Globalization and Business

13-17

Authors: Ramaz Putkaradze

The worldwide processes of economic globalization and integration are irreversible. This, on the one hand, provides significant opportunities for small countries and contains some threats on the other hand. There are the following integration groups in Europe: the European Union, European Free Trade Association and CIS (Eurasian Union). Despite the current hard challenges it is facing, the European Union is the most developed integration group, as well as one of the largest markets in the world. It should be noted that in recent years Georgia has achieved significant progress on the path of economic integration with the EU; in particular, we mean the Association Agreement signed between the European Union and Georgia, Deep and Comprehensive Free Trade Area is the part of this Agreement. The Association Agreement between EU and Georgia has fully entered into force. The Agreement suggests Georgia to adjust trade-related legislation and regulations to the EU standards. As indicated in the paper, although Georgia is not a member of the CIS, the country has quite close trade relations with the CIS member states, which have been characterized by increasing trend recently. Of course, we are not against trade relations between countries; however, future risks and challenges should be studied and analyzed. CIS member states accounted for almost 35% of Georgia’s export, while the average corresponding indicator for CIS member states was 16-17%. For example, CIS accounts for 23% of Armenia’s export, 7% of Azerbaijan’s export, 21% of Moldova’s export, 17% the Ukraine’s export, etc. The processes globalization and European integration are irreversible and Georgia has to use the current processes for the development of its economy. The country has chosen the appropriate foreign political and economic priorities and therefore it should continue its way towards the EU towards establishing closer ties with the EU. It would be desirable for Georgia to use the experience of leading European countries, as well as new EU member countries while implementing economic reforms.

22-28

Authors: Demur Chomakhidze

Georgia is represented in almost all fields of energy (Hydropower, Thermal Power Plants, Electrical and Heat networks, Fuel mining industry, non-conventional energy). The article analyzes the level and dynamics of the production of energy in Georgia; Energetic, including electrical balance, external energy relations. Macroeconomic and Energetic indicators are compared with each other and with the energy indicators of abroad. There is formed energy development concept in Georgia, taking into consideration as new constructions, as well as activation of existing reserves.

32-38

Authors: lamara Qoqiauri

Scientific work “In Search of the complex way of devaluation of Lari in Georgia” is an original research devoted to actual and practical items of Georgian currency. Nowadayin Georgia, it is necessary to study current basic changes in Georgia, to find out and eradicate subjective and objective causes of falling down of Lari course, to stop the existing extreme situation in money turnover and avoid possible inflation, to collaborate trustworthy ways to survive national currency. Global circumstances such as long-term temper of “external and internal factors” on Lari course, as well as political-economic processes in the neighbouring countries of Georgia unstable development of economics in the country“investment starvation”, incorrect coin and fiscal politics, and other objective and subjective reasons caused a fall down of Georgian national course. In the work, based on practical materials, the necessity and inevitability of devaluation of Lari is scientifically explained. In the article based on the analysis of devaluation of Georgian Lari the authors have given the urgent opportunities and recommendations to stop the formed extreme situation in the economics of the country and avoid possible inflation of Georgian currency. in the work the results of the research is introduced by the recommendations of economical solution of problems. Realization of these recommendations will support the development of Georgian economics, to stop the devaluation and stabilization of Georgian currency lari.

44-46

Authors: Nino Kavtaradze

One of the most unsolvable problems for developing countries still remains the drop of their national currency course, it is the result of many factors that take place in economy overall and also of the errors that are committed by the central banks of these countries. All that triggers the impoverishment and decreases the level of earning of population. The central bank should choose floating or fixed currency system, as for developing countries it is extremely important to stabilize the national currency course.

