Globalization and Business

13 - 21

Authors: VLADIMER PAPAVA

It is not so uncommon when the main deterring factor of economic growth is its politicization. As a matter of fact, economic policy is a part of governmental policy and this means that the “politicization of the economy” is practically unavoidable. The problem is when the conditioning of the “politicization of the economy” is the type of economic policy that is not based on the achievements of economic science. If economic policy is not only distant from economic science but, on some occasions even contradicts it with its elementary provisions, then this type of economic policy held by a government should be called “non-economic policy.” Among the causes of “non-economic policy,” special attention must be paid to problems in the existing mistakes in economics, in the non-professional economic team of a government and in the wrong recommendations given to a government by international financial institutions. Post-communist Georgia’s experience gives us noticeable examples when different governments held ‘non-economic policies’ which negatively impacted the country’s development. As a result of successful economic policies economic reforms were held which subsequently combatted hyperinflation in the 1990s,achieved macroeconomic stability and established the Georgian lari (GEL) as the national currency following currency reform. Relevant reforms were completely based on economics. The main problem is the rapprochement of economic policy to economic science. Achievement of this is only possible in the case when economic policy is elaborated by highly professional economists.

34 - 43

Authors: Igor Lyutyy, Yuliia Nakonechna, Liudmyla Demydenko

The article contains a theoretical generalization of the essence and necessity of state borrowing, monitoring of indi- cators of state and state-guaranteed debt in the conditions of government aspirations and actions in the field of ensuring the sustainability of public finances in Ukraine. The main task of the authors is to monitor the indicators of state and state-guaranteed debt in the context of the need to ensure the sustainability of pub- lic finances of Ukraine. State debt in Ukraine remains a significant factor of macro-financial risk. An important measure to prevent the threat of uncontrolled growth of public debt is to strengthen financial control and the implementation of continuous monitor- ing of its main indicators. The cost of public borrowing and the assessment of the effectiveness of their use as a factor in ensuring the sustainable development of the economy is a constant source of discussion between officials, public organizations, and repre- sentatives of scientific analysis centers. The article uses the generally accepted methodology for calculating the main indicators characterizing the state’s debt policy. The method of expert assessments analyzes the condition of the state debt and prospects of its servicing in Ukraine. Statis- tical and analytical methods have been used for the processing of statistical data on the study of the dynamics of indicators of state and state-guaranteed debt in Ukraine. The sources of infor- mation were the materials of the Ministry of Finance of Ukraine, the State Treasury Service of Ukraine, as well as the Budget Code of Ukraine, laws and regulations of Ukraine relating to the budget sphere, scientific works of domestic and foreign scientists. This study aims to address the issues of analyzing and evaluating pub- lic debt indicators in the context of improving debt management. The authors propose to use 10 indicators to monitor the state of public debt and make managerial decisions in public finance. The empirical experience of developed EU countries confirms the feasibility of using the key benchmark of state debt to GDP of 60% in government debt management. At the same time, the max- imum level of public debt for emerging markets is proposed in the range of 40-60%. These ideas were embodied in the position of the medium-term state debt management strategy for 2018–2020 years, where the planned gradual reduction of public debt to GDP is 60% as of 2018, up to 52.2% in 2019 and up to 49% in 2020 . Consequently, it is important to monitor compliance with the established expected values during the budget periods de- fined by the strategic plans for monitoring and justifying the ac- tually obtained indicators. In this context, the actual indicator of Ukraine’s debt in 2018 was 68%, which indicates a deviation from the planned indicator, which was due to the presence of internal and external factors which were not taken into account when this indicator was planning and which need to be further studied. So, the quality of debt planning needs further improvement. In addi- tion, the group of indicators of debt security should include the indicator of external government debt - short-term external debt as a percentage of reserves (threshold value - 100%), from 2014 this indicator is constantly exceeded. The dynamics of changes in the state debt and state-guar- anteed debt to the main macroeconomic indicators and budget parameters, weaknesses of the government debt strategy, the prospects of the debt policy in Ukraine are determined.

54 - 59

Authors: Paata Koguashvili, Nikoloz Chikhladze

Georgia has long been considered one of the exempla- ry wheat producing and consuming countries. In the article, the authors claim that the production of cereals as a strategic food must be a priority, and that the structural transforma- tion of arable lands will allow for producing 1.0-1.1 million tons of cereals in the medium term, which is sufficient for the country’s food security. As to wheat, we can produce it within 60-65% of our demand, of which, price of one ton will be by$ 25-30 as compared who imported wheat. To that end, we have to change agricultural policy and bring it in line with the existing global challenges. In the last two decades, there has been a trend towards the decline in world cereal output and the continuing rise in their prices. The latter is also due to the fact that population growth has far outpaced the per capita growth of cereal pro- duction. In the last four decades, the global price of 1 ton of wheat has increased from $ 80.4 to $ 173.4. The era of cheap food in the world has come to an end. Economic calculations indicate that by 2025, the opti- mal area for wheat will be considered: 114.0 thousand ha, for crops - 421.8 thousand tons, for a grain-storing - 120.0 thousand ha, and for a fodder - 50.0 thousand ha, for maize - 170,0 thousand ha and 714,0 thousand tons, for barley - 50,0 thousand ha and 160,0 thousand tons, for oats - 20,0 thousand ha and 50,0 thousand tons. In case of land consolidation, the wheat cultivation area may be increased to 150.0 thousand hectares. In order to avoid the long-standing problem, it is necessary to apply all the reserves for increasing domestic cereal production, for which, first of all, Georgia should adopta financially, technically, technologically and institutionally strong State program supporting grain producers, which will also involve institutional measures to produce elite seeds.

