Globalization and Business

21 - 31

Authors: Givi Bedianashvili, Quji Bichia, Ekaterine Natsvlishvili

Entrepreneurial activity has always been a major factor in the socio-economic development of any country in the world. This is especially evident in the discussion of the problems of economic growth, when the efficiency of the functioning of the entrepreneurial sphere within the country clearly determines both the rates of economic growth and the state of the social sphere and the well-being of the people. It is noteworthy that in modern conditions, against the background of the high importance of the formation of the knowledge economy, the innovative aspect of entrepreneurial activity in the context of all business entities is gaining special urgency. The effectiveness of the whole innovation process depends on the effective functioning of knowledge-based entrepreneurship. The great importance of the continuous process of developing and promoting entrepreneurial activity in the society was confirmed by the two-year period of world experience of the Covid-19 pandemic crisis. As it is known, one of the main subjects in entrepreneurial activity is the entrepreneur and it is its level of skills that determines both the quantitative and qualitative aspects of the entrepreneurial field. In this regard, the demand of the labor market and the state of entrepreneurship training by the higher education system should be considered first. All of this is reflected in issues such as the need for entrepreneurial skills in the entrepreneurial field, their proper representation in the labor market, the formation of skills required by future graduates in entrepreneurship, and the training of competent people based on modern challenges. The aim of the research is to identify the requirements of the entrepreneurial field for human capital skills, to identify the imbalances in the labor market, to determine the compliance of the skills required for the teaching and learning activities of high schools, to identify the existing challenges and to formulate separate recommendations. The research process used the methods of induction, deduction, qualitative, quantitative, comparison, statistical analysis, benchmarking. The processing of existing literature, retrieval of statistical data (including with the direct assistance of the National Statistics Office of Georgia), automatic download of data (so-called scraping) from various employment sites, conducting surveys and in-depth interviews, sorting and quantitative analysis of retrieved data were included in the own research. The consideration of expert opinions is within the research. Research has shown that when considering the skills of entrepreneurs, as a starting point, the entrepreneurial activity in a particular country and the requirements for its development should be considered. It should be noted, however, that the labor market may not be able to meet the needs of the entrepreneurial sector (employers). On the other hand, the perceptions of the entrepreneurial subjects themselves about the required skills are often limited and conditioned by the relatively short-term current perceptions of the modern technologies of the entrepreneurial activity itself. The research and the analysis of the positive practical experience of the developed countries of the world clearly showed that in this regard, close cooperation with universities in the field of entrepreneurship in the form of entrepreneurship training and short-term courses will be effective. The involvement and support of the state in the development and implementation of innovative entrepreneurial policies would also be important here.

37 - 44

Authors: Natela Tsiklashvili, Tamari Poladashvili

Reforms in the field of education have been going on for almost 30 years since Georgia gained its independence. During the period, numbers of ministers and heads of educational institutions were replaced. Unfortunately, the subject of graduate employment remains an unresolved issue. Higher education institutions (HEIs) are crucial in training qualified graduates and employing them according their profession. The given paper presents the qualitative analysis of Higher Education Institutions involvement in the context of graduate employment. The study involves all accredited universities and teaching universities located in the regions of Georgia by January 2020, which had at least first-generation of graduates. This approach determines the reliability and validity of the study. Hence, the research encompasses 4 universities and 6 teaching universities located in the regions of Georgia. The aim of the research is to evaluating the current conditions of HEIs in relation to labor market stakeholders, determine the problems and challenges in regards of graduates’ employment by profession. Analyze the functions of career services and outline the aspects that create horizontal and vertical unemployment of graduates. The presented article is one of the first academic attempt that examines region based Higher Educational Institutions by qualitative research method, using interview technique. Therefore, its scientific and practical significance is important in terms of the developing regional and then national higher educational environment.

52 - 56

Authors: Liudmyla Demydenko, Yuliia Nakonechna, Nataliia Miedviedkova

The article is devoted to the study of directions for increasing transparency and publicity of local budgets. The study substantiates the need to improve the practice of using tools for increasing transparency and publicity, taking into account international experience, as well as identifies ways to increase the efficiency of using these tools in order to ensure the socio-economic development of regions. The results of the study allow authors to develop directions for improving transparency and publicity of Ukrainian local budgets, which will help increase the efficiency of budgetary resources and the quality of public services.