51-55

Authors: Ambrosi Grishikashvili

Iran’s political and economic situation is less known in Georgia. Our seclusion in Russian Empire and isolation from the outer world during decades was the reason of unawareness of these processes. Despite Georgia’s independence witnessed in recent years, the situation has not improved. This article serves as filling of the mentioned gap. Iran’s political and economic history of 20th century briefly can be considered according to the following stages: Issuing of the concession on the extraction and processing of oil deposits to the Great Britain, which was against Iran’s interests; Emerging of the renting economy with the elements of colonialism; Moderate growth of the economy between 30s and 50; Decrease of the economy during the Second World War and political conflicts; Nationalization of assets; Reform of 1953-1978; White revolution and dependence on foreign capital and oil; Fast growth of Iran’s economy from the mid 50s to mid 70s. Starting from 1978 the state economy is determined by oil and gas.

60-62

Authors: Lia Pitiurishvili, Gia Buchashvili

This article deals with the foreign exchange market, its essence and meaning in the world and in Georgia. Wide spectrum of foreign-economic settlements, tourism, capital, and labor migration, as well as other ongoing operations are carried out on foreign currency markets. It envisages usage of foreign currencies by buyers, sellers, intermediaries, and other financial companies and firms. Georgian foreign exchange market can be considered as a less diversified market. Necessity of elaboration of the correct foreign exchange policy should be defined. For the purposes of mitigation of the strong fluctuation of the domestic currency, the currency market and the National Bank of Georgia should jointly workout the strategy which would allow the national currency to maintain its stability.

67-74

Authors: Tea Munjishvili

In the article the existing systems of collection of knowledge are analyzed, need of computer simulars of creation for collection of knowledge in economy is checked, necessary conditions for their functional capabilities and use are defined, the initial computer simular for the collection of knowledge created by us is figured. In the article the existing systems of training of the financial analysis are analyzed. One of the ways in improving of quality of e-learning of objects of an economic profile is development and applications during training of simulator. In the article the technology of preparation and training of the financial analysis with use of an assessment bankruptcy of the enterprise by means of the logician - probability and the Z-score of models, the developed author of software package TRAINER1 the exercise machine. The TRAINER1 used for the multiscenario analysis and generalization of results to predict assumptions of possible errors and to create recommendations of their correction.

79-82

Authors: Ramaz (Isac) Meparishvili

According to the poem by Shota Rustaveli the human is the basic idea, a human has changed, changes and will change for different period of time. A human is always in search of something, this has caused aesthetics of thinking, this thinking leads us to world culture. That is why religious, political, ethical, philosophical ideas ultimately form the cultural integrity. Such a clear example is Shota Rustaveli's poem “The Knight in the Panther's Skin”. The core of the "Knight in the Panther's Skin" is a culture in which the diversity of cultural life is revealed. The concept of the poet's thinking comes from the cultural paradigm that underlies the world culture.

90-95

Authors: Ganna Zhosan

The impact of the complex index of social responsibility in general indicators proven productivity of the enterprise activity interpolation using spline interpolation of the third degree. This relationship is nonlinear. The economic-mathematical model of the impact of the complex index of social responsibility for synthesis rate productivity of the enterprise activity and is displayed graphically.