68 - 73

Authors: Marine Natsvaladze

Traditional Economics looks at the persons as at some kind of rational machine which takes into consideration all available information and then makes optimal decision. Re- ality is rather different. The behavioral economics claims that there is no rational «economic human” and probably will nev- er exist. Person’s behavior is irrational and this irrationality is not random and clueless. Vice-versa - this irrationality is systemic and predictable. Behavioral economics explores what affects people›s economic decisions and the consequences of those decisions for market prices, returns, and resource allocation. Tradition- al economic research assumes that people›s economic deci- sions are based on the rule of maximizing utility. Behavioral economics uses experiments that observe human behavior in order to uncover how we think. Behavior- al economics has been called the science of decision-making. It is a growing academic discipline which uses experiments that observe human behavior in order to uncover how we think. Behavioral economics is about understanding com- mon decision mistakes that people make and why they make them. In particular, a large aspect of behavioral economics is concerned with the gap between intention and action. Classical economic theory assumes that individuals are rational. However, in the real world, we often see irrational behavior – decisions which don›t maximize utility but can cause a loss of economic welfare. It means economists need to take into account the potential for irrationality. Successful marketers must have a profound understand- ing of the consumer’s thought process in order to create a suc- cessful marketing campaign. By understanding the consumer’s decision-making process, marketers are able to develop value propositions that really fit the consumer’s needs. The impor- tance of understanding behavioral economics for marketers is immeasurable as it allows for a better understanding of the human mind. Behavioral economics allows marketing profes- sionals to optimize marketing strategies and get real results. In the article are reviewed applied aspects of behavioral economics, also theoretical and practical results of researches. These results will be useful in company management, for pol- iticians, in private decision making as they give different per- spective to rational-functional models. In case of ignoring the interdisciplinary approaches, integration of economics and psy- chology can result in waste of resources and wrong decisions.

83 - 89

Authors: Natela Tsiklashvili, Ketevan Chanidze, Zeinab Surmanidze

Internal migration is an important demographic process that negatively affects a country›s demographic balance. It can be both voluntary and forced. In the first case, the migration of people from the village to the city is due to socio- economic reasons. In the second case, people are forced to leave their homes and move during natural disasters and conflicts (eco-migrants and displaced persons). The problem can be considered in a regional context and highlight a number of trends that are relevant for the Autonomous Republic of Adjara. The reduction of the population of regions is importance for ensuring demographic security, both for using the potential of economic development and for the population in the regions adjacent to the state border. Since the internal migration flows are large, this can lead to an increase in labor flows from the regions. In addition, in the case of vulnerable groups, such as displaced persons and eco-migrants who live in different municipalities, additional problems arise in terms of integration resettlement. According to experts, the control of internal migration processes was practically destroyed in the post-Soviet period. The movement of the population within the country is no longer controlled; accordingly, the issue is less studied in the scientific direction. Management of internal population flows caused by armed conflict, socio-economic and environmental problems requires more attention from the state. It is especially important to develop and implement policies that encourage the use of accumulated human and financial resources for sustainable development, which will allow local residents to stay in their places of residence. This will affect not only urbanization/emigration trends, but also general macroeconomic indicators, income levels and living standards.

96 - 104

Authors: Avtandil Sulaberidze

An important role of migration in the world as well as in local predictable changes, with regard to certain countries’ population, indicates to the challenge of migratory processes. In order to explain the causes of migration, with the aim of its optimization and regulation, there were formulated various theories and concepts regarding the migration. From among these concepts, we have employed the neoclassical theory of migration and the theory of migratory transition, as well as the concept of the third demographic transition. In the process of the formation of Georgian population, migration played, and still does, a significant part in influencing the growth rate of the Georgian population’s size. If natural increase was the main component in terms of the size formation of the Georgian population during 1960-1991, from 1992 up until today, external migration assumed the same role. Since 1992, the low natural increase can no longer compensate for the negative net migration as a consequence of which the Georgian population has decreased by 3723.5 thousand persons by 2019. On the one hand, since 1992, Georgia has belonged to the list of the countries that are demographically developed and on the verge of depopulation. On the other hand, because of the high intensity of emigration, it is among the donor countries which supply the developed countries with emigrants. Socio-economic analysis of the migratory processes that are associated with Georgian population has showed us that Georgia’s economy is characterized by a high share of labor in comparison to capital and by low market income, whereas the highly-developed countries of Europe are distinguished by the opposite tendency – the low share of labor compared to the capital and higher market income. This is directly linked to the neoclassical theory of migration, and the mentioned distinction forces Georgian population to emigrate toward the highly-developed foreign countries. Furthermore, decrease of work-force together with its human capital did not cause a significant growth of their income. In spite of the fact that the salary of the Georgian emigrants (especially illegal ones) is small in the highly- developed countries, in comparison to Georgia, European countries offer substantially higher salaries even on the low-qualification jobs than the actual salaries of a worker employed on the high-qualification jobs in Georgia will ever be. This difference is the main reason as to why the emigrants refrain from returning to their homeland. A sociological survey has confirmed that emigration from Georgia, besides economic factors, is associated with such social-demographic factors of migration as are: receiving education, exile, and the desire to live in better conditions, etc. These factors substantially determine the positive of migration in the receiving highly-developed countries and negative – in Georgia. Therefore, the more distinction there is between the positive and negative factors of migration, the higher the expected emigration to the other countries and the possibility of staying there. According to the current statistical information with regard to the materials of the 2014 population census, the article demonstrates the dynamics and tendency of the migration of the Georgian population since the country gained its independence up until today. It analyzes migrants’ sex-age structure. It has been revealed that the emigration is especially intensive amid the population that is in their reproductive age and is able- bodied. Moreover, it is related to social-economic factors. The sociological research conducted on students showed us that 42% of them intend to emigrate abroad after they graduate during 2018-2020. Additionally, working is the primary motive for boys as studying is for girls. After receiving education abroad, the half of them intend to return to homeland provided they can find a job with a decent salary in Georgia. Net migration has decreased at the expense of the immigration of foreign citizens and not at the cost of illegal Georgian citizens. In the aftermath of a short-term visa- liberalization within the territory of the EU, emigration from Georgia has increased, which is confirmed by the growth of the negative net migration from 2212 to 10763 inhabitants in 2017-2018. This, in turn, will reduce the population reproduction potential in Georgia and through “brain drain” the country will lose its human capital that possesses higher education. Therefore, it is still early to draw conclusions with regard to improving the perspectives of emigration and immigration of Georgian population.

