Globalization and Business

15-27

Authors: VLADIMER PAPAVA

The article analyzes the crisis in the economics, its primary causes and its manifestations. It shows how traditional economics “turns a blind eye” to many significant aspects of economic reality. Within this crisis, the economy lags behind the economic reality and so various economic theories are used to attempt to interpret the economic phenomena. Some of the clearest examples of economies falling outside of reality are seen in the transition economies of the post-Communist period on their way to a market economy as well as the events of the global financial and economic crisis in 2007-2009. The most recent example of the crisis in economics is cryptocurrency which has already spread over almost the entire world over the past several years but which has not yet become a topic of systematic study in economics. In order to overcome the crisis situation in economics, it will be of utmost importance as to how well the human factor is reflected in economic studies and to what extent it will be approximated to the behavior that is characteristic of human beings in reality. For this purpose, economists must apply the knowledge about human nature that has been amassed in the field of social sciences such as philosophy, psychology, law and political science. For the development of economics and for its relevant transformation, the conditions referred to in the traditionally used phrase “other things equal” (“ceritasparibas”) need to be minimized in economic studies. This will be possible if an economic study relies not only (and in certain cases not to a greater extent) on mathematics but also on philosophy, psychology, law, history,geography and political science. In this regard, economists need to conduct studies by expanding their scope;that is, along the lines set out by the above-mentioned fields of the social sciences. Given the variety of economic theories, seeking possible ways to synthesize them becomes of great importance and this will assist economists in perceiving a given economic reality in a comprehensive way.

36-42

Authors: GIORGI GAGANIDZE

Often in scientific circles, mistrust regarding the reliability of competitiveness or other indices is expressed. The definite part of the economists think that it is not advisable to form any serious strategies based on these indices. This mistrust is probably caused by less awareness in these issues, especially because of the absence of tangible, confirmed ties between these indices and the real economic figures. We often witness only superficial talks about indices, focusing on the place of the particular index of the country in certain rankings, which causes its politicization and the discussion of the fundamental issues is not taken into account. In this publication we will try to concentrate on the indices focusing on country’s competitiveness and trade support. Such a choice was determined by two important issues: the first is the direct connection of these indices with the competitiveness of the country’s exports and the second - both of these indices are made by the World Economic Forum and hence certain unified methodological approaches exist.

48-53

Authors: NODAR KHADURI

Despite the fact that Georgia has already been an independent country for 25 years and inculcates the principles of market economy, the issue of choosing the model of country’s economic development has not been resolved up to the present time. Georgia frequently chooses radical models not only at the theoretical level, but also at the political one and has ambitions of merging them by unique prescription. Unfortunately, frequently there are attempts to borrow ideologically inappropriate models without comprehending their essence that causes problems for maintaining achieved successes. In order to choose a correct model, it is imperative to analyse at least at the theoretical level all those threats and possible successes that can be caused by choosing this or that model and its implementation. It is important that the society achieve consensus on what political philosophy the Georgian state system should be based on, the organic or mechanical theories of state. According to the first one the state is a natural organism, each individual is a part of this organism, and the state itself is a heart of this organism. According to this ideology; the individual is important as a part of society and his/her wellbeing should be considered in the context of the well-being of society. As regards the mechanical theory, it is based on the notion that the state is not an organic part of society and humans devised it to achieve their own goals. The economic essence of the noted theories is clearly reflected in Adam Smith and John Maynard Keynes’s theoretical legacy. Smith was convinced that, if there are free markets and individuals act by their own interests, the whole economy works well. Smith claimed, that in the conditions of market economy the useful action of individuals’ own interests by the principle of “invisible hand” brings about maximization of the general well-being of society. According to Keynes, Smith’s “invisible hand” showed an utter irrelevance to the real developments that became a reason for formulating a new macroeconomic theory. Today our aim is to find that theoretical golden mean, which in case of its implementation, will enable Georgian economic model to be maximally effective and fair.

58-66

Authors: GIVI BEDIANASHVILI

In modern conditions it is important to develop a systemic and institutional concept of culture as a form of knowledge economy. In order to present a systemic concept of knowledge and culture in the formation of knowledge economy, I think the new meaning of paradigmatic and conceptual aspects of economic science is of particular importance. In addition, the systematic representation of the cognition process is particularly important. As shown by the practice of recent years, the main problems in the form of knowledge technology are solved, which will facilitate the improvement of the “cognitive” function of economic science and enhance its practical benefits. The modern stage of globalization is characterized by a number of specific peculiarities of post-dosystem development, which, in our view, is important to the development of knowledge-based economy (knowledge economy). It is noteworthy that globalization stems from adding global dimensional dimensions to the knowledge economy, such as resource-technological, informative, communicative and institutional structures. In addition, we think it is necessary to understand the knowledge of the knowledge economy. This makes it possible to develop culture with knowledge as a factor of forming a knowledge economy. According to the Postindustural Theory, the main resource of the post-denser economy is information and knowledge, the main type of manufacturing activity is the high level of automation of the production, the science of technologies used primarily from the main technologies, and various services are the most common types of economic activity. In industrial society, the field of agriculture, industry - Industry, Postindustry - determinants are already theoretical knowledge with universities, as a place of active and generating knowledge.

