INNOVATIVE ECONOMICS AND MANAGEMENT

15-22

Authors: TAMAZI GAMSAKHURDIA, TEIMURAZ PESTVENIDZE

The paper deals with the international image of the country and the Georgian nation on the critical edge. The reasons are considered to be the unresolved problems in the country such as the low level of economic development, human constitutional rights and infrastructure. It is worth mentioning that the weakening of the nation and the village is the destruction of the country's history and traditions. It is necessary to improve the demographic situation. One of the main directions of the demographic policy is to create stimulating and facilitating effective conditions. Special attention should be paid to the reduction of child mortality and the improvement of healthcare in general. Establishment of harmonious relationship between people and state institutions will promote the welfare of the country and its population. All these should be based on the consideration of the traditional values of the nation, overall care of the people and the country's well-being. The main resource of the country must be a healthy, well-educated, morally formidable and patriotic spirit. The priority of the country should be the introduction of innovations in all areas. There are many competitions among young people, innovative clubs are created, finances are spent and the result is that distinctive young people are taken abroad to study. Unfortunately, the best of them do not come back anymore, who returns they are without prospects, because there is no environment here where they can use their knowledge. Be¬ca¬use of the errors in education we do not have a qualified staff, we lose the interest of education and labor, there is the sharpest decline in living standards, the deepening of alienation, the demographic situation worsens, the feeling of unconsciousness increases, the emigration increases, the national values are evaluated, damaged, and ruined. The national treasures are on the critical edge. The country's ecology is dramatically worsening, as a result of the unexplained exploitation and misuse of spoilages made a negative effect on the ground that is already blown out. Even in the Colchis Valley, the initial processes of desertification are observed. Create a legal base in order to monitor strictly the terms of the contract with investors. There are all conditions in the country to use our natural resources reasonably and use the country’s regions effectively. The decisive measures in the country should be taken to create such a legislative basis for the rational use of natural resources, in the management of investments which will damage less the interests of the country and will benefit more from its economic development. One of the most important steps for the growth of economic is the creation of new types of products, diversification of new markets and mobilizing new resources. More activity is needed to implement innovations in the economy and activate still unused resources. These and other negative developments in the country have had a negative effect on the living conditions of the country's population. The attention of the agro-sector that is the vital importance for the country has relaxed. That left most of the population behind the poverty line. One of the main goals of the government is to increase the global competitiveness of the country. There is still a shortage of innovations and scientific researches, which is caused by ineffective reforms of the education system, deliberate attacks on scientific institutions and the intellectual drive out of the country. Because of this the index of country's global competitiveness is quite low.

27-30

Authors: LASHA-GIORGI DATASHVILI, DAVID DZOWENIDZE

At the end of the twentieth century and the beginning of the twenty-first century, globalization and trans nationalization became the main process of world economy. These processes determine the level of living and social-economic situation in the country, most of which are involved in transnational companies, since they are the main participants of regional integration and development of social economies. The development of today's economy and technology is through them.

49-53

Authors: KESO SUMBADZE

The environmental is Regularly changing, accordingly manager requests to take decisions in extreme timetables, need it fast react and correct decision. The issue is relevant, accordingly many scientist is interested study of the decision making process. There are studies at different times and places with relevant results, as well as different methods of decision-making, theories and models. In the article we will consider diferent decision makings methods, theories, and models by various scientists.The managers can use models of decision-making in their activity to be more effective.