61 - 65

Authors: Otari Tukvadze, Ana Guchua, Nikoloz Chikhladze

The inevitable decline in the reserves of traditional energy sources is fostering interest in the development of renewable energy technologies around the world. The territorial characteristics and abundance of water resources in Georgia have great potential for the development of small hydropower, although the reality indicates a lack of high practical interest in this field. Comparative analysis of the characteristics of Georgian and foreign energy systems indicates the existence of a number of problems in the small hydropower industry in Georgia, which is related to the strategic understanding of the development prospects of this field at the state level. This situation naturally leads to an increase in investment risks. The aim of the article is to determine the conditions that will make the construction of small hydropower plants attractive and facilitate the formation of a relevant market through a geoeconomic understanding of the issue. The object of research is the opportunities and tools to improve Georgia's energy security, taking into account the geo-economic factor of the state. The subject of the research is to discuss some of the current problems related to Georgia's energy security in the geo-economic context, in the context of hydropower. Institutional analysis, synthesis and comparison methods are used in the processing of the article.

77 - 82

Authors: Temur Shengelia

A market economic system based on the means of production is characterized by fundamental uncertainty. The differences between the fundamental uncertainties and the risks lie in the fact that it is impossible to empirically measure the level and dynamics of future threats. A correct understanding of the uncertainty is essential for the study and analysis of the crisis. Under the influence of the COVID-19 pandemic, world economy found itself in a new global crisis, which had a significant impact on the rise of economic and social uncertainty, the degree of which is so high that it is impossible to predict the model of the economic and social development due to the current pandemic. The current economic crisis is characterized not only by global losses but also by the limited sources of compensation. According to scientists (Adžić., Al-Mansour, 2021) a crisis of this magnitude is the most unprecedented economic event of the last century. The COVID-19 world pandemic crisis has limited a traditional opportunities for small business, accordingly has emerged a new one. The most difficult problem was created in the value chain. Small business is a heavily dependent on consumers and suppliers behaviour, therefore, changes in the value chain have a significant impact on all of its participants. The closure of national borders has led to the disruption of the logistics network; And after the reduction of the stocks, it threatens to almost all participants in this network. It is important to consider the uncertainties and risks that are involved while studying small business crisis behavior. As a result even the most trained institutions are approaching disaster. After a pandemic, the universe will find itself in a larger, no less turbulent zone. Prior to the crisis, cost was the most important criterion while choosing a supply chain that had led to single suppliers and small stocks for small businesses. As it seems during the pandemic, this choice turned out to be one of the most important causes of the small business crisis. At the same time, dependence on one supplier has undergone a transformation into the need to diversify stocks, that has led to an increase in funding sources and which has led to the financial instability of a small company. These examples of the correlation between environmental and small business threats have illustrated the need for a global vision in order to adapt anti-crisis behavior model .A global vision is certainly needed. There is no single, optimal choice for overcoming uncertainty, however, the importance of the multivariate strategies is an important. Small firms found themselves unprepared for such approaches, leading to a high level of uncertainty. As well as, when a small business is in the early stages of its life cycle, the lack of experience limits its choice, and the lack of resources prevents it from choosing an effective strategy, that has exacerbated the problems of the small firms.

88 – 93

Authors: Nana Rusadze, Ekaterina Zakaradze, Aza Ipshiradze

The last two years in the history of mankind can be characterized as the beginning of a nation of difficulties caused by the spread of the coronavirus pandemic. The pandemic has broken all borders (political, legal, state) and overcoming the transboundary global crisis has necessitated the participation of all levels of government and the private sector. The pandemic, along with human health, attacks the socio-economic sphere and poses obvious threats of economic depression, rising unemployment and poverty, limited social contacts, and many other negative events. This threat affects the state and municipal management and, consequently, the public services provided by them. Unfortunately, unlike trade and education, these types of services are largely impossible to digitize. In the current situation, the attention of citizens and business representatives is drawn to the actions of the state, as its activities and management skills have acquired much more function. Meeting the needs of citizens in a pandemic requires the use of approaches based on new technologies, new forms of interaction and innovative methods of work. The economic sustainability of public administration occupies an important place in public policy as a determinant of public sector modernization, support, optimization of functioning, and improvement of public services. This acquired a special load during the crisis caused by the coronapandemic. The ongoing coronavirus pandemic dictates that it is necessary to develop new approaches to state intervention and public service delivery systems in all areas of public life in times of crisis in order to respond optimally to the needs of citizens.