73-77

Authors: DAVIT NARMANIA

State Management and Public Administration Teaching is an actual matter of all civilized countries. Educated state officials who have profound knowledge in these subjects are more effective than public servants who have received the general education. Performance at work and decisions made by the effective public servants are directly reflected on country’s success. Thus, different countries more or less successfully teach State Management and Public Administration at various universities (or different public training centers). It is considered that the money spent by the state is much less than the impact received from learning. In this work we are trying to briefly over view the international experience and based on this reveal the effective teaching tools. Also, we present the possible ways to measure the efficiency of training. The work is focusing on the approaches and challenges of new public management, which require constant improvement in management. Therefore, it is necessary to update the teaching approaches to the State Management and Public Administration periodically. In addition, the work is analyzing the current condition of state management and public administration teaching in Georgia. Based on the public sector reform progress and produced analysis the tasks for improving the teaching approaches is introducing.

86-90

Authors: MURMAN KVARATSKHELIA

In most countries of the modern world, the problem of overcoming poverty is hanging like a sword of Damocles. The rich and poor exist from the very beginning of the mankind, having the open and hidden opposition towards each other. Namely, this can be named, one of the main reasons of outbreaks of revolutions in different countries, followed by the destruction and victims. Even the modern civilized world has not been able to solve this universal challenge, in spite of all the scientific and technological achievements. For Poverty alleviation all the States need to carry out the right and rational social and economic policy. Simultaneously, it is necessary to find ways to balance the uneven distribution of the World wealth, overcome the cultural barriers, and the most important thing is to undertake more effective measures for inclusive development of economics of the developing and backward countries.

97-104

Authors: MEDEA SHAPATAVA

Contemporary world admits and analyses the destroying results and consequences of the largest-ever bankruptsy of the Lehman Brothers Investment bank which lead to the mortgage crisis and turned into the global one. The recession continues up to present, i.e. almost for ten years. Leading economists forecast the further negative issues and confess that the economic figures would never go back to the ones we had back ten years ago. The extreme points of consideration the recession and the crisis issues are in contradiction with the economic theory which predicts further recession though may never provide consistent and exact figures and dates. The reflection of the crisis on to the economic theory and science may provide further materials for discussions and arguments against existence of the crisis, as the global economy development never interrupted. Moreover, the world faced the birth of an absolutely new and enigmatic product on the market – cryptocurrency. The question is: would the cryptocurrency bring the relief in terms of recession or would it lead to a new default of the market? The economic science estimates the pros and cons of the existing risks and market threats and hopefully will play its substantial role in eliminating them.

110-115

Authors: INGA BALARJISHVILI

The article analyzes the manifestations and causes of the paradigmatic crisis of the modern economic “mainstream”: the “monopolization” of economic theory and economic education by the neoclassical direction; Fragmentary nature of scientific research; The “fascination” of scientists with the problem of economic growth and ignoring other factors of social development. The emphasis is on the lack of interdisciplinary research, the “mathematization” of economic knowledge. It is noted that the role of mathematics in economic models is only instrumental, mathematically complex economic models make the world more incomprehensible than simplify, the connection with real life is lost. Unlike the «mainstream», technology and individual taste in the institutional economy are endogenous variables. Institutionalists focus on the boundaries in which the actual future can be predicted, in contrast to the prediction in the «model context»; Institutionalists approach the economy as an organic and evolving «whole», and not as a static mechanism; Other advantages of the institutional economy are: the use of methodological collectivism instead of methodological individualism; Study of the processes of adaptation and disequilibrium, a criticism of the «neoclassical search» for optimal and equilibrium solutions; Instead of technology, focus on ownership and transaction costs; Recognition of ideology as the determining factor in economic history, which contradicts the neoclassical vision of the world; The refutation of the Pareto optimality principle; Emphasis on economic and political power. The methodological orientation of the institutional economy and the possibility of practical application determine its potential for becoming a “new mainstream”.

121-130

Authors: MALKHAZ CHIKOBAVA

The study analyzes the essence of the modern capitalist system, attempts by the capitalists to ennoble the Western economic system, which is described by Aristotle as hrematics, a counterbalance to the economy or “house building”. The work emphasizes the absurdity of determining the market economy. It is emphasized that modern capitalism is, first of all, not an economic, but a spiritual phenomenon. It has all the religious symbols, it is an invisible religion in all its main directions, which diametrically contradict Christianity. It can be called a “monetary religion”. The paper also presents when, by whom and in what context the term “capitalism” is first mentioned in chronological order. The paper notes that, despite the “titanic efforts” of the “economic science”, the “progressive” approval of capitalism was difficult: this social and economic education largely discredited itself. The document also discusses the absurd idea of economic manipulation that banks “participate in the creation of public products.” It is worth noting that banks are not so-called financial intermediaries and they themselves create money from the air in the economy, which is the main reason for inflation. Unfortunately, in modern “economy” usurious credit is usually regarded as a historical precursor of a bank loan, which in itself is an absurd idea. The work briefly presents the ideas of Henry Ford, Henry George, Silvio Gezel, Emrey Sheldon and Michael Roobotem on the inefficiency of modern capitalism. It is noted that translating the works of these authors in modern conditions and ensuring their accessibility for students and young people is not an easy task. Unfortunately in our universities today do not offer the labor of Ford, George, (except for Ford). In addition, the same can be said about most professors who “train” students of mainstream. In the author’s opinion, the above authorization will become a good helper for the crisis in our country. For these purposes, we need to popularize these authors in our country.