63-72

Authors: SHALIMOVA NATALIIA

The traditional approach to define the essence of the audit is based on the fact that it is often viewed as a special kind of entrepreneurial activity since this aspect visibly emerges in the conditions of a market economy and it is the key in the development of legislative documents for the audit regulations. But there is a number of scientific problems that were not studied fully and first of all, it concerns a statutory audit being the initial one in the history of the formation of an audit as an element of social and economic relations in a society. The necessity to perform a statutory audit arises if the state wants to protect information rights and legitimate interests of the group in obtaining reliable information about the activities of individual entities. In other words the state carries out the function of regulating the production and distribution of informational products which are essential for the development of a society. This creates more or less equal opportunities in the consumption of information products because the interests of the society require much of the information to be available, so the state should create the mechanism to ensure access to information. Thus, a statutory audit should be considered as a public good and its functions go up to a higher level, since the state considers the obligation to reduce the information risk, primarily its own, and not the responsibility of a shareholder. The relations arising in the course of a statutory audit have to a large extent public and legal character and act as a tool to reduce or prevent a conflict of interests. Although the choice of the auditing organization and payment of the services are carried out on a commercial basis within the framework of a civil law contract, by its objectives, purpose and functions a statutory audit is performed in the interests of a certain group of people that can not be determined in advance and the state. So these are public interests. Statutory audit should be considered as a public service based on public (social) interest that is a socially significant activity regulated by the law, which in turn needs additional requirements for the activities of such subjects of auditing activity and the content of statutory audits. It should be noted that indirectly the recognition of statutory audit as a "public (social) service" is confirmed by the fact that the European Community legislation uses the term "public interest entities" to define criteria for the statutory audits; it is considered that the degree of significance of public interests should determine those entities that must necessarily be subject to annual audits. These entities include enterprises of significant public interest due to the following factors: type of business, volume of activities, number of employees, corporate status which provides a significant number of shareholders (credit institutions, insurance companies, investment firms and funds, pension firms and funds, and listed companies). The establishment of the institution of statutory audit in Ukraine was conditioned by the state's demand in the conditions of property relations reform and only later the need of "classical" users of the audit results appeared that determined its formation in the world economy. It is necessary to understand and use all the advantages of auditing activity from the point of view of its social benefit in the system of social and economic relations. Despite the difficulties that arise while performing a statutory audit it is difficult to deny the need for its application, since, as J. St. Mill underlined "there are things where the intervention of the law is not necessary in order to rethink the judgments of people about their own interests, but in order to give these judgments a real power because people themselves are not able to do this differently than by mutual consent. And such consent will not be valid unless it is reinforced or sanctioned by the law". Sometimes only a joint agreement can ensure the coincidence of private and public interests and to provide the necessary level of social utility which is completely true of the statutory audit.

93-101

Authors: LALI BOCHORISHVILI, NANA GVINIASHVILI,

Financial analysis is the element of financial management and audit. As the cognition method of economic processes it holds a prominent place in the factory management system and is a prerogative of top echelon of management structures. Under contemporary economic situation the independence of enterprise when taking management decisions permanently grows. Economic status of enterprise and its financial independence and stability are depended on correctness of decision taken. The goal of financial condition is getting the most quantity of key parameters giving objective and exact picture of financial status of enterprise: its profits and losses, changes in actives and passives, settlement of accounts with debtors and creditors and identification of the most effective ways of attainment profitability and stability. As the subject of financial analysis is selected the specific Electric Enterprise of Georgia, financial information (accountability) of which meets all requirements, such as: validity, openness, clearness, utility and significance, completeness, consistency, comparability, carefulness, neutrality etc. As is known financial status of enterprise is characterized by the unity of indicators reflecting the process of establishment and application of its financial resources. Analysis of complete financial status includes consequent implementation of following types of analysis: financial indicators in the accounting period, financial stability of enterprise, solvent, creditworthiness and liquidity of enterprise; financial results; potential bankruptcy of enterprise. In the process of analysis of financial accountability of Energy Enterprise over the last 3 year period has been calculated a number of absolute and relative financial indicators. One of the most important tasks raised before us when determining financial status of Energy Enterprise was a study of indicators of financial stability of facility. As a result of carried out work is identified that at the given specific enterprise indicators of financial stability are expressed in positive dynamics, i.e. state of its accounts guarantees or almost guarantees paying capacity of enterprise. Paying capacity is of the key signs of normal (sustainable) financial status of enterprise.

