English / ქართული / русский /

Journal number 1 ∘ Paata Koguashvili Gega Baghaturia

DOI:  10.36172/EKONOMISTI.2021.XVII.01.Koguashvili.Baghaturia

Expanded Summary 

The paper describes the main reasons for the underdevelopment of the country’s agricultural sector. Taking into consideration these reasons and current realities, it is necessary to find a mechanism of the new relationships between the State and business, through which it will be possible to ensure the recovery of this sector and its subsequent innovative development. The argument was made for triggering the mechanism of public-private partnership in agro-industrial complex.    

The relevance of the research stems from the need to introduce the mechanism of public-private partnership in agro-industrial complex of Georgia, and so to contribute to expanding the resource base in mutually favorable conditions for the State and business, as well as to target unutilized resources at sustainable development of agro-industrial complex. The State is to play a leadership role in these relationships.

Currently, PPR is the most effective form of the business for a number of spheres of social life. In this aspect, the State acts not only as a partner with multilateral resources, but also as an organizer, regulator and employer on the investment project. Private capital in PPR raises the country’s investment attractiveness, improves people’s standard of living and contributes to economic and social development.   

The authors present the main reasons for the underdevelopment of agricultural sector in Georgia, such as:

•   the destruction of previously existing scientific capacity;

•   the lowest social standing of the rural population;

•   the lack of a modern integration system of education, science and production;

•   the destruction of agro-processing industry;

•   the saturation of local market with cheap imported products;

•   economic and political instability;

•   inefficient use of the existing raw material resource base;

•   the lack of the modern forms of relationships between the State and private sector.                  

The subject of PPR could be the implementation of a particular project, when the following characteristics are of importance for of relationships between the State and business: 

  • the State’s interest in the project implementation;
  • project duration (usually, the PPR project duration is estimated at 10 years at least);
  • the allocation of risks among the parties.

When involving in public-private partnership, the risks faced by investors can be broken down into three groups: 

1) political (the risk, which is associated with poor coordination and inefficient governance); 

2) financial (the risk of non-repayment, due to lack of project profitability; high cost of borrowings; the risk of failure to comply with the commitments made by the local authorities, when covering investments from the budget); 

3) legislative risks associated with a legislative amendment.

There are all preconditions in Georgia for the development of agro-industrial complex  through public-private partnership. Through such an approach, it is possible to introduce at the domestic level the innovative technologies developed by the Food Research Institute over the course of several years, increase the amount of export output, create new employment opportunities, and besides, to harness unutilized resources, which would substantially enhance the situation existing in key sectors of the country’s economy.    

Key words: State; business; science; agro-industrial complex; public-private partnership.