136-143

Authors: NANA ASLAMAZISHVILI

What does the Balance of Payments deficit mean? The deficit of the balance of payments does not always mean economic downturn, or vice versa. However, achieving and maintaining the balance of international economic relations is an important macroeconomic task for any country. In this regard, the in-depth analysis of the balance of payments tendencies is extremely important, especially for Georgia. Unfortunately, in our country often approaches and methods of analysis are inadequate, communication with users is delayed, data transparency is insufficient, academic circles are less interested in external sector statistics problem. The purpose of this paper is to provoke designing of comprehensive foreign sector data analysis among appropriate specialists.

148-152

Authors: ELISO BERIDZE

Macro-prudential policy implies monitoring, evaluation and carrying out such a supervisory policy of financial stability which will be aimed at eradicating systemic risks and neutralizing pro-cyclic nature of the financial sector (growing to the cycle direction, pro-cyclical). To do this, it is necessary to carry out the supervisory policy: risk assessment; analysis of the activities of banking institutions and preparation of recommendations. Systemic risks include: exogenous shocks (economic fall, external shock, etc.), the second, so-called “contagious shocks” (contagion) that are due to the high integration of the financial sector internationally; the third category is the accumulation of financial imbalance that is the risk of endogenous nature and is often collected by the support of market participants. Against the background of the global crisis, Lehman Brothers’ bankruptcy in September 2009 clearly demonstrated those negative externalities which are linked to the bankruptcy of the systemic bank globally. Consequently, the macroprudential policy aims to reduce the probability of system banks’ bankruptcy and in case of bankruptcy to limit the system’s adverse effect. However, it is important to adequately implement the countercyclical fiscal and monetary policy.

159-164

Authors: GULNAZ ERKOMAISHVILI, DAVID ALUDAURI

The paper deals with one of the important legislative amendments in the Tax Code of Georgia, according to which the existing model of taxation was changed by the Estonian model. It was created in the agreement with Georgian legislation and with regard to Georgia’s socio-economic condition. The purpose of this model is to accelerate economic growth and create favorable conditions for starting and developing business. Based on the analysis of statistical data, the new tax system can be positively evaluated, as there is clearly visible improvement in the volume of investment and GDP, which will ultimately result in a country’s well-being.

169-174

Authors: TARIEL LOMIA

In the state the environmental policy faces three main issues, they are: The issue of internalization of external costs (i.e. the issue of transaction costs), informing issues and the issues of control. The issue of transaction costs must be overcome by effective and active environmental policy. This can only be done if the ways of efforts of environmental policies are used to create (the use of instruments) situations on the market that are not voluntarily established. There is a precondition for this fact if the environmental policy conductors have enough information about relationship between natural resources, production, technology and environmental impacts. In other ways how can we identify and determine the quantity of harmful substances that are allocated by different pollutants (e.g. setting limits of environmental pollution). So far, there is a huge deficit of the possibilities of obtaining and reacting to the information by the National Environmental Protection Service Officials all over the world. It is also unclear whether the state has the possibility to examine the legality of the environmental law by the economic subjects (control problem), the discussion on the size of radioactive irradiation is still relevant. In case of violation of legislative norms on environmental pollution by the economic subjects, the controlling system must have more effective sanctions (violators should pay higher cost of expenses than expected benefits). An effective implementation of the goals of environmental policy is only possible by combined usage of legal and market economic instruments. The natural environmental resources are characterized by the attractiveness of the social product, thus we can deal with the environmental problems by existing the decentralized market in the economy, for this purpose of environmental policy, it is necessary that the state fulfill its functions of regulation. The formation of environmental policies in Georgia also takes place in many international obligations. In order to be closer to the developed international community, Georgia tries to implement internationally recognized environmental approaches and regulations where it is possible. The EU and Georgia have signed an Association Agreement, and one of the main issues is the scope of environmental protection. The Agreement provides a wide range of measures in environmental issues, which will facilitate environmental conditions not only for human beings and ecosystems but also would improve environmental management and effective decision-making procedures. The process of converting the national legislation of environmental protection to EU legislation implies several interconnected stages, namely: 1. Analysis of EU environmental legislation to identify basic principles; 2. Analysis of national legislation to assess compliance with EU principles; 3. To conduct basic principles of the European Union in national legislation; 4. Implementation of relevant institutional changes.