124-137

Authors: MERAB VANISHVILI, BADRI GECHBAIA

The latest literary sources and the rich factual materials, consistently studied the behavior of financial features in Georgia. The methodological basis for Economic Cooperation and Development / International Financial Education Network (OECD / INFE) developed by financial education and financial inclusion measuring 2015 manual. OECD / INFE-'s manual makes it possible for information to be collected and rescued dogs or cats-Neil for determining the level of financial behavior scores. Georgia, the collected data is entered OECD / INFE-'s 2016 international comparison report, which will identify common challenges and similarities between the countries, and indicates a number of effective solutions. The article deals with the financial behavior of important issues, such as basic financial concepts, knowledge and real-life application of skills, personal and household financial management, financial goals and achieve them to take concrete steps, saving and budgeting, financial unexpected circumstances and the age of retirement readiness, borrow and Ali's management, financial products and other awareness and usage. According to the survey, the total rate of the financial behavior of the positive behavior of all counts, which are discussed in the field of answers to the questions have been revealed. Financial behavior of a maximum rate of 9 points, while the minimum value - 0 points. OECD / INFE-'s methodology, 6 or more points higher compared to the behavior of the indicator considered. The score only 36% of respondents in Georgia. At the same time, a majority of respondents positive behavior characterized by: 5% of the population to 28.7, while 19.2% of them - 4 showed a positive behavior. The average population of a behavioral indicator of the maximum 9 points and 5.0 points. The data obtained as a result of the survey have been important for the setting up of certain standards and orientations towards the financial behavior of the population, as well as for the development and implementation of separate programs within the National Strategy of Financial Conduct. In order to encourage useful financial behaviors, it is important to have special channels where reliable and comparable information is available, such as resource centers, Internet portals and mobile channels. In addition, it is recommended to activate campaigns on savings benefits and develop and disseminate different mechanisms for promoting savings.

143-148

Authors: MARIAM IASHAGASHVILI

At present, the largest part of the financial sector is held by the commercial banks. The role of the capital markets is modest. For the development of the capital market it is essential to make legislative amendments, to improve many regulatory or legislative acts and to comply with the international practices. In this regard, the most important is to review and improve the tax code, since a lot of vague and ambiguous records in the tax code need to be specified, to become more simple and understandable to the reader. The current approach to the taxation regime shall be changed and the burden shall lay on the net investment income instead of transactions. This does not meant to provide tax privileges, but to provide a fair and economic growth-oriented approach.

157-159

Authors: NINO KAVTARADZE

Nowadays, it is considered that the preparation of budget by the program budgeting style is the most important achievement for Georgia. It should be admitted, that the researches show, that by the transparency of its budget Georgia is on the one of the leading positions among the numerous countries. The great value of program budget is, that it relies on the main priorities of the country, which main goal is to achieve them and get desired results, for these proposes are determined future relevant measures, valuing indicators and sources of financing. Each program has its title, executive- spending institution and its description from its purposes. It should be emphasized, that despite some achievements and significant progress in the the method of program budget, there are still some problems, focusing on solving them and making changes will lead to the real and effective results of program budgeting.