103 - 109

Authors: Giorgi Bregadze

Georgia experienced a substantial increase in the number of international visits during the last few years, boosting interest among the locals looking for new business opportunities. The optimistic expectations of future tourist flow led to an enormous amount of investments, mostly in the hospitality industry. The reality did not meet expectations after the world pandemic deteriorated the tourism flows leading to catastrophic losses for the tourism industry all over the world, including Georgia. This study employs a macroeconomics analysis tool - input-output model to identify the secondary economic effects of decreased tourism flows caused by COVID-19 in Georgia.

114 - 119

Authors: Lali Osadze, Maka Sosanidze

In recent years, logistics have gained great importance both locally and internationally. The status of a "transit country" has long been an important precondition for the development of the economy and international relations of Georgia. With the growth of the economy, Georgia's function as a trans-Caucasian corridor has expanded. This is the shortest route connecting East Asia with the Europe. Significant railway, motorway and pipeline transport passes through the territory of Georgia – by means of which, it is possible to cheaply and efficiently transport goods from the Caspian Sea to the Black Sea and vice versa. As a result of economic and infrastructural reforms carried out in recent years, the transport and logistics sector in Georgia has developed significantly, but not sufficiently yet. As a result of infrastructure modernization, simplification of customs procedures and liberalization of services in key sectors of the economy, the country's transit and logistics potential has been increased, providing better international connections with global markets. Georgia is currently modernizing and expanding its transport infrastructure, which includes a growing national expressway system, new rail routes, international airports and expanded seaports / terminals. At the same time, legislative approximation with the EU continues in the field of transport, which is a priority issue in the process of Georgia's European integration. The development of the country's infrastructure, transport, logistics, communications, energy, technology, education and financial hubs is important for realizing the potential. Donors are providing their assistance in achieving Georgia's logistics goals. With their help, the National Logistics Strategy of Georgia for 2021-2030 was prepared, which states that the logistics sector of Georgia is in the process of transformation. An important indicator of the state of the logistics sector in Georgia is the World Bank Logistics Index (LPI), where Georgia is not in the most favorable place (119th place among 160 countries). The Logistics Index reflects the vision of international service providers and business operators on how countries integrate into the global logistics network through their major trade gateways. Therefore, it reflects not only the changes throughout the country, but also problems associated with the access overseas. It should be noted that over the past decade Georgia has invested heavily in the development of road infrastructure, but logistics and intermodal infrastructure continues to be developed, resulting in low efficiency of maintenance of logistics system, relatively its high cost and less reliability of the logistics system, which negatively affects international transportation. COVID-19 has affected not only on the healthcare system, but also on global critical infrastructure, including transport and logistics. The start of pandemic highlighted a critical importance of transport and logistics systems, both on international and local level, which previously had not gained much attention. Despite the success achieved, number of problems has remained for transformation of Georgia into a regional transit and logistics hub. Efforts to improve transport infrastructure and services should continue until existing constraints are completely removed. Poor service quality, outdated logistics infrastructure and equipment, ineffective supply chain management, as well as disorganization of personnel and their poor qualification are not a complete list of problems. An effective and consistent policy for the development of transport and logistics will make Georgia more attractive for investment and improve the country's economic potential.