184-187

Authors: DEMUR CHOMAKHIDZE

The report analyzes the role and importance of energy conservation for Georgia. Based on concrete materials, the effectiveness of social labor and energy savings on gross domestic product (GDP) is comparable to each other. It is said that the reduction of GDP energy efficiency by 1% is almost the same, and in more than a few years, the result of GDP increase is more than the same as the productivity of public labor. In this regard, the report describes the level and dynamics of major macroeconomic indicators of the economic development of Georgia for 2013-2016. Set up events to improve the situation.

194-198

Authors: USHANGI SAMADASHVILI

The historical fact is that a large-scale trade war led the United States to a “great depression” in the thirties of the last century. History also shows that when the trade between strategic countries is resolved, war begins. Given this, one of the most important conditions for global stability is the integration of the EU and the Eurasian Economic Union. Until recently, relations between the EU and Russia were short-lived. The relationship between the EU and the Eurasian Economic Union as an alternative should be based on equality and long-term consequences. The aim of the article is to contribute to the normalization and further development of the EU and the Eurasian Economic Union, which, in our view, will eventually complete a comprehensive integration agreement and will have a solid foundation for global stability.

206-210

Authors: LIA TOTLADZE

It is important to predict trends of economic development for any country. Researchers and practitioners use different ways for evaluation and forecasting economic activity. Identification of indicators, which change impact on the economy in general, is one of the widespread methods. The most appropriate tools to solve this problem are the leading indicators and indexes based on leading indicators. The selection of indicators depends on the specificity of the country’s economy. Among the leading economic indicators is the dynamics of applications for the Building permissions for private houses, and can also be successfully use residential transactions. Depending on the above, the paper deals the aspects of calculation of leading economic indicators. This paper analyses some aspects of the effectiveness of indicator for predicting economic activity and describes the methodological issues forward leading indicators. Particular attention is paid to analysis of residential transactions dynamics as a leading indicator as in theoretical as in practical terms. The article highlights the peculiarities of its implementation in Georgia.

218-225

Authors: QUJI BICHIA

The positive correlation between expected wages of workers and additional steps of education attainment has been studied extensively, as well as inverse relation between education level in the country and unemployment rate. Thus, it is important to analyze education and labor markets in relation, more so with the presence of imperfections in these markers. Coordination may fail on markets of asymmetric information when there are high and low quality products which are indistinguishable. This can cause degradation of the market. In order to avoid it, motivations of each side should be aligned correctly on education and labor markets. This can only be achieved if the education system is constructed with right motivators for both sides right from the base. Education cannot be a useful signal to employers if educational attainment cannot be used as a way of distinguishing employee’s skills from others’.

233-241

Authors: MURTAZ KVIRKVAIA, VASIL KIKUTADZE, DAVID SIKHARULIDZE, SHOTA SHABURISHVILI, VAKHTANG CHARAIA

The correct professional orientation is related to the problems of the society, which are quite difficult to solve. These problems include high rate of unemployment, low labor productivity, career advancement opportunities, etc. Therefore, the purpose of the present paper is to study the factors which affect the professional orientation of young people in Georgia and to determine how much they affect the decision about professional orientation. Graduate students of Georgian secondary schools participated in the present research. With the help of a special questionnaire, the schoolchildren have expressed their opinions and assessments regarding the factors affecting their professional choices. Research showed that professional orientation of the most people participating in the research is affected by the following factors: the prestige of a profession, future employment opportunities, the estimated level of income by profession, personal interests and direct relation of family members with the profession. The choice of profession by young people is largely influenced by their parents, while schools fail to provide proper assistance regarding professional orientation. For ensuring representativeness of the research results, the research limitations were identified. In particular, public and private, regional and central secondary education institutions of Georgia involved in the research were previously determined by territorial and ownership forms. The research was conducted based on a structured survey format through preliminary developed questionnaires. The questionnaire was completely filled out by 712 respondents from all around Georgia. In our opinion, taking the current limitations into consideration ensures representativeness of the research results. Identification of the factors affecting professional orientation in Georgia provides possibility to consider these factors while planning the activities of proper professional orientation. Wrong professional orientation of young people is related to a number of negative consequences. Youth support in professional orientation should be based on the study of the factors affecting the choice of future profession. Until now, in Georgia there were only assumptions about the factors considered by young people when choosing the profession. The purpose of the presented study is to find out which factors affect the professional orientation of young people in Georgia on a scientific basis. The analysis of the research results showed that professional orientation of young people in Georgia is affected by the following factors: prestige of a profession, possibility of future employment, estimated level of income to be received by profession, personal interests, academic performance at school and direct relation of family members with the profession. It should be noted that the factors affecting professional orientation revealed by the research, in turn, directly affect the level of motivation of individuals to study in higher education institutions and significantly determine the intensity of academic mobility processes, which also requires further researches. Based on the research, the following conclusions can be made regarding the factors affecting professional orientation of young people in Georgia:  When choosing a profession most of the 12th grade students of secondary schools pay special attention to prestige of a profession, possibility of future employment, estimated level of income by profession, personal interests, academic performance at school and direct relation of family members with the profession. The respondents consider that perspective of employment in chosen profession is the most important among the other factors, which can be positively evaluated from the perspective of making correct professional choice. However, the fact that most of the respondents consider that protection by friends and relatives is the main factor for being employed in chosen profession is an extremely negative factor for making correct professional choice. Such opinion can be considered as one of the main reasons of wrong professional orientation. In addition, the existence of the factor of protectionism in employment possibilities can be considered as one of the main reasons of low motivation of learning at higher education institutions.  Being informed about labor market is essential for correct professional orientation of young people. The research substantiates that even according to the respondents’ evaluation, their level of awareness of labor market in not sufficient. However, it is likely that the real level of their awareness of labor market is even lower. The empirical results of the research showed that the better an individual is informed about the chosen profession, the less likely he/she is to change his/her choice of profession.  An important part of the graduate students of secondary schools find it easy to choose a profession, they make decisions easily and spend very little time on making a decision on future profession; as a result, young people are not sure about the correctness of their professional choice. Empirical studies also showed that the probability that the individual is absolutely convinced in his professional choice and is not going to change it is about 20%, which is quite a low indicator.  Parents play an important role in making decisions on future professions by their children, while the involvement and support of schools (teachers) in correct professional orientation of young people is very low;  Family income considerably affects professional orientation of young people in Georgia as young people from low-income families are forced to focus on state-funded specialties rather than on their own professional interest;  Study of one’s own personal characteristics is quite an important factor. In particular, the better the individual has studied his/her personal characteristics, the more confident he/she is in the decision about the future profession.

