in the investment of creating the corresponding productions (first of all, by including in the relevant international inter-firm and intra-firm technological chains).

Thus, it is necessary to monitor the ongoing processes in the world for the production and use of new high-tech products and, on the basis of serious analysis, the adoption (by entrepreneurs) of decisions on the feasibility of producing a new product.

3. The next group of industries is agriculture and industries, based mainly on the processing of its products, i.e., the branches of food and light industries. As can be seen from the above analysis, the situation with the level of self-sufficiency in these vital sectors and, for some types of products, the level of self-sufficiency is rather low. The reasons for the insufficient development of these industries and ways to rectify the situation have been examined by us in a number of publications[4] and are the subject of a separate exposition.

4. The next group of industries are industries that mainly produce products for intermediate consumption and use or processing: metallurgy; chemical industry; polymer industry (production of plastics and rubber and products thereof); production of metal plastic; the industry of building materials. For the products of these industries, the demand in the world is steadily growing (in particular for fertilizers, metal plastics, building materials) and, despite the fact whether the country has raw materials for production in these industries or not, in the case of a reasonable choice of directions for the development of this industry, in foreseeable future, the total export-import balance in the output of these industries can be positive, despite the fact that at present, for each of these industries, it is to some extent negative. Particular attention should be given to such an actual direction as the production of metal and plastic products and products from them, as well as to the production of qualitative building materials, including for export.

 5. Wood products and products obtained by processing them (building materials, furniture, paper, etc.) occupy a large place in the provision of economic sectors and the needs of the population, and, as shown above, a large share in their supplies falls on imported goods. Therefore, the development of appropriate local production is one of the most important directions for achieving a positive economic effect in the economy. Unfortunately, throughout the period of 1990-2012, uncontrolled logging and export of untreated timber often took place. As a result of this, the opportunities for selective logging for the supply of raw materials to these industries have declined markedly. Therefore, it is necessary to develop production (primarily furniture production) on the basis of imported raw materials (of course, using local timber supply capabilities). Also, in the long term, with a view to increasing the supply of processing plants with local timber, proper care is needed for the country's forests, as well as the establishment of plantations of fast-growing trees (for example, eucalyptus around the perimeter of the Colchis marshes), as is currently practiced in some countries.

6. In the achievement of a positive structural effect, a certain role can be played by the expedient development of the services sector, primarily tourism, whose outstripping growth can cause significant positive shifts in the export-import balance (the service of foreign tourists in the country actually represents the export of services). Prospects for the development of this branch are the subject of separate research and have been considered in various aspects in the works of K. Kveladze[5]. The system of education also has certain possibilities for servicing foreigners.

From the foregoing it is obvious that the "reorientation of the structure of the economy" of Georgia should take place in the following areas[6]: 1) The growth of electric power capacities mainly due to the construction of hydroelectric power stations. In addition, with the focus on the experience of the FRG and the USA, one can take a course toward using solar cells in the power industry, gradually bringing the share of energy generated by them to the electric power balance to about 10%; 2) Bringing the share of high-tech products output in the total volume of products released in industry from the now meager share of 1.5% to a significant fraction, which will significantly increase the level of self-sufficiency of the economy primarily due to the expansion of exports. For this, it is necessary to select several priority areas of development, either through resuscitation of any traditional industries (for example, the construction of a multidisciplinary machine tool plant using flexible, IT and other new technologies in production and the extensive equipping of products with IT technologies, the construction of a modern plant for the production of television sets, computer, etc. monitors), and at the expense of the founding of new industries, taking into account the fact that the niche for marketing the products of the selected production in the world was not oversaturated (for example: the production of solar cells, or on the basis of imports by domestic manufacturers of appropriate production technologies, or with the involvement of an enterprise of a foreign corporation; the establishment of an enterprise for the production of modern batteries, etc.). Besides, for many high-end products it is impossible to locate the whole production cycle in a single country, therefore the state should assist national firms in the integration into international inter-firm technological chains; 3) Coordinated development of related branches of agriculture and food industry with the growth of their import-substituting and export-oriented functions; 4) Coordinated development of related branches of agriculture and light industry, which is the most urgent, priority task; 5) Accelerated development of selected industries (through the modernization and expansion of existing and the establishment of new) in the chemical, polymer, metallurgical industries, in the production of building and composite (including metal-plastic) materials and products from them in such a way that after a certain period, the total export-import balance on the products characteristic for these branches would be positive; 6) Development of enterprises of the woodworking industry, first of all, furniture and for the production of building materials from wood; 7) Development of service industries with an emphasis on the growth of their import-substituting and, where possible, export-oriented opportunities.


Thus, the level of self-sufficiency of the economy is more or less low in all the groups of industries (energy, food, light industries and agriculture, chemical and polymer industries, construction materials industry, high-tech industries, etc.), and for a group of high-tech (in this group of statistical materials we have grouped a fairly wide range of industries from the automotive and machine tool construction to IT technologies) and light industry is very low. In order to achieve a significant structural effect in the near future in the process of industrial restructuring (primarily by increasing the level of self-sufficiency of the economy), it is necessary, in particular, in the electric power industry to focus on the construction of hydroelectric power stations, to create or develop import-substituting and export-oriented production in food and light industries, while strengthening the agricultural raw materials base of these industries, to develop and partly revive the industries of the building materials (in particular, the production of metal-plastic and products from them), etc. And most importantly, without which it is impossible to significantly improve the country's export-import balance, it is necessary to move on to accelerated development (new construction, resuscitation on a new technological basis) mainly export-oriented, selected in accordance with certain criteria for prioritizing and the evaluation of marketing possibilities of products intended for production, high-tech industries (for example, production of IT-equipped machines, production of solar cells, etc.).


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  15. Рокфеллеры решили избавиться от нефтяных активов (23 сентября 2014 г.). – Электронный ресурс:  www.interfax.ru/business/398170
  16. Рокфеллеры решили инвестировать в ВИЭ. – Электронный ресурс: Greenevolution.ru/2014/24/rokfellery-reshily-investirovat-v-vie/

[1] Most reasons for the decline in agriculture are set out in the following works: [Бурдули, 2013: 20-27; Абесадзе, ..., 2014: 206-216; и др.].


[2] In order to compare the volumes of exports and imports with the volumes of local output, the statistical data on aggregated groups of goods from the value in US dollars were converted into GEL by the existing rate in 2011: 1 US dollar = 1.65 GEL.

[3] It is unclear, according to which position in the statistical reporting its products are taken into account: in chemical, polymeric or metallurgical.

[4] See: [Абесадзе, ..., 2014: 195-234]. - Chapter VII. The need for coordinated development of related industries and agriculture; [Бурдули, 2013: 20-27]; [Вурдули, Датунашвили, 2013] and others.

[5]  See, for example: [Квеладзе, 2013].

[6] This article considers only the sectoral structure in terms of types of activities, but the structural content can be considered from the point of view of other characteristics, for example, in the distribution of enterprises by size.