110 - 115

Authors: Maia Grigolia

The article discusses how fiscal stability affects macroeconomic sustainability and whether stability means strong economic growth in Georgia.The results of the analysis conducted in the article is supported by those numerous studies which indicate that fiscal stabilization reduces output volatility. Based on the existing analysis, we can say that fiscal policy can make a significant contribution to stabilizing output. Fiscal Stability Indicator (FISCO) for Georgia has been calculated and cross-country analysis has been performed. It has been found that fiscal policy contributes more to stabilization of output in developed economies than in transitional markets and developing countries. The fiscal stabilization indicator for Georgia is 0.42 and is statistically significant, which indicates that one percentage point change in output causes 0.42 percentage point change in the total budget balance (as a share of GDP). The FISCO indicator is 0.41 for developed countries and 0.24 for transitional markets and emerging economies. Based on the correlation analysis, it has been revealed that higher fiscal stability is associated with lower output volatility. However, here also, the difference between the groups of developed and transition and developing countries is significant: in developed countries- the relationship between fiscal stabilization and output fluctuation is stronger and sharply negative than in transition and developing economies. More often, fiscal policy is used as a stabilization mechanism when the economy lags behind the desired pace of growth; And are less likely to resort to policy mechanisms when booming. Due to the proven importance of the fiscal stabilization in economic sustainability it can be concluded that the use of fiscal stabilization as a mechanism only in the «black days» can greatly worsen the sustainability of government debt, as governments appear to lack the advantage that they can reduce deficits and create fiscal buffers to better address future negative shocks in times of growth.

121 - 125

Authors: Nino Parsadanishvili

Present paper focuses on current crises in international trade in services negotiations from the perspective of consideration of trading interests of developing and least developed countries in line with the operational agenda of the World Trade Organization (WTO). Through the analysis of the existing international legal texts and scholarly works particular attention is paid to the different rounds of trade in services negotiations in parallel to the consideration of the results of relevant ministerial conferences of the World Trade Organization, drawing attention to the situation with regards of consideration of the interests of developing and least developed country members of the WTO. Special focus is paid to the complexity of the decision making process and it’s complication over time due to increased participation of parties concerned in the process of trade in services negotiations resulting in no progress in the overall process. Next to analyzing the challenges faced by the WTO in trade in services negotiations, especially in terms of considering the interests of developing and least developed countries, paper shows the ways that could be used during 2020 Kazakhstan Ministerial Conference of the World Trade Organization for finding solutions to simplify the decision making process and establish freer international trade in services by the way of either implying new approaches in interpreting the existing multilateral treaties that deal with trade in services between all member states of the WTO or deepening the discussions on a new plurilateral agreement helping the organization to overcome the stagnated process of trade in services negotiations and therefore ensuring the compliance with it’s own operational goals.

130 - 135

Authors: Lela Scholer-Iordanashvili

Globalization offers new challenges to the world economy, which becomes more depended on unprecedented in- crease of financial activity worldwide. Availability of information and development of technologies significantly increased capital flow in the world and role of capital and monetary markets in economy. Second half of 2007 and first half of 2008 faced important events in the world economy. Among them especially no- table are US real estate crisis and global limitation of credits, devaluation of USD and strengthening of inflation processes. These global events have significant influence over financial stability. In the recent decade variability of stocks and interest rates, together with globalization of capital markets, in- creased demand on financial instruments with the purpose of distribution of risks. From this perspective, interest rate derivatives are most frequently marketed among OCT derivatives. Therefore, estimation of the role of financial derivatives instruments is very important in stability of international financial system. Purpose of research is to analyze influence of derivatives over financial crisis. Within frameworks of re- search 5 countries are studied for 1997-2010 quarterly. OLS regressive equation is used in research for empirical tests. Model includes following variables: crisis index (dependent variable), independent variables are: correlation rate of cur- rent account and GDP, correlation rate of domestic credit on private sector with GDP, correlation rate between for- eign currency reserves and conditional amounts of market derivatives on the stock exchange. Empirical analysis shows us that influence of derivatives over financial stability is not unilateral and depends on characteristics of financial system of the country. Particularly, in Singapore and USA, where financial system is strong, influence of derivatives is positively reflected on financial stability, and empirical study conduct- ed on example of emerging markets, particularly, Argentina, Russia and Brazil revealed negative influence of derivatives on financial system.