247-251

Authors: NINO LETANDZE

In this Article we discuss environmental issues necessary for safe and sustainable development of tourism as an integral part of economic relations. We focus to examine the impact of anthropogenic effects on the environment, which manifests itself in organizing recreational utilization of nature. We refer here to the impact of ecological problems on human health in Kvemo Kartli region, which is very attractive tourist destination and has a great potential for tourism development as of its cultural and historic heritage.

12-16

Authors: DEMUR CHOMAKHIDZE, DAVID NARMANIA

The article views environmental protection issues in the energy sector of Georgia. Trends of developing energy complex are discussed and assessed envisaging ecological requirements. It is indicated that energy complex is the most polluting one among the fields of material production. Focus in made on ecological problems of the land, including cultivable ones, water, climate and other fields. The Georgian experience is presented in respect with meeting these challenges. At the end, views are given for improving the situation. Points to be stressed are: - Rational production and usage for energy resources, creation of energy recourse-conserving, low waste or no waste environmentally clean technologies, reduction of emissions, and thermal gases polluting an environment, decrease of harmful action of industrial and other waste and waste utilization; - Construction and reconstruction of systems of protection of environment, including increase of rates of filtration and neutralization of natural substances in the exhaust gases, waste water, cleaning of ground polluted and damaged during construction and operation of energy facilities, and also usage of industrial waste as secondary raw material; - Provision of economic incentives of rational use of casing-head gases, suppression of practice of their burning in their torches (first of all at the experience of creation of economically favorable conditions for use of such gases); - Introduction of environmentally clean technologies of coal burning in thermal power stations and other enterprises, as a condition of coal use prospects; - Improvement of coal fuel quality (including its enrichment, processing, bracketing etc.); - Usage of mine methane; - Growth of production of high-quality engine fuels appropriate to the European standards, improved for conformity with the requirements of the advanced legal base for polluting substances and exhaust gases emitted as a result of oil products combustion; - Development and realization of the programs of minimization of environmental damage caused by construction and functioning of hydroelectric power stations; - Organization of works of certification of environment protection technologies and means; - Organization of experts training working in a sphere of an environmental protection.

24-31

Authors: GIORGI GAGANIDZE, BADRI RAMISHVILI

The paper reviews the specific topics of the formulation and management of the Export Strategies. Export Strategies became of vital importance for Georgia. After the signing DCFTA with EU Georgian officials were wondering that the export potential of Georgia would be utilized in the best pos sible way. Unfortunately utilization of export potential is only possible by developing and executing Export Strategies.The author reviews different methods of evaluating the export potential on different markets.In addition to it the article reviews different indicators for evaluating the efficiency of the export strategies.

38-44

Authors: ŁUKASZ AMBROZIAK

The aim of the paper is a comparative analysis of a competitive position of Georgia and Poland in their agri-food exports in the EU market. This topic is especially important in the context of the Deep and Comprehensive Free Trade Agreement between EU and Georgia, which came into force in September 2014. The research question is: Do Georgia and Poland compete in the same product groups in the EU? To answer this question some indices of the competitive position will be used: trade balance, trade coverage index and revealed comparative advantages index by Balassa. Trade data will be downloaded from UN Comtrade database. The initial research results show that Georgia and Poland significantly differ in their competitive position in agri-food exports in the EU market. However, Georgia has a large potential to increase its exports to the UE.