133 - 142

Authors: Iuri Ananiashvili, Natia Matsiashvili

The findings presented in this article are to some extent continuation of the previous studies done by Georgian authors on the economy of Georgia using CGE models. The main instrument used in our research is based on a standard model tailored by Hosoe (Hosoe, 2004) to specifics of open small economy and is its modification of a certain kind. Two types of factors of production are used in this model to produce goods and services: labour and capital. The model also includes four types of commodities and production activities: agriculture, industry, construction and services. Under the necessary assumptions and restrictions, our model is a system composed of 99 equations and as many of endogenous variables. 36 of these equations correspond to the peculiarities of domestic production; 13 of them describe the government behavior; 4 characterize the investment demand function; The other 46 equations represent the behavioral characteristics of government, households, and the external sector. The social accounting matrix corresponding to the state of the economy of Georgia in 2019 is specially constructed for our research. To build it, we used the information contained in the Geostat Supply and Use tables (SUT), separate aggregates of national accounts, balance of payments, consolidated budget, and labor force survey data. Parameters of CGE model are calibrated based on the social accounting matrix. For this purpose, 2019 is considered as a base year and it is assumed that at that time economy of Georgia was in equilibrium. To define units of measurement for commodities and factors of production we set all prices of initial equilibrium to be equal to 1. Using our estimated model we arrange three different scenarios for the Georgian economy to find out what could have happened after implementing certain economic policies under ceteris paribus. According to the first scenario, the initial equilibrium of the economy is determined as of 2019 and the rate of indirect taxes is reduced by 10%. In the second scenario, we assume that the Georgian lari, has depreciated by 15% against the US dollar under ceteris paribus and we examine the expected results of the event. Lastly, in the third scenario, we assume under ceteris paribus that export increases by 20% and determine the aftereffects of export incentives.

143 - 151

Authors: Malkhaz Chikobava

According to a review of "Central Banks: Monthly Balance Sheets", prepared by the consulting company Yardeni Research, Inc., the assets of the four leading central banks in the world - the US Federal Reserve (FED), the European Central Bank (ECB), the Bank of Japan and the People's Bank of China (PBOC), increased by 4.8 times over the specified period. Consequently, the liabilities of the big four central banks increased by 4.8 times. As it is known, the bulk of the Central Bank's liabilities is money issued by central banks (in the form of cash and deposits, on which commercial banks place their funds). Therefore, the money supply issued by four banks in a quarter of a century has also increased by 4.8 times. The FED was especially distinguished by the fact that it began to sharply increase the issue of money in the midst of the financial crisis of 2008-2009. This was done under the flag of "quantitative easing" (QE). There were three "quantitative easing" programs, the last one ended in 2014. However, when the US declared a "pandemic" and began to impose quarantine restrictions, the Fed's printing press was again launched at full capacity. Now the Fed buys $ 120 billion a month in the securities market ($ 80 billion in US Treasury securities and another $ 40 billion in mortgage securities). Accordingly, the dollar supply is increasing by the same amount every month. The Bank of Japan is on the second place in terms of the growth rate of assets (and money supply). It began to build up assets and money supply earlier than other leading central banks, from the end of the 20th century to the beginning of the 21st century. At the end of February 2021, the picture has changed radically. We see a rapid rise in the value of the indicator at the Bank of Japan, at the turn of 2018-2019. It crossed the 100% bar. Now its assets are equal to 127.4% of GDP. The indicators of the relative level of assets of the Fed and the ECB have grown very much. But the Central Bank of China has reduced the relative value of its assets by about a third. This is both the result of curbing the activity of the Chinese Central Bank and the fact that China has experienced high rates of GDP growth. As for the other three leading central banks, their policy of increasing money supply will continue. The head of the US Federal Reserve, Jerome Powell, makes it clear that the US Central Bank, at least until the end of the year, will continue to buy securities in the same volumes (that is, $ 120 billion a month). ECB President Christine Lagarde said in March that the bank would accelerate asset purchases in the coming months under the Pandemic Emergency Purchase Program (PEPP). The volume of this program is 1.85 trillion EUR. In addition, the main ECB repurchase program continues to operate. Other central banks that are not included in the survey by Yardeni Research, Inc. are also pursuing an asset buildup course. Among them are the Bank of England and the Swiss National Bank. Leading central banks of the world, to justify the runaway money emission, refer to the "pandemic". The more money supply is created, the more likely it is that this currency will have a lower rate in relation to the competitor's currency. And the undervalued exchange rate of the national currency is a means of strengthening the international competitiveness of national business. However, such competition can lead to the collapse of the currencies of rival central banks.