143 - 146

Authors: Gocha Ugulava

Modern economic science is unthinkable without predict- ing and planning the prospects for economic life development. There are many different mathematical and statistical tools in the arsenal of scientists as well as practitioners and econo- mists today in purpose of forecasting. To date, one of the most prominent effective tools for data analytics is artificial neural networks. Artificial Neural Network - is a mathematical mod- el created in the likeness of a human neural network, and its software and hardware implementation. We carried out mod- eling and forecasting of regional economic indicators using the artificial neural network of the three-layer perceptron archi- tecture. The network architecture and neuron settings were automatically formatted through the programming language R and its package - Neuralnet. During the forecasting phase, the data vectors were presented as data frame in five input param- eters (DFI, FAI, EMP, BT, CPI), according to the neural network forecast of the regional gross domestic product (RGDP_NN) was calculated. All data are from the Imereti region and are taken from official GeoStat sources. Forecasting was done at the same time scale (2006-2017) to enable us to compare the predicted values with the actual ones to verify the level of fore- cast accuracy. We also tested the results of the neural network in another way - compared to the predicted values using mul- tiple linear regression on the same data. The accuracy of the predicted values calculated by the neural network was quite high, which was not declining but slightly ahead of the accura- cy coefficients of the predicted values obtained through linear regression. Also, the predictive values calculated by the neu- ral network with high adequacy and accuracy were compared with actual, existing ones. Presented material shows that the use of artificial neural networks for the prediction of territorial economic indicators is reasonable and justified. Their role in analyzing and predict- ing indicators that are characterized by non-stationarity, dy- namism, lack of a definite trend, periodicity, nonlinear struc- ture is especially increased. It is therefore advisable to apply this method in regional economic studies, in predicting terri- torial development plans, strategies, targets and indicators.

161 - 169

Authors: Quji Bichia

This paper aims to compare spread of an opinion, norm, innovation or a belief in different types of networks. For this purpose, different network metrics are discussed and results of network model are summarized based on simulations. Norms may spread from a single source or multiple sources and these issues require separate analysis. Networks play an important role in decisions that peo- ple make. They determine what information someone will re- ceive and how will he act within this limited information. As it turns out, small number of people can influence decisions of majority. These can be consumption decision, decisions about adopting new technologies, innovations, medical prac- tice, social norms and so on. Mathematical models of net- works help us understand how these processes propagate. There are different types of networks that can emerge within a society or some group and there are characteristics that can describe roles of group members in spreading some idea or innovation. Networks can be of many kinds but human networks tend to have common characteristics. Therefore, current work focuses on 4 types of networks - small world, single-hub (one central figure), multi-hub (many central figures) and two-component. Small world random networks are observed in different situations and they can be used to describe some human interaction networks. Many networks are described by power law distributions, where new members of a net- work have a preferential attachment and link to other high- ly connected members. Single-hub and multi-hub networks describe such situations. Two-component network is used to describe polarized groups that have opposing views and are competing with each other. This could be political parties or competing firms. The present paper analyzes patterns of information flow across different types of networks and compares the condi- tions for the emergence of group behavior. Contribution of this work is the simulation results that show how different networks exhibit varying outcomes and propagate opinions differently. Simulations on small world, single-hub, multi-hub and two-component networks with 150 members show that network types matter in terms of how fast can group behavior spread within a network. The process of spreading group behavior is as follows: Every individual receives some signal is about a binary decision. Individuals make the first decision based on their signals because they have no other information. In the next step, every individual looks at the decisions of those in his or her neighborhood and updates his or her belief by the Bayes rule. On the next step, they observe others’ actions again and decide whether to change own action or not, and so on. After some stages, a stable point is reached where no one is willing to change his decision anymore. The study compares the times needed to reach stability in different types of networks. Simulations have shown that the speed of propagation of a belief varies according to who is the source of this process. However, the difference is not big within a small world network. As it turns out, full distribution occurs in at least 4 and a maximum of 20 periods, and the average time of full distribution varies from 6.5 to 8.6, depending on whether the most connected member is the source or the least connected one. The result is quite different if there is one central figure. The presence of one central figure prevents information from spreading across the network, as there is preferential attachment- ment and some members can only acquire one connection. If there are several central figures, the full spread occurs relatively faster. In a two-component network, full adoption occurs quite rapidly. Although the connection between components is almost non-existent, a small number of existing links play a critical role in rapidly disseminating a behavior. Group behavior spreads more rapidly in a random network than in a network characteristic of a special society on average. But multihub network has the potential for the fastest spread (although information disseminates faster in a random network on average). Group behavior is slow to spread in a single-hub network, as some individuals are very weakly connected to other areas of the network. An opinion spread in the neighbourhood of the central figure will soon reach all members of around him or her but it will take a long time to reach far ends of the network. The two-component network in this regard maintains a balance between the speed of dis- tribution and the area of distribution. There is least variation between adoption times in a two-component network (not considering the small-world random network). The high variation in single-hub and multi-hub networks indicates that it is advisable to consider more specific situations for accurate results. Comparison of adoption times within multi-hub networks of different size shows that adoption happens at the same speed most of the time regardless of the network size. When two opposing opinions are being spread and one of the opinions is dominated by the other, it takes similar time periods for all sizes of multi-hub networks.