100-104

Authors: Giuli Giguashvili

Turism is considered as the largest and fastest growing industry in the World. Tourism’s impact on the economic and social development of a country can be enormous: opening it up for business, trade and capital investment, creating jobs and entrepreneurialism for the workforce and protecting heritage and cultural values. This sphere can bring much profit as to private firms, also to concrete countries, Revenues from tourism sector grow on annual basis and reach record figure. Over the past 10 years, tourism is an only sector in Georgian economy that grows on annual basis. It should be also noted that tourism sector has become one of the important sources for currency inflows to the country. According to the statistics of national tourism administration, the year of 2016 and the beginning of 2017 were especially successful in terms tourist and currency inflows from tourism sector. Tourism in Georgia is an important component of the economy of Georgia. International tourism is a rapidly growing industry. In 2015 it employed around 158,500 people, producing 6.7% of Georgia’s GDP by providing US $1.94 billion of revenue. 2015’s tourists numbers reached a record high of 2,278,562 people. In 2016, international tourist arrivals increased again, reaching 2,714,773, with resultant revenue estimated to exceed US $2 billion. Revealed 6,350,825 international visitors arrived in Georgia last year, which is 449,731 more than the year previous. The largest number of tourists is reported to come from Azerbaijan (1,523,075, an increase of 9.3%) Second place is Armenia (1,496,246, an increase of 1.9%) followed by Turkey (1,254,089 – a decreased of 9.9% from last year). In the fourth place was Russia with 1,037,564 tourists visiting Georgia in 2016, a full 12% more than in 2015. Visits from Ukraine increased by 21.8%, amounting to 172,631 people. The latest data indicate year-on-year visitors from Europe also show positive signs; with the total number of travellers from Lithuania, Latvia, Czech Republic, Bulgaria and Germany all significantly increasing. An exceptional increase in tourism was observed from the following countries: Iran (+485%), India (+ 199%), Saudi Arabia (+ 116%), the Philippines (+ 89%), Oman (+ 75%), and China (+46%),” Chogovadze said. The newly-established visa-free travel represents the most important achievement for Georgian citizens that will further deepen and encourage contacts, business relations and tourism. Development of turistical business and involve in the economical service of the country is the most important and active problem of the development of market economics. For its regulating and arranging the state must do the best.

109-112

Authors: David Lolua

Rural tourism is a rest in the countryside. People, who have a small farm, are hosts for arriving guests and they have the opportunity for their accommodation and can offer a variety of activities. In recent years the popularity of rural tourism has grown considerably in the developed countries. In this direction there is a growing interest of foreign tourists to the Georgian villages, too. Rural tourism provides very interesting opportunities for business development in the village. Theoretically, any resident of the village who has time, desire and organizational skills can be engaged in the rural tourism. Georgia has great potential for rural tourism development: natural beauty, rich flora and fauna, a lot of cultural and historical monuments, folklore, cuisine and more. The aim of the research is to study the prospects for the development of rural tourism in the country, as additional employment opportunities, together with or on the basis of its own housekeeping rural areas. Research methodology: Theoretical and methodological basis of the study are the works of Georgian and foreign specialists in this field, Legislative acts, as well as methods of the survey, analysis, conclusion. Results and implications: Research into the causes of poverty in the villages of Georgia showed that most of the respondents consider the low incomes and unemployment to be the main source of the poverty. To improve this situation, it is important that the rural population has been able of additional employment together with a private household, or based on it. Such a possibility is the development of rural tourism and homestead tourism. Conclusion: Development of rural tourism in Georgia will contribute: 1. The creation of new jobs in rural areas. 2. The improvement of the living standards of village inhabitants. 3. The creation of tourism infrastructure. 4. The reduction of seasonality of tourism to nothing (rural tourism is functioning year-round). 5. The development of entrepreneurial activities in the village. 6. The restoration of cultural and natural monuments in rural areas. 7. To attract tourists in the villages. The proposed works suggest the creation of facilities for alternative, organic, ecologically pure, harmless, energysaving materials, such as wood, clay and stubbles. Based on the research, it was found that the stubble eco-house is very attractive, cheap and convenient for consumers, because of its thermal characteristics, including accommodation, such materials are acceptable for residential and hotel buildings, for recreation of tourists and protected areas,also in agricultural buildings (farms, warehouses ...), cottages, etc.

116-119

Authors: Nana Nadirashvili, Lela Inasaridze

During managing the marketing system with scientific methods, especially with synergism and synergetic ideas, we are introduced to new innovative methods as a result of which we get a completely original group. Usage of synergetic ideas helps us to increase management effectiveness, particularly to realize and become aware of important defects and their remedies without special expenditures. Such method makes it possible to conserve-minimize resources and costs.