53-58

Authors: LIUDMYLA DEMYDENKO, VIKTORIIA REINSKA, VLADYSLAV DEMYDENKO

The relevance of the study of the tax system is due to the objective need for qualitatively new instruments of taxation influence on economic development. Nowadays, the tax system of Ukraine is predominantly fiscal; since fiscal and other functions of taxes are interrelated in inverse proportion, their implementation is problematic. Therefore, despite the existence of the thorough research of the tax system of the state, there is a need to substantiate the essence, objectives, principles and criteria of the effectiveness of this complex and large-scale process. Exploration of the theoretical and practical principles of the state tax system development in the context of the economy transformation, defines the main directions of the improvement of the tax system of Ukraine. The article specifies the peculiarities of the formation of the tax system of Ukraine, considers the components of the tax and describes them. It emphasizes the need to control the timely payment of taxes and fees. The article determines the deficiencies of the domestic tax system, such as inequality in taxation and discretionary application of tax norms. The efforts for the improvement of the tax system of Ukraine should be aimed at reforming tax authorities, which should correspond with the best European models, and at organization of educational work with the taxpayers of different age groups.

65-70

Authors: JOSEPH ARCHVADZE

Involvement in the world economy makes the economy of Georgia and the welfare of its population more dependent on the global process and the global market conjuncture. The small size of our country’s economy, much greater import than export and consumer market satiety with imported products increases the risk of dependence on exogenous factors. The high level of dollarization of economy, savings and credit resourses strengthens the vulnerability of the welfare of Georgian economy and its population toward global processes. Today, more than 70% of consumer market comes to imported goods. In addition, Georgia, comparing to its neighbouring countries, is far behind by the negative balance of trade. In Georgia the number of wage earners out of 1000 people is twice less than in the United States of America, and the purchasing power of average salary is 6 times less than the level of the USA and 2 times less, than average global level. The population of Georgia has decreased by 32% compared to late 1980s, while the number of employees by - 1.5 times, among them employed employees - by 2.9 times. The number of migrant workers is more than 1 million and most of the mare engaged with the informal and illegal labor activities. Georgia belongs to the list of rare countries (if not the only), that has more employed citizens abroad than in its own country. Taking this into consideration the real level of unemployment in Georgia is not 13.9% as declared but - about 43%. Money transfers from abroad increase the income and welfare of Georgian households by 1.3 times. Large scale involvement in the world economy has not resulted in an adequate change of cost of living and its approach to poverty level. Today, the ratio of Georgia to the USA by the price of Big Mac is 64%, by the consumer prices – 39%, by the living cost – only 6.1%.

79-83

Authors: TAMILA ARNANIA-KEPULADZE

Today it is widely recognized that the economic development is largely determined by the decision taken by economic agents. Modern economic science does not provide an undeniable and perfect definition of economic agents’ economic behavior and a universally recognized and having no alternative model of human behavior is not yet formulated in the economic theory. Scientists proceed from the different methodological approaches and use various characteristics for the development perceptions regarding human behavior. Despite a large number of scientific schools, directions, and divisions of modern economic theory, there is a dominant model of human behavior which represents a specific orientation and comparable model for other economic schools – this is the model of Homo Economicus that arose within the classical economic theory and was developed by the neoclassical economic school. This model is considered to be one of the founding dogmas of the modern Mainstream Economics in which the classical economic theory has reached the highest level of formalization. The given article considers the peculiarities and interconnections of orthodox economic theory and Mainstream Economics and mentions that along of evolution of their interrelations the optimization behavior, the principles of minimizing expenses and maximize of a profit still remain to be a general methodological approach. The modern economic mainstream is based on the fundamental postulate such as methodological individualism that is most widely used an analytical method in modern economic science. According to methodological individualism, the human behavior is the main indicator of the nature of economic phenomena. The traditional microeconomic orthodox theory considers human beings as independent, associative, selfish, and rational species, which have stable and exogenous preferences and in every particular moment have full information about the current situation and use the information in order to satisfy own egoistic interests with a purpose to maximize a benefit. To define the model of economic men the acronym REMM (or «Resourceful, Evaluative, Maximizing Man») proposed by Karl Brunner and William H. Meckling is used. Based on the development of the acronym REMM the acronym RREEMM (or „Resourceful, Restricted, Expecting, Evaluating, Maximizing Man”) was developed. Other models of human behavior were developed by a sociologist Siegwart Michael Lindenberg. He distinguishes two types of human behavior and presents them by acronyms SRSM (or “Socialized, Role-Playing, Sanctioned Man”) and OSAM (or “Оpinionated, Sensitive, Acting Man”). The human behavior model is a fundamental and systematic element for any direction of the modern economic theory. Every economic school develops its own model of human behavior that best illustrates this school as a theoretical system.

90-95

Authors: BAZHENOVA OLENA V., CHORNODID IHOR S.