178 - 184

Authors: Panteleimon (Paata) Kldiashvili

Accounting and auditing are essential elements of contemporary economic relations. Their importance and the need for their development are constantly growing. Such relevance of the issue has paved the way for our interest in this subject, and accordingly, the purpose, objectives, subject, methods and the informational basis of research have been determined. The purpose of research is to identify the areas where improvements could be made in accounting and auditing regulation for private sector enterprises in Georgia, based on international experience, the country’s international commitments and the characteristic features of economic development. The analysis of the legislative frameworks in force, established practice and international experience allows us for defining the major aspects of the regulatory improvement of accounting and auditing activities, as well as for developing measures that must be undertaken in the separate important areas. In particular: To determine an optimal model of accounting; To identify of levels of accounting records maintenance; More effective use of resources of the International Federation of Accountants (IFA) and other international organizations at the national level; Accelerating research on developing the accounting and auditing field; Setting up effective regulatory and/or self-regulatory body of the field of accounting and auditing; Establishing the auditing quality control system; Ensuring compliance with international standard requirements for financial accounting. Introduction of the continuous education system; Improvement of the regulatory legal framework. Conclusion. Studies conducted allow us for compiling the regulating algorithm consisting of three main components: training and certification; methodical and methodological support; and supervision. Training and certification. Training (including continuous training), in compliance with programms accredited by the Servce, should be provided by professional organizations; certification should be independently provided by the National Assessment and Examination Center on the basis of passing the professional examination, in compliance with the examination program accredited by the Service. Methodical and methodological support. Studies conducted clearly demonstrate a low level of compliance with professional standard requirements and practice in Georgia that is mostly due to the lack of appropriate methodologies, methodical guidelines, supporting manuals and legal acts. A high level of this correlation has also been confirmed using the examples of many other countries. In the component, we should highlight the preparation of these materials on the one hand, and on the other hand, transferring them directly to the consumer. We believe that the preparation of materials should be provided by the Service for Accounting, Reporting and Auditing Supervision in close cooperation with international and local professional organizations and academic staff; these materials should be transferred to representatives of the profession/practitioners by professional organizations. Supervision. This is a key component of the algorithm, which should ensure the effective functioning of the remaining components. It should become a guarantor of compliance with the requirements of national legislation, international standards, and other regulating documents and the minimum requirements of the quality of services provided. Based on the conducted studies, it may be stated unequivocally that the only optimal option in modern conditions for our country is the existence of a state supervisory body in the field of accounting and auditing. Furthermore, for this stage, the functioning of the Service for Accounting, Reporting, and Auditing Supervision within the Ministry of Finance is not a bad decision, although in order to increase the effectiveness of activities, it is necessary to implement a gradual transformation of the Service in accordance with the model we have propose.

11-15

Authors: Oksana Zhylinska, Oleksandr Chernyak, Olena Bazhenova

The paper explores the impact of innovations on the cross-country income differences among advanced economies based on the economic and mathematical models construction. As indicator that defines level of innovations production in the country, we have used number of researchers in R&D sector (per million people). Therefore, it has been constructed panel data model to estimate the effect of number of researchers in R&D sector on GDP per capita in advanced economies. Results of estimation have shown the significant impact of researchers in R&D sector on GDP per capita for the group of advanced economies testifying that innovation really matters in driving economic growth.

24-31

Authors: Giorgi Gaganidze

In this article, the author tries to prove the advantages of exporting the export price. It is proposed to evaluate export growth based on the common formula of regulation. The chronic shortage of balance of trade in commodity products of Georgia was always the subject of concerns of Georgian authorities. Under the independence of Georgia all governments have set a goal of foreign trade openness. At different stages, different ways of solving this problem, namely opening new markets, increasing re-export, re-orientation in traditional markets, etc. This issue was also a subject of research for scientists and researchers, and many interesting researches were conducted in this direction. See Bibliography. All these directions are distinguished in this study and are considered to be the most serious problems that impede export growth, at the same time it is expedient to identify new directions and establish new opportunities for export growth.

39-48

Authors: Nugzar Todua

At current stage business development cannot be imagined without social networks. The customers spend more and more time in social networks and get most part of the information from them. Therefore, for the companies, the social media is a powerful tool for attraction of clients and for competition. Usingthe social media marketing is particularly popular in tourism industry. Technological changes in mass media allow immediate distribution of information in the sphere of tourism. Reasonable using of social networks in tourism requires creative marketing approaches ensuring coverage of the target audience to maximal possible extent. Sites of social media became the primary source of information for the destination management organizations. Usually the tourists trust online information and before commencement of travel they visit the forums and online reviews, as well as specialized blogs. Hence, there is a close relationship between involvement of tourists’ social network sites and change in their behavior. Technological development and globalization of media creates new opportunities providing sharing the information between tourist consumers through blogs, web sites or destination sites. The destinations need creative and powerful social media marketing strategies to attract potential visitors. Social media helps the destinations to communicate with the visitors at relatively low costs and higher effectiveness than traditional communication methods. Social media, as an instrument for stimulation is used for the purposes of interactive marketing. Though, it is notable that there is a growing number of visitors, who use social media applications, creating new challenges in entire tourism industry. As social media plays a significant role in the activities of travel agencies, we found reasonable to find out the level of satisfaction of the foreign tourists with the activities of Georgian tourist companies in social media. Market research showed that of social media platforms, among the foreign tourists the most widespread is Facebook. 85.1% of the respondents use it. It is followed by YouTube (54.7%), Instagram (32.4%), Google+ (31.1%), Linkedin (29.9%), Twitter (27.2%) and MySpace (15.5%). 14% of the respondents use the other social networks (Pinterest, Tumblr, Flickr, Reddit, Ask.fin, Vkontakte, Odnoklassniki). Study demonstrated interest of the respondents to the information provided by the sites related to tourism, their trust and satisfaction. Analysis shows that the respondents are satisfied with the social media marketing offered by Georgian travel agencies to certain extent. As a result of our market study we can conclude that Georgia is an attractive destination for the foreign tourists. Therefore, the number of repeated visits to Georgia increases from year to year. In making choice of Georgian travel agencies, the foreign tourists basically rely on the information in social networks and word-of-mouth marketing. Though, interest, trust and satisfaction of the foreign customers to social media marketing offered by Georgian travel companies are at the average level. Therefore, foreign tourists evaluate media marketing activities conducted by Georgian tourist companies as average and this underlines insufficient activity of Georgian tourist companies in social networks. With the help of marketing research obtained levels of interest, reliability and satisfaction of foreign tourists in relationto social media marketing provided by Georgian destinations.On the basis of analysis of the research results statistically significant values were obtained that show influence of the activity, interest and reliability regarding to social media marketing provided by Georgian destinations on the foreign tourists’ satisfaction.In the work statistically significant value is also received reflecting the influence of the social media activity provided by Georgian destinations on buying behavior of foreign tourists’.

