EKONOMISTI
The international scientific and analytical, reviewed, printing and electronic journal of Paata Gugushvili Institute of Economics of Ivane Javakhishvili Tbilisi State University |
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Journal number 1 ∘
Nino Sagareishvili ∘
The Factors Affecting Production of Domestic Agricultural Goods and Export Promotion Expanded Summary Countries use different strategies to develop domestic production and get positive trade balance. Economic development of the country highly depends on international trade. To make an in depth analysis of this topic, we can discuss two alternative strategies:
The paper overviews both strategies and determines its positive and negative aspects. It mainly concentrates on direct and indirect effects of export promotion on increase of domestic production. Import substitution is a government strategy that stimulates increase of domestic production and substitutes import. It is worth mentioning that import substitution strategy does not mean increase of export of agricultural goods. It is beneficial for increasing employment rate, for decreasing demand on foreign currency and for giving an opportunity to the country to satisfy market demand by domestic production. At the same time export promotion stimulates export. It gives producers an opportunity to satisfy not only market demand, but develop their products in such way that they can increase export. Promotional programs help producers to understand and implement international standards and get know-how from international producers. As mentioned, both strategies have positive and negative sides. Main advantages of import substitution are the following: it protects domestic production, increases competitiveness of domestic production, stimulates producers to develop quality, and increases self-sufficiency of the economy. At the same time export promotion gives an opportunity of diversification, getting know-how and experience from international producers, entering international markets and etc. Agriculture is one of the most important sectors for Georgian economy and it takes an important role in Georgian Economy. Georgia produces agricultural products, but most of them are seasonal goods. Therefore, agricultural goods are imported during the whole year. Nowadays domestic production of agricultural goods is very low. Georgia imports agricultural goods from other countries. Georgian trade balance is negative, it means that import volume exceeds export volume and domestic production is not stimulated enough to increase export. The main goal of the research is to discuss factors that stimulate an increase of domestic production of agricultural goods and to determine influence of export promotion activities on it. Analyzing the data and current policies underline the factors that stimulate domestic production:
The analysis shows that problem of scarce resources can be overcome through stimulating productivity and promoting export. In order to stimulate export, the following methods are being used:
Main conclusions from the research are the following:
The following recommendations are prepared for government and private sector as well:
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