In the paper, the signal system of Ukraine’s economy external sustainability is considered. For this purpose it is presented the Ukraine’s economy external sustainability indicators system that consists of 40 indicators that are divided into five groups: macroeconomic indicators; indicators, characterizing the current account position; indicators, characterizing the capital account position; debt indicators and indicators,characterizing the influence of the external sector. Based on the signal approach, the threshold percentiles, the probabilities of instability occurrence due to external disturbances and the noise-signal ratio for each indicator of external sustainability for the Ukrainian economy are calculated. their values for 21 indicators are quite high but less than one. Based on analysis of indicators’ signals, there is a clear tendency of more accurate identification of the volatility since 2008. For the overwhelming majority of indicators the probabilities of an unstable situation arising due to the signal from the indicator are high and exceed 50%. The probability of an unstable situation occurring without indicators’ signals for all external sustainability indicators except one also exceeds 50%. In addition to it for each of the five groups of indicators and the indicators’ system in a whole the average probabilities of unstable situation occurrence is calculated under the condition of a signal from indicators and without it.

104-107

Authors: NODAR GRDZELISHVILI , EKATERINE GIGOLASHVILI

In this work the role and the meaning of regional clusters in EU are discussed. It is also said that the clustered politics is the new direction in the Politics of the Economic development, and also the clustering is very weak on the modern level of the Economic development of EU. One task is to show the clustering potential in increasing the competitiveness both in the country and in the regions. As the world practice shows us the cluster approach is not only the mean to reach goals of the industrial politics, (structural changes, increasing competitiveness, intensification of new courses and etc.) at the same time this is a powerful tool to stimulate regional development, which at the end may be seen in the trade balance stimulation of the regions, also in raising the employment, in budgets of different levels and in increasing the salary, in raising the industrial Sustainability and competitiveness of the regions.

119-123

Authors: MIRZA KHIDASHELI, NIKO CHIKHLADZE

Excessive indebtedness, or the “overproduction” of credits, is a feature of the modern credit system. Its results are commonly encountered in the local, regional or global economies. It appears before us as a cause of a severe financial and economic crisis. Despite the regulation methods using in the modern «mainstream» theory and practice to address the existing problems, it is still posing the new challenges for the regulatory institutions, beyond the focus of which, one main issue remains permanently: how the “overproduction” of credits is created in demand economics (but not in need economics)on such scarce resources as money and savings. Over the past few years, in the composition of bank loan portfolio of the Georgian banking sector, there has been significantly strengthened and increased the share of loans to natural persons, while the share of the local economy in GDP is almost non-existent and stays in the low single digits. Obviously, the process was observed by the National Bank, and based on the theoretical foundations of its functioning it has adopted a new regulatory norm. The article dwells on studying, the process of the “overproduction” of credits and the causes of the causes, as well as the main aspects of a new regulation set out by the National Bank of Georgia and the expected outcomes, and the relevant conclusions have been made.

133-137

Authors: GIORGI SHIKHASHVILI

The article contains general and author’s paradigms, definitions and opinions related to the topic. It is worth mentioning: • In economical and managerial sphere it is necessary to formulate new concepts and paradigms that will revive management sciences and practices; • To prepare higher qualified managers: it is needed to prepare the appropriate educational-training system; • In globalization, in civilized countries, based on the latest economic-management concepts and paradigms the relevant business-management theory and practice is developing, which must be taken into account in our country as well; • To achieve sustainable development goals it is necessary to make major changes in planning and management areas; • Ecological management is the process of mobilizing resources by the organization, which is intended to solve environmental problems; • Concept of synergistic economics and management should be based on the work of each person and the whole community in economical and managerial works.

143-147

Authors: LEVAN SILAGADZE

Resource deficit is a serious problem, but wealthy resources do not mean the riches of the country. One of the main reasons for the collapse of the former Soviet Union was ineffective use of rich natural resources. The Soviet economy, especially in the last years of its existence, was mainly dependent on income from the export of resources. Dropping prices on export resources have significantly damaged the country and have played a big role in the collapse of the former USSR. In the early 1990s, after the dissolution of the Soviet Union, new independent states, differently, but still found the way to build a market economy. Some of them have benefited from the richness of resources, while others more or less have taken advantage of innovations. Recently, one of the post-Soviet states (Georgia, Ukraine, Moldova) became associate members of the EU. The European integration vector has created new requirements. It becomes more actual to stimulate attracting foreign investments. In these processes the countries which use these foreign investments in accordance with logically elaborated and substantiated priority are getting more benefit. All three above-mentioned countries are suffering a serious problem of territorial integrity which obviously creates a lot of problems. The report is dedicated to the comparative analysis of only foreign direct investment (FDI) in Georgia, Ukraine and Moldova. Initially, the newly formed independent post soviet countries have suffered from a deficit of their own finances, and foreign investors were observing the current events and not hurrying. Countries should have their own model of development, to create the laws, structures, conditions for people to get dignified income to deepen the integrative processes and etc. Such tasks could not be completed in a short time, which was well understood by foreign investors. As a result in the early 1990s the scales of direct foreign investments in the analyzed countries were minimal, and then the processes were speeding up. The FDI played a key role in economic development of these countries.