166-174

Authors: OLGA PUGACHENKO

Economic evaluation as one of the evidentiary arguments has been used since the time of Aristotle, Demosthenes and Xenophon. The evaluation is aimed at studying the financial and economic activities and includes examination of accounting and tax accounting documents, researching financial, economic and credit activities of economic entities. The evaluation on economic issues is appointed on general grounds in compliance with the requirements of the Law of Ukraine "On Forensic Examination" and the procedural legislation. The performance of the evaluation is in the subordination of the Ministry of Justice of Ukraine. The framework of the judicial economic examination includes the following: examination of documents of accounting, tax accounting and reporting; examination of documents on the economic activities of enterprises and organizations; examination of documents of financial and credit operations. The Tax Code of Ukraine contemplates the examination in the case when special knowledge in the field of science, art, technology, economy and other industries is needed to solve tax control issues. The specifics of performing economic evaluations in the Criminal Procedural Code of Ukraine, the Civil Procedural Code of Ukraine, the Economic Procedural Code of Ukraine and the Code of Administrative Proceedings of Ukraine make it possible to assert that, in general, the procedure for the appointment and performing forensic economic examination, as well as the rights, duties and responsibilities of forensic experts in Procedural legislation are similar. According to the procedural legislation of Ukraine the experts perform primary, additional, repeated, commission and complex examinations. The duration of the examination is determined depending on the complexity of the study, taking into account the workload of the experts. During evaluations (expert studies), in order to fulfill a certain expert task, the experts apply the appropriate research methods, methods of performing forensic examinations, normative and legal acts and regulatory documents, as well as the existing standards of the former Ukrainian SSR and state classifiers, industry standards and technical conditions of the former USSR, scientific and technical, reference literature, software products and so on. The selection of the way of performing the examination (the choice of certain methods, (methods of investigation)) is carried out within the competence of an expert. The basis for the examination in accordance with the current legislation is a procedural document (decision, specification) on the appointment of examination drawn up by an authorized person (body), or a written appeal of the victim or a party to the defense of criminal proceedings, which necessarily specifies the requisites, a list of issues raised to the expert, as well as the objects to be investigated. The results of expert studies are presented in a written form as the expert's conclusion or a report on the impossibility of giving the opinion. The expert’s report is made out on the form of the expert institution and signed by the expert conducting the research. The signatures in the final part are certified by the seal of the expert institution on each page of the text of the final conclusions.

185-190

Authors: IOSEB MAMUKELASHVILI

Education is a catalyst through which major societal changes take place. This paper is based on the premise that Georgian state-owned joint stock companies need financial statements in order to improve its capital structure. The above-mentioned premise is also based on the assumption that implementation of high quality accounting standards is crucial to the provision of financial statements that are necessary for joint stock comapanies to improve its owner’s equity financing opportunities. Therefore, the role of education must be examined in the context of implementation of International Financial Reporting Standards. The research process was organized as follows: the Global Comepetetiveness Index of 2014-2015 by Klaus Schwab published by the World Economic Forum was obtained as a source of data to examine educational systems and the implementation of IFRS in various countries of the world. It was evident that Georgia’s educational system and the level of IFRS implementation both need improvement. The goal of this research was to study if there is any cause and effect relationship between the quality of educational system and IFRS implementation in 144 countries of the world, including Georgia. Empirical evidence suggests that the quality of countries’ educational and research institutions are a 57% precondition to the successful implementation of IFRS. Furthermore, collaboration between educational institutions and private sector entities is a 62% precondition to the full implementation of IFRS

202-206

Authors: NANA AKHALAIA, MANANA VASADZE

Unemployment is one of the major problems of Georgian society, which is more or less equal to all social groups. One of the main priorities is to address the problem of unemployment in the country. In recent years, the hotel market has a healthy and rapid growth in tourist destinations. Tourist sites and the whole tourist market are developing attracting foreign investments. Hotel business is the most dynamically developing subdivision of the tourism industry that brings millions of profits to the economy in many countries. Hotel business development is a crucial factor in tourism development. Growth of tourist flows and efficient functioning of hotel facilities create jobs and provide filling up regional and national budgets. The leading role in Georgian economy belongs to trade and service sectors where the most people are employed

211-216

Authors: MERAB ONIANI

Knowledge of the theory of personality gives a manager an opportunity to create a certain opinion about the person’s psychological characteristics and his/her nature as well as helps him to develop his management techniques. George Kelly’s Personal Construct Theory views a person as a unique creature. The theory studies and touches upon: the actual difference in perception of the world subjectively and considering these similarities and differences in the process of management. the person’s desires to enquire about the future and make proper interpretations. the issue of successful communication being dependent on mutual knowledge, opinions and actions. the issue of impossibility of changing the already happened events and creating the experience of successful management through proper interpretations of the facts. the issue of working out the effective management strategies through managing objective reality in the perceptions of people.