59-62

Authors: Fitim Deari, Izet Zeqiri, Sadri Aliji

In this study, we try to demonstrate mainly from the methodological and pedagogical perspective how investment weights and the correlation between securities are manifested in the portfolio risk and return. Empirical data are examined from 2010 to 2018 and for the experimental purpose two companies are randomly selected. Totally five simulations are performed using Excel. The fifth simulation presents the case of optimal proportions for an investor that efforts to minimize the portfolio risk.

73-78

Authors: Varnalii Zakharii, Demydenko Liudmyla, Nkonechno Yuliia, Miedviekova Nataliia

In order to build an effective model of management of budget funds, it is important to ensure the constant and systematic disclosure of information on the accumulation of financial resources of the state and local budgets and the directions for their use. The first results of the process of fiscal decentralization in Ukraine are considered, which is accompanied by changes in the budget and tax legislation. Specifics of the formation of tax revenues of budgets of joint territorial communities are outlined. The state of disclosure of budget documents by the amalgamated territorial communities is highlighted and the need for coordination of the authorities in this area is indicated. Understanding citizens› spending processes in the public sector can significantly increase confidence in state institutions, and provide conditions for the implementation of necessary reforms in all-important areas of the country. In the context of the fiscal decentralization reform launched in 2015, the issue of transparency of financial information at the local level in Ukraine is raised, as significant amounts of financial resources are transferred to local budgets. Strengthening the focus on local government action on effective management of budget funds should be a priority for public organizations and political parties. The implementation of the state policy aimed at increasing transparency and openness in the management of financial resources in the public sector will ensure tangible results in the social and economic spheres that will be obtained by the citizens of the communities.

87-95

Authors: David Aslanishvili

This research will explore other possible financial vehicles that go beyond traditional sources of private capital offered by commercial banks. It will look at international experience and the opportunities to use public support, green bonds to raise green finance as well as the work of energy service companies (ESCOs) to finance green investments. We have offered our view of what should be done in fact (not in paper in Georgia as it has been in the past 15 years) to change the situation and end the negative and harmful monopoly of the commercial banks and the National Bank of Georgia and to have in place the two independent sources to attract and invest resources in Georgia. This will increase the capitalization of the country and is a proven way to eradicate the country›s lagging and accelerate economic growth. Why should we focus on this issue? According to WHO›s latest data, over 7 million people die each year because of breathing air with solid particles, and one of its main pollutants is vehicles. (Cereceda Rafael, Cuddy Alice. 2018.....) Georgia’s Capital - Tbilisi - is occupying the 3rd place in the light of air pollution, Due to the critical situation, the public demand to live in a clean ecological environment, day by day increases. In our research the following Questions are discussed and overviewed: Is it important to act on the issues of Georgia›s position on the global scale? What unique components can be used to prolong the average life of people? What investors do the country need for building eco-projects and their realization? What type of ecofriendly technologies can be developed for potential customers in Georgia? In that field we have studied the following: The links between economic growth, green growth (e.g. clean energy), high living standards and capital markets; Why the Commercial Banks are the main and the only source of finance for green (and not only) investments in Georgia; Situation on capital markets of Georgia (stock and bond markets) - as an indicator of economic growth and an alternative source of financing; Possible benefits of non-bank financing, including for clean energy projects and the SME sector (e.g. small hydro, energy efficiency); The role of government in supporting capital market development; The role of international community (donors, IFIs, international organization) to support Georgia’s efforts to develop capital markets.