154-157

Authors: BESIK BOLKVADZE

The paper refers to the specificities of usage of analytical financial tools in real sector of economy in Georgia, also inevitability of taking into consideration of analytical nuances by financial practitioners. In the article the importance of financial ratios utilization is highlighted. The following peculiarities are also considered and analysed:1. Selection of financial ratios; 2. Period of calculation of ratios; 3. Normativity of financial ratios; 4. Combined usage of ratios; 6. Sector specific financial ratios. It should be noted that analytical financial tools such as financial ratios are only used in Georgian business entities in following cases: economic entity represents corporate business; company has a good arranged management system; it is a branch of foreign firm; company is in tight coordination with financial institute, etc. The paper refers to the most important issues of the country’s corporate finance as follows: classification of enterprises for reporting goals, managerial reporting aspects, functions of regulator state organ, financial statements quality, companies’ accountability from auditing point of view, prerequisites the usage of international financial reporting standards (IFRS), inevitability of formation of financial benchmark system. It should be noted that the average sector benchmarks are not calculated in Georgian transitional economy that makes impossible for companies to compare their financial performance measures to the average sector/subsector financials. The consolidation and concentration process of financial and managerial reporting stimulates the utilization of analytical financial tools which increases the quality and access of relevant and reliable financial information flows.

164-170

Authors: VLADIMER TOGONIDZE

The article reviews the role of the innovation policy and national innovation ecosystem in Georgia in determining the direction of economic development of the country. The focus is on the state’s role in supporting the sustainable components of the country’s innovation ecosystem. A particular accent is made on the need for considering the importance of innovations and the introduction of new technologies in the aspect of getting benefits from the Association Agree ment with the European Union. The peculiarities of the use of human resources in the country and the problematic issues related to the introduction of innovations and new technologies in the development of economic relations with the EU. The article discusses a successful example of innovative development in Georgia by using the so-called “case study” method for the State Service Development Agency and the House of Justice.

176-180

Authors: NAIRA GALAKVARIDZE, ELDAR GUGAVA

The usage of natural resources is to consume the natural resources to satisfy the needs of the society. At the same time, the traditional economic model of the revenue and welfare of the goodness suggests the interaction of household, firms and market access. A. All revenues are spent (not stored); B. There is no international trade; C. This model is a locked self-contained system. The economy can be divided into two subsystems - production and consumption. Each of them directly or indirectly uses environmental resources and creates "waste products" that contain all types of material substance (substance-Latin-origin, which is the basis for the first basis of all things and events) which can be exhibited in the atmosphere, discharged into water bodies or be deployed on the soil or in the ground. An important component of "waste products" is also energy wastes in the form of heat, noise, magnetic field, radiation, vibration, etc. A substantial amount of material waste can be returned to production, and the rest is partial. Energy wastes can also be used as partially. If the economic activity is within the borders, the environment has the ability to absorb, pollute and waste to assimilate the environmental system without damaging it then the ecological-economic damage will not arise. In the case of economic activity the balance of ecosystems is broken and the ecological economic consequences of negative ecological-economic results are created. Thus, externals (externals, which are not taken into account by their implementers and therefore do not affect its decisions) regulation of natural usage of processes seeks to interfere with the state's interference in the market economy by means of administrative or economic leverage. This can be explained by the market inefficiency, due to the impossibility of self-regulation of ecologic-economic systems at the expense of natural market mechanisms, as well as the peculiarities of a number of countries that are due to certain stages of their development.

185-190

Authors: RAMAZ PUTKARADZE

The North American Free Trade Association (NAFTA) was founded in 1994 and includes the US, Canada and Mexico. Most of the tariff and non-tariff barriers were abolished after the agreement went into force. The Association has significantly contributed to deepening trade between member states and the growth of investments. NAFTA is an example of how the member states can benefit from free trade. Although NAFTA was established just 24 years ago, the benefits brought by it to the member countries are quite significant; in particular, gross domestic product (GDP) of the member countries increased, the GDP per capita increased, employment rate grew. NAFTA provides an example that free trade has and will have a future. According to various studies, since 1993 the number of the employed has grown by 40 million people. It should be noted that the U.S. export to Canada grew from 100 million USD in 1993 to 267 million USD in 2016 and to Mexico from 142 million USD to 498 million USD. The U.S. import from Canada amounted to 111 million USD in 1993 and 278 million USD in 2016; while import from Mexico grew from 151 million USD to 572 million USD. Every fourth job in Mexico depends on the export sector. The majority of economic analysis shows that NAFTA is beneficial for the economy of North America and the residents of the member countries; however, it damaged a number of sectors. In addition, it is argued that withdrawal from NAFTA and restoring trade barriers will negatively affect U.S. economy and expenses. However, Mexico will be much more affected as jobs will be reduced and economic growth will slow down both in short and long term perspectives. NAFTA has great support in the U.S. (as well as in Canada and Mexico). The survey by Gallup conducted in February 2017 showed that over 70% of Americans consider that NAFTA was good for America. Georgia has trade and economic (and not only) relations with NAFTA member countries