225-229

Authors: GEORGE GABEDAVA

Transport is the most important field, which defines the socio-economic development of the state. Georgia’s strategic location gives the opportunity to become logistic hub of the Caucasus, but to achieve it the number of activities must be carried out towards the transport infrastructure. Georgia has a real chance to deliver and send additional cargoes, which leads to increase in income and improves conditions of production and trade development. Main issue for cargo owners is to offer profitable conditions and its practical implementation, for that the necessary conditions are: safe transportation of cargoes, their rapid delivery and reduction of shipping costs. Through the implementation of seaports infrastructure and new technologies, Georgia has a real chance to become main logistic hub for the Caucasus and Central Asia. Which will increase the role of Georgia as a transit corridor, but rather a contributing factor to the development of the country's economy.

234-237

Authors: TINATIN MEDZMARIASHVILI

The state procurement is one of the most important spheres of the country, where 12% of the gross domestic product comes from it. Therefore, the significance of importance is given to the government financial resources rational spending, fair and non-discriminatory environment formation, development of healthy competition in the state procurement process and the information transparency. For state and private sectors the functioning of the state procurement is important. Until 2010, state procurement in Georgia was carried out through means of a paper. Since December 1, 2010, the new procurement system was launched. Due to lack of proper transparency, there was discriminatory approach and corruption, availability of information was limited, high fees in tender participation and territorial inequality restricted competition. All tender procedures were carried out through means of a paper. Currently operating state procurement electronic system is characterized with a maximum transparency. The system can be used by the purchaser, supplier and any person interested in it.

245-251

Authors: NINO ZURASHVILI, DAVIT NARMANIA

In the modern world within the development processes of urbanization, it becomes actual urbane politics, which is implemented by the governments of the cities. In tight urbanization conditions, it is especially increased demand from the customer to the flats and homes in the cities. Accordingly, to the demand from the customers in the capital of Georgia Tbilisi and other important cities of Georgia (for example Batumi) begin massive construction processes. Chaotic buildings create ecological problems, which makes environments in bad conditions to live. Therefore, it is very actual how is regulating construction in Georgia. In the precede article it is discussed urbane politic, which is implemented in the capital of Georgia from the founded to the present time. In the article analyzed legal acts which are regulating construction development in Georgia.

257-262

Authors: NANA RUSADZE

During the last decades, the efforts of Governments across the world have been directed towards creating an effective civil service. Modern requirements pose new challenges for the organs of state administration, and they have to re-examine traditional administration methods and be constantly mindful of increasing the effectiveness of their activities. It is obvious that local authorities also face similar challenges. One of the main objectives of municipalities is to exercise their own powers completely and to offer appropriate services to the population. For the purpose of assessing the effective exercising the own powers of municipalities provided for in Local Self-Government Code of Georgia, in April 2017, we conducted a survey of 520 respondents in municipalities of Imereti (12 municipalities in all). For each parameter, we derived the arithmetical average, which formed tha basis of the calculation of the overall index of analysis parameter. Analysis revealed that the relatively better situation is observed with establishing the municipal preschool (kindergartens) and out-of-school education institutions and with ensuring their functioning. It is noteworthy that the index appropriate to this kind of services is higher than the highest index existing between municipalities (3,40>3,14).The index of water supply, water carriage and melioration is also high (3,1). We believe that within their framework of powers, municipalities have to attach more attention to the regulation of street-trading, exhibitions, markets and fairs, disabled people, as well as to sheltering and registration of the homeless. It is desirable to conduct the similar surveys in all regions of Georgia every year that will contribute to identifying the weak points and resource mobilization to address the encountered challenges.