17-20

Authors: Izet Zeqiri, Fitim Deari, Sadri Aliji

The role and place of information in financial decision making process is undisputed. The financial decision that doesn’t rely on information would be inaccurate and costly. Information serves and helps in the decision making process both information users, internal and external. Thus, nowadays firms pay enough attention to the construction of appropriate information systems. Such information systems should be able to provide information in time, valuable, and with many rest qualities which are required by user’s needs. In the firm context, different levels of government have different needs. Whereas, the strategic level requires information that is linked with future and a longer time, the tactical level requires such information which includes recent past and future. Or, the operational level requires such information which includes the current state and has informative character.

26-31

Authors: Dmitrijs Oļehnovičs, Inta Ostrovska, Viktorija Šipilova, Elita Jermolajeva, Ludmila Aleksejeva

Nowadays, much interest is devoted to the use of innovative (or wise) methods in assessing regional development. Rural areas have particular importance in ensuring sustainable development of any state; moreover, smart approaches to the assessment of regional development potential help determining common trends in the socio-economic development of the state as a whole. The present study shows the possibility of an integrated use of quantitative and qualitative methods in the assessment of the sustainable development of Latgale region (Eastern Latvia). The assessment was carried out within the framework of the project 5.2. of the national research program EKOSOC-LV. The quantitative assessment was based on scientific and practical experience taking into consideration the peculiarities of the development of Latvian regions and districts and resulted in the establishment of an integrated index (Smart Development Index), which comprises four dimensions – Resources, Population, Economy, and Management. The qualitative assessment was based on the viewpoints concerning the cornerstones of smart specialization and the factors influencing it expressed by experts representing the state administration, business and scientific environment. Expert opinions were collected by using the AHP method. The results of the research can contribute to the development of a scientifically grounded state and regional policy that reveals the full potential of smart development of rural areas, taking into account the rate of the regional socio-economic development. The case and the methodology of the present study can also be interpolated to other regions experiencing the need for creating an integrated, scientifically grounded, balanced and sustainable policy of regional development. The research is supported by the State Research programme 5.2. “Economy transformation, smart development, management and legal framework for the sustainable development of the state and the society – new approaches in the development of sustainable knowledge society (EKOSOC-LV)

36-43

Authors: Jeton Mazllami, Izet Zeqiri, Brikend Aziri

The economy of the R.M. did not have the necessary immunity to face the worldwide consequences of the global financial crisis that hit most of the western national economies a few years ago. In order to prevent and alleviate the negative consequences, the government of the RM during the period from 2008 to 2010 has taken some anti crisis package of measures. The government has introduced four packages of anti-crisis measures in the period 2008-2010. The aim of this paper is to analyze how the government of the Republic of Macedonia facing with the 2008 financial crisis, how the government was implement the anti crisis measures and finally what is the impact of financial crisis in the business sector with special emphasize the Pollog region. A large scale survey in SME’s has been conducted in order to get a clearer picture from the business point of view.

55-57

Authors: NIKOLOZ BAKASHVILI

Humanity has a lot of challenges in regard of social, political, ethnic, religious, gender etc. direction within the context of modern globalization, but innovative reveal of the natural regularities in regard of the globalization process characteristic of legislative and social-economic systems taking place willfully or involuntarily, can be considered as the most important one among the mentioned challenges. Sensitivity of business to the internal or external environment characteristic of business within the conditions of globalization can be considered as especially sensitive at all stages of the social-economic formation. If we take into consideration the impact of external factors, affecting social-economic systems, on the economic behavior of the mentioned business structures, the problems related to globalization can have extremely important impact together with the positive events. The latter, on its side, causes the start of so-called “natural survival process” of existing business structures. Business is the field of activity of society distinguished with special requirements. Transparency and legitimacy of the financial-economic situation can be considered as the most important among the mentioned requirements. Since the globalization process is accompanied by the strife for survival in a form of business subjects relevant resources (labor, financial, material and/or other material or non-material) will be provided. This may contain: ability to make law-abiding maneuvering within the legislative system, attractiveness of investment, image of honest taxpayer, compliance with the international harmonized customs tax system, establishment of trust and transparency by the participants of partner and/or equity capital, confirmation of stable financial image with possible contractors and so on. All the above mentioned can be achieved through proper working of the most important segment of market infrastructure such as audit. Materials of audited financial statements form the basis of transparency of working of business subjects, financial stability, image of honest tax payer and obtaining of desired partner status. Herein, business adaptation process is accompanied by the relevant increase of load of audit segment and inevitability of additional requirements and regulations for the field of audit within the globalization process. It should also be noted that important challenges can be perceived in regard of audit profession and auditorial activity as well that is caused by the process of globalization. That caused a number of legislative and structural changes in the country on its side.