104-116

Authors: Irakli Danelia

Depending on geographical location, the development of Georgian economy was directly related to the efficient use of transit function. For Georgia, as a transit function, the importance of transportation infrastructure is important in the formation of its geo-economic positioning strategy. The acquisition, realization and development of Georgia›s transport potential began in the 90s of the 20th century. Nevertheless, complex research and analysis on the possibilities of development of transit function of the country in Georgian economic literature is not practically investigated yet. Morover, there are not identified determinants on the development of the sector, and their impact on the economic development of the country is not defined either. The study aims to analyze capabilities of Georgia›s transit potential and to determine its influence on economic development of the country in the process of integration of modern world economy. The following objectives are derived: Identification of significant stimulant determination of development of transport / logistics field and its effectiveness; Establishment of transit / logistics potential for economic development of the country. The objective of the research is the transport and logistics sector in the Member States of the Organization for Economic Cooperation and Development, the Caucasus and Central Asian countries as an important instrument of economic development of the country. The research is subject to comparative analysis of the targeted and consequential indicators of transport and logistics sector in the member states of the Organization for Economic Cooperation and Development, in the Caucasus and Central Asia. The theoretical foundation of the research is the works of various Georgian and foreign researchers about the study. The survey was based on the World Bank, the Organization for Economic Development and Cooperation, Eurostat, National Statistics Office of Georgia, Georgian and Foreign Professionals, Georgian and Foreign Marine Ports, Railway and Motor Operators, as well as the laws of Georgia. The work is based on analysis and synthesis, quantitative, qualitative, groupings, and medium-size, graphic expression, indexing, comparison, regression and correlation methods. The scientific innovation of the research is the attempt to conduct a complex examination of transit capabilities in Georgia, as a result of which: Using the Panel Data Analysis Method is reasonable as the development of the transport/logistics sector is a very positive role in the socio-economic development of the country, the main determinant of which is the infrastructural investment. Panel examinations and econometric calculations for member and partner countries of the Organization for Economic Co-operation and Development (OECD) with transit function and sea exit confirmed that investments in the transport/logistics infrastructure of these countries are the most efficient. The paper can be used to overcome the challenges of successful transit systems in Georgia and its successful integration into the world economy. Consequently, the findings and recommendations of the research topic are appropriate for the Ministry of Economy and Sustainable Development, the Ministry of Regional Development and Infrastructure, the Parliament of Georgia and other sectoral authorities, non-governmental organizations, scientific organizations and other stakeholders. In the process of teaching geo-economics, «international economy», «world economy» and their neighboring disciplines.

123-129

Authors: Amirani Maglakelidze

Formation of a strong middle class in Georgia requires a development of small and medium entrepreneurship. As a result of implementation of a rational economic policy and realization of the knowledge and technology based approach in this field, increasing the number of employment, improvement of the national enterprise possibilities, enhancing the competitiveness of the production and growth of the overall level of prosperity of population could be achieved. Small and medium enterprises have been growing during the recent years, however, the growth rate is not sufficient. Share of the population belonging to the middle class is still low in Georgia. According to the studies conducted by the World Bank, in 2014 only 7% of the population of Georgia belonged to the middle class. According to the economic-statistical study conducted in Georgia in 2018, share of the population belonging to the middle class in 2016 was 16%. The same study, with exclusion of the employment factor, shows the growth of the above-mentioned share to 24,6%. Ignoring the employment – very important determinant of the middle class – naturally puts the last figure far from reality. Current income inequality and high level of poverty negatively impact formation of the middle class in the country. In order to achieve the growth of the small and medium entrepreneurship, and respectively, growth of the middle class share, the following actions should be taken by the Government of Georgia: Increase of the scale of small and medium entrepreneurship programs, maximally inclusion of the regions; Support of the start-ups, formation of innovative economy; Promotion of the entrepreneurial education, formation of the corresponding environmental system for the export oriented industries; Maintaining political and economic stability.

143-147

Authors: Nino Abesadze, Natalia Robitashvili, Otar Abesadze

Introduction and aim According to the policy towards gender equality, Georgia has become one of the most reformed countries in the Caucasus. Despite the fact that many steps have been taken in this regard, the problems are still in the society. The main objective of the study is to identify and analyze gender imbalances in the country on the background of gender stereotypes in the context of civil cognitive levels. Research methodology: In development of the article, generally accepted qualitative and quantitative data analysis methods of the economic science were employed, among them, statistical data processing, data grouping, inductive-deductive data analysis methods. The scientific study employs surveying, observation, as well as comparative, analytical, and graphical methods, which are used by the author to compare and analyze facts and assess solutions to specific issues. Results and implications: The paper considers the gender aspects of Discussion of inequality problems in Georgia. Besides, the trends of unemployment and their reasons are identified and the international instruments of protection of human rights regulating the equality between the men and the women in Georgia are considered. In addition, based on the statistical data, is given the analysis of employment and unemployment in a gender respect; a particular accent is made on the need of International practice of gender protection. Conclusion: Stereotypical views on gender roles still exist in Georgia: the function of women is the care and upbringing of children, doing homework, and man-taking care of family finances. The fact is that more men employed in Georgia than women. The level of inactivity in women is almost twice as high as in men with a similar indicator of 42.0% and 21.8% respectively. In 2017, unemployment rate for women Increased by 1.8 percentage points to 12.7 percent, and for men decreased by 1.6 percentage points and by 15 percent. Changes for to the same period are also indicators of activity level. The level of activity increased reased by 1.5 percentage points for women and decreased by 2.8 percentage points for men and 58.2 percent and 74.6 percent respectively. Interesting trends are shown by employment indicators according to age marks. The number of men employed by the 45-54 age group is significantly higher than the number of women employed for the whole nine years, indicating the employment rate of women, especially in the 15-24 age group where the number of men employed is twice as high as the number of women employed. It is also true that the average level of compensation for women is lower than men. Their rates of growth are also different.