271-280

Authors: YEVGEN PANCHENKO, NATALIIA RUDUKHA

The features of the world market of banking services, of which the European Union is a part have been analyzed in the article. Features, scale and dynamics of this market, its role in the socio-economic development of the EU member states have been shown. The characteristics of cross-cultural differences in the functioning of banking systems in different EU member states have been given. The socio-economic nature and modern mechanisms for regulating banking activities have been disclosed in the interests of stabilizing the macroeconomic indicators of the national economy and improving business performance. The advantages and weaknesses of the liberal and administrative concepts of banking regulation have been shown. Differences in the functioning of national banks in the EU member states have been disclosed. The role and mechanism of the European Central Bank's influence on the social and economic development of the European Union have been analyzed. The problems of the functioning of the banking system of the EU after the withdrawal of the Great Britain from the European Union have been revealed. The article describes the ways of integration of the banking system of Ukraine into the financial structure of the European Union in the context of the implementation of the Agreement between Ukraine and the EU on a free trade area. Attention have been drawn to the need to take into account the significant differences in the levels of development of the banking business of Ukraine and the EU, in particular the ratio of net loan portfolio and gross domestic product, which in Ukraine is respectively 0.45, and in Poland 0.7 with double the GDP. The directions of the convergence of the European and Ukrainian banking systems have been shown on the basis of the increase in the European international trade turnover.

285-292

Authors: PAATA AROSHIDZE

By the end of 2014, the central government of China declared the readiness to develop “alter of the Great Silk Road" – “One Belt - One Road". According to this project, China will economically be connected to Europe, the central and South-West Asia, Africa and Australia. The goal of this project is to export technology and "know-how" from China, high-speed railways, infrastructure development and service delivery to the whole world. Instead China will be able to import agricultural, health care and energy products, also other important commodities that are essential for China. The modern version of the “Great Silk Road” has the serious basis to fully change the global economic landscape. China from "World Factory" will become the main exporter of technologies and techniques, "World Trade Center" and the main hub of central electronic trade. "One Belt - One Road" will not only increase cargo turnover between China and the rest of the world, but also will make it possible to exchange experience between Europe and Asia. The project includes the following directions: 1. China-Central Asia-Russia-Europe (with the Baltic Sea); 2. China-Central Asia-West Asia-Persian Gulf-Mediterranean Sea; 3. China-North-East Asia-South Asia-India Ocean. The international economic corridors are planned to be created in these directions of: "China-Mongolia-Russia", "China-Central Asia-West Asia", "China-Indochina", "China-Pakistan", "Bangladesh-India-China" and "China-Mediterranean Sea". Implementation of this project is important for Georgia, because the economic corridor of China-Mediterranean Sea borders the territory of Georgia and the country's favorable geopolitical location can be used in this context. It should particularly be noted that in May 2017, the Free Trade Agreement was signed between Georgia and China, and China expressed readiness to establish an international bank in Georgia with a capital of 1 billion US dollars. Especially important is the prospect of the use of marine ports of Georgia. On the official map, which includes the project “One Belt - One Road” the Deep Sea Port of Anaklia is marked. It can be said that the new project of China will give a new possibilities to the transit function of Georgia, which will facilitate the country's geopolitical strategy and should be the basis for political security and economic growth of the country.

297-302

Authors: MZIA DIASAMIDZE, IRMA TAKIDZE,

The course of the vessel in relation with the wind is an angle between the direction of the wind and the midship line of the vessel. One of the most widespread use of the wing is its application in the wind-driven ship. But these ships are not so fast. But there also is an alternative way to use wind for ship movement despite wind speed and stream force – the application of Magnus Effect, which is the result of mutual impact of the physic phenomenon, such as Bernoulli effect and creation of border layer around streamlined object. Using this effect, the first rotor vessel was created. In 1980s more complicated form of turbo sail was developed by French engineers under supervision of oenologist Jacques Yves Cousteau. In comparison with the best of the usual sails, the turbo sail provided 3,5-4 larger propulsive coefficient. It was supposed to install turbo sails to the tankers, bulkers and the large ships to decrease fuel consumption rate. Nowadays there are attempts to put rotor sails into mass usage. The rotor sails give possibility to save 30-40% of fuel at 16 knots speed. The experience of German shipbuilders will show if it is useful to develop the sails, working in application of Magnus effect. We hope, that in future the world navigation will apply the principle, described by the talented German scientist more than 150 years ago.