63-70

Authors: Madona Gelashvili

At current stage, deepening of the trade & economic relations with the developed countries is of greater significance than with the countries at the same development level. This is mostly caused by the increasing technological dependence on the developed countries. For the developing and transition economies it is of critical significance to attract foreign investments providing the basis for economic development,exports growth and integration into the world trade and economics. To evaluate the directions of the foreign trade relations of Georgia, the work offers discussion of the foreign trade turnover, export & import, the largest trade partner countries, the largest groups of import and export goods and other indicators. Georgian government supports the idea of export oriented policies. Reduction of import tariffs and liberal local policies of recent years is best suitable for such approach. Export-oriented policies imply entry to the foreign markets and improvement of situation, with respect of production and costs in domestic export sector. Both of these aspects are subject of trade agreements, determining the conditions for opening markets for one another by the trade partners. And such negotiations deal not only with the tariff and non-tariff barriers but legislation regulating and forming the markets in general, as well. Trade policies of a country comprise significant part of the economic politics, as exports promotion is associated with economic growth, especially, where the trade partner, e.g., such as EU, implements the policies oriented towards foreign markets.

76-80

Authors: Lela Kamladze

This study reviews the Member States’ experience with codes of conduct and conflicts of interest affecting the partnership arrangements under the European Structural and Investment Funds. The focus is on conflicts of interest affecting the Monitoring Committees under the European Regional Development and European Social Fund. The study reviews the rules and other approaches to deal with conflicts of interest, discusses best practices and ends with conclusions and recommendations advocating a complementary rule and value based approach supported by transparency and ethical leadership.

91-95

Authors: Natela Vashakidze, Dezdemona Maglakelidze

Financial instruments are a delivery tool to provide financial support from the EU budget. Financial support provided to final recipients through financial instruments may take the form of loans, guarantees and equity investments. If properly implemented, financial instruments provide two specific benefits compared to grants: — the possibility of leveraging the public funds (i.e. mobilising additional private and public funds to complement the initial public funding); and — the revolving nature of their capital endowment (i.e. the use of the same funds in several cycles). The fact that loans have to be paid back and guarantees have to be released or, in the case of equity investments, returned should also have an impact on the behaviour of final recipients, leading to the better use of public funds and reducing the likelihood that the final recipients will become dependent on public support. We analysed the use made of preferential and risk-sharing arrangements with private partners and of tax agreements in this regard. Commission’s measure of leverage for financial instruments does not properly take into account the extent to which public financing mobilises additional funds need for more differentiated leverage ratios to obtain meaningful measurements Difficulties in identifying leverage of additional private and public capital for shared management instruments.

100-102

Authors: Givi Bakradze, Nanuli Dzimtseishvili

The present article discuses peculiarities of existing tax legislation of Georgia. Study reviews the necessity of current tax legislation improvement towards business stimulation approach. The recommendations are given for the improvement of tax system and tax policy

106-108

Authors: Liudmila Demydenko

The article deals with the drafts of two versions of tax reform, which were represented in 2015 by the Ministry of Finance of Ukraine and by the Committee of the Verkhovna Rada of Ukraine for tax and customs policy. The authors have represented the types of tax reforms on principles and methods of implementation tax policy in Ukraine. Insignificant positive changes were created in the tax system due to the adoption of compromise amendments to the tax legislation. A substantial reduction of the Unified Social Tax (UST) can be considered an important contribution for improving the business climate in Ukraine. It was concluded to provide radical tax reforms in the nearest future.