162 - 165

Authors: Teimuraz Sartania

The rapidly accelerating globalization process in the 21st century, advances in technology and science, and other developments related to these processes have posed hitherto unknown challenges to our country's education system. Therefore, at the current stage of the country's development, the main challenge of the Georgian higher education system should be considered to improve the quality of education. However, the effectiveness of the higher education system depends on a large extent on the optimal distribution and efficient use of monetary resources between the various links and field of the education system. Based on the study, generalization and research of the above-mentioned issues in the article, the main factors, influencing the development of organizational leadership and educational space in Georgia, were identified. The aim of this research is to determine the compliance of the Georgian educational system with the international principles and to identify the model of a successful university with a significant impact in this direction. Also, based on the generalization and evaluation of the experience of foreign universities, active use and implementation of leadership strategies in Georgia. The aim of research is to identify the challenges of the Georgian education system based on the generalization of modern leadership practice. The object of research is Georgian and foreign educational institutions. The subject of research is to study and identify the factors that have a positive and negative impact on the development of the Georgian educational system. The research is based on analysis and synthesis, as well as graphic representation, comparison and other methods.

173 - 176

Authors: Mamuka Lezhava

Tax administrations play a big role in terms of economic development of the country. Each reform or change implemented by them leave significant imprint on shaping the business environment. Without adopting a fair tax policy, progress in business, as well as in economy is unachievable. Fulfilment of commitments under the cooperation with EU, represents the state priority. Respectively, the best model of European practice is being established from 2021, further promoting the cooperation between Georgia and EU to move to another level. Considering the abovementioned circumstances, the value-added taxable objects have been substantively changed since 2021 in Georgia. The amendments aim to protect the tax payers’ rights, improve the tax regime and approximate it to the European Standard to the maximum extent possible. As a result of a qualitative research, the expectations both of field experts and business sector representatives towards the amendments made to value added tax since 2021 have been analyzed through an in-depth interview. The research was aimed at defining the further role of the amendments from the perspective of economic development. The impact of implemented reforms on the development of the country’s economy was assessed as the research object; and the amendments made to the Tax Code in 2021 and the mechanisms of its functioning were determined as the subject of the research.

186 - 190

Authors: Maia Azmaiparashvili

Sustainable tourism development is a fundamental concept of tourism planning. Optimal use of resources helps to preserve natural treasures. Businesses are required to have high standards of accountability in order to avoid adverse environmental impacts in a competitive environment. Less attention is paid to the problems of destinations in general and its sustainability in particular. Innovative tourism management is increasingly focused on local destination management and its sustainability. In this paper, we discuss the problems of destination sustainability on the example of protected areas. We analyzed visitor statistics, processed visitor satisfaction survey, revenue and the impact of tourism sustainability on the quality of the destination. In addition, the paper covers the problems identified in terms of sustainable development, such as ensuring the sustainability of the destination, sustainable maintenance and development dependence on its management. Tourism and environmental conditions are interrelated. The environment contains many elements. The most important factor in achieving sustainable development is the development and management of tourism in a way that does not harm the environment. Ecologically correct planning of tourism should be well aware of the potential impacts that follow the development of tourism. Sustainable development means balancing economic progress, social justice and protection of the physical and natural environment. The principle of sustainability includes the ecological, economic and socio-cultural aspects of tourism development, so it is necessary to balance all three directions to guarantee the long-term sustainability of the destination.

197 - 205

Authors: Ekaterine Zviadadze, Lasha Zivzivadze, Mikheili Kuchava

The main objective of the presented paper is to identify investment opportunities in the apple value chain and also to evaluate the specific apple project using the state programs/projects. The methodological part provides a financial evaluation of a specific business project, taking into account state funding programs/projects. Furthermore, general investment opportunities of apples are analyzed in the paper. In addition, in order to study the investment potential, the investment climate of Georgia and Georgia’s international ratings are discussed. A brief description and analysis of various state support projects are also provided. Additionally, an overview of local apples and the world market is given. Due to the climate conditions and soil types of Georgia, the production of intensive apple varieties has a great potential in the country. Promoting the cultivation of intensive apple orchards through the use of various state supporting programs/projects and full compliance with apple production technologies, Georgia will have potential to increase the average apple yield per hectare. It is important for Georgia to use the existing free trade relations with other countries and to diversify the apple export market, which will further increase its competitiveness. Based on the financial evaluation, key performance indicators are positive and beneficial for the investors, which should give the motivation to the investors to invest in the apple value chain. In the field of agriculture, the continuation of the implementation of various state co-financing projects/programs and their development will give additional motivation to local and foreign investors, which will further increase the competitiveness of Georgian apple value chain.