157-162

Authors: Maia Azmaiparashvili

Tourism is based on deliberate and reasonable consumption of tourist resources. The object of research is Ecological Tourism, Protected Areas - Development Sustainability, Economic Benefit and Integration of Local Culture in Georgia. The understanding and recognition of significance of sustainable tourist achievements became the base of eco-tourism. In the world of tourism the notion sustainable tourism and eco-tourism are used in the same way. Besides this close relation each of them has slight, but important special features. Sustainable tourism means the duty of the society to provide the protection and maintenance of the environment for the future generations. These conditions are not only political and economic factors and needs strengthening with the help of making decisions. We should realize what does ecologically sustainable environment means for the development of tourism and what part in this case plays eco-tourism as one of the main parts of the development of the sustainable tourism. With its natural landscapes it is known that protected areas now play an important role in protecting Georgia›s biodiversity, natural heritage. In the work there is a significant place for visitors ‹statistics on the protected areas, survey of visitors› satisfaction, income from tourism and the sustainability of tourism sustainability. So as to provide sustainable economy for tourism, tourist sustainability is needed. During the sustainable development of tourism the resources should be used so as to satisfy economic, social and esthetic needs, but at the same time maintain the originality of the country.

168-175

Authors: Nugzar Paichadze, Natalia Kharadze, Nino Paresashvili, Dea Pirtskhalaishvili

Business career enables human resources to increase qualification opportunities and become recognizable at the same time. In the course of the research, we got interested what kind of attitude towards career issues was in different age groups. What the manner was by which the career of different generation respondents was managed, what the respondents’ attitude is to the career, how they perceive the career management policies implemented by the executives of the organization. The research was conducted in the «Human Potential Management» laboratory at Ivane Javakhishvili Tbilisi State University. 560 respondents participated in the survey. The questionnaire included 32 questions and 125 options for an answer. SPSS statistical software package was used for statistical processing and data analysis. As a result of the research we have developed the hypotheses: Hypothesis 1: Age Q3 affects how people are accepted at work Q5. We used Pearson’s Correlation Analysis to determine the strength of the connection between the variables of this hypothesis. We got the correlation coefficient 0.415. By means of the correlation, it was shown that between these variables there is a moderate positive attitude. To test the reliability of hypothesis we used Chi-square test that indicates that the statistical significance level P (Sig.) does not exceed 0.001. Accordingly, the first hypothesis is reliable. According to both indicators, hypothesis 1: Age Q3 affects how people are accepted at work Q5 has been confirmed. Hypothesis 2: Age Q3 affects working experience Q4. We used Pearson’s Correlation Analysis to determine the strength of the connection between the variables of this hypothesis. We got the correlation coefficient 0,870 . By means of the correlation, it was shown that between these variables there is a strong positive attitude received as a result of single factor dispersion analysis, it is shown that F=200.3, P= 0.000; P<0.01, i. e. between the groups a statistically significant link is noticed on 0.01 level. Consequently, the hypothesis 2: Age Q3 affects working experience Q4 has been confirmed. Hypothesis 3: Age Q3 affects when was the last time you got a promotion Q6. We used Pearson’s Correlation Analysis to determine the strength of the connection between the variables of this hypothesis. We got the correlation coefficient 0.641. By means of the correlation, it was shown that between these variables there is a moderate positive attitude. The results of Levene’s statistics, the difference of averages (the same T value) equals to 11.085, the statistical significance level P (Sig.) does not exceed 0.001, i.e. between the vertical and horizontal career growth and career movement of the employed people inside and outside the organization there is a statistically high level of connection on 0.01level. Consequently, the hypothesis 3: Age Q3 affects when was the last time you got a promotion Q6 has been confirmed. Hypothesis 4: Age Q3 affects whether you were promoted in a career over the last 5 years? Q12. We used Pearson’s Correlation Analysis to determine the strength of the connection between the variables of this hypothesis. We got the correlation coefficient 0.122. By means of the correlation, it was shown that between these variables there is a weak positive attitude. To test the reliability of hypothesis we used Chi-square test that indicates that the statistical significance level P (Sig.) does not exceed 0.001. Accordingly, the first hypothesis is reliable. Consequently, the hypothesis 4 Age Q3 affects whether you were promoted in a career over the last 5 years has been confirmed Hypothesis 5: Age Q3 affects whether a person is searching for a job in a parallel mode Q34. We used Pearson’s Correlation Analysis to determine the strength of the connection between the variables of this hypothesis. We got the correlation coefficient 0.131. By means of the correlation, it was shown that between these variables there is a weak positive attitude. To test the reliability of hypothesis we used Chi-square test that indicates that the statistical significance level P (Sig.) equal to 0.082. Which means that hypothesis 5 is not reliable. Consequently, the hypothesis 5 Q3 Age affects whether a person is searching for a job in a parallel mode Q34 has not been confirmed. Some recommendations were worked out based on the research.

182-186

Authors: Kristine Odishvili, Maia Nikvashvili

It is known that the creation of a perfect product / service is directly connected to the qualification of the employees. Competition between companies has led to any organization that needs to constantly improve its product / service. The company can offer the novelty only through the employees. In addition, the process of establishing the novelty must be permanent.Thus it makes clear the need of management for the process. Obviously this is not easy because it is associated with the management of living people, with the development of creative skills, which is unpredictable.Witch is the responsibility of human resources management. The survey examines the problems and challenges that the Human resourse management must overcome for employee career development. In the article the discussion is about human resource management approaches to strategic management, development, motivation and corporate culture of employees. The structure of the article: introduction, researches review of the relevant direction, career development-research findings, main challenges and recommendations. The study showed an interesting picture in terms of career development. We hope that the findings of this study will provide Human resources management specialists with a clear understanding of the challenges and will pay more attention to the career development of the employees.