114-122

Authors: Łukasz Ambroziak

The aim of the paper is to present changes in Polish exports of food industry products in 2000–2014 using trade statistics in value added terms. They allow to decompose gross exports by the origin of the value added content, i.e. domestic and foreign inputs. For this purpose, the World Input-Output Database (WIOD Release 2016) was used to create a matrix of value added flows in the world economy According to the investigation carried out, in 2000–2014 the share of domestic value added content of Polish gross exports of food industry products dropped by nearly 10 pps. In 2014, slightly more than 74% of those exports was value added created in Poland, whereas foreign value added accounted for the remaining almost 26%. In comparison with other economic sectors, the share of domestic value added content of Polish exports of food industry products was relatively high. In this respect, the figure for Poland was also above the EU average.

126-129

Authors: Manana Aladashvili

In contemporary terms, tourism is a highly complex, multifunctional, multidimensional, and dynamic category of national and international significance. Therefore, it is necessary to primarily consider and analyse the very concept of tourists and tourism; its essence, structure, types and forms in which it primarily exists as a social, cultural and economic phenomenon, as a practice and a science. Globalization is a relatively new concept in economics, and it refers to the opening of individual national economies to the world economy, with mutual strong co-operation with as few legal barriers as possible. Sustainable development is also a recent economic concept, and it refers to the adjustment of economic development of a certain country to its natural resources, but also the resources of other countries that the respective country uses for its economic activities. The abovementioned differences in the outlook on tourism, globalization and sustainable development indicate that tourism is a very heterogeneous social phenomenon, and that different approaches and conclusions arise from these differences. Such activity has prompted the need for better linking of economic and political systems of different countries. It is indubitable that the boost of contemporary globalization is related to economic growth and depletion of natural resources at the global level. This indicates that the globalization process in terms of energy and environmental constraints could have a self-annihilating character. Simultaneous effects of tourism, globalization process and sustainable development will significantly affect future development of overall economic and social changes worldwide.

133-136

Authors: Darejan Bitsadze, Ia Goderdzishvili

Research reviews the ways of improving competitiveness and anti-crisis efficient management of automobile transport for both cargo and passengers, discusses numerous ways of improvements in these fields. Based on analysis of correlative connections of inner and outer factors, publication assesses the competitiveness of transport companies.

142-150

Authors: Quji Bichia

Automation brings new opportunities and new challenges to the economy. Economic environment is changing with fast pace and this has a huge impact on labor market. Problem of employment is becoming more challenging as robo technologies are replacing labor force. Economists started looking for solutions to this problem and one solution they are considering is universal basic income. The idea of distributing equal income to every citizen has caused different reactions in economists. Even if wages from working makes the income different, many look at the program skeptically. Nonetheless, the idea is being tested in different countries and the results will show how widely the universal basic income may be implemented. Though, more pragmatic approach to the problem would be to help workers adjust their effort towards occupations that would be more demanded in future economy.

155-158

Authors: Naira Galakhvaridze

The article is about importance of the landmarks and monuments in cultural tourism and it gives the specific information how to run management of such places. The term “World Heritage” has the most important place in the hierarchy of monuments. The landmark or the monument, which happens to be on the list is rightly considered to be unique and it is assigned the rank of the world’s treasure and it means, that the landmark or the monument is the most important thing of culture and history. Once the monument is included in the “UNESCO World Heritage” list the country should provide to check the legislative base systematically and to renew it if necessary. It is very important to protect and keep the monument’s the characteristics and value that were the crucial points in recognizing the above mentioned place to be authentic and important for the mankind. In case of damaging the monument that is in the World heritage list the monument is immediately taken from the list. It’s our duty to take care of the places of such great importance in order to keep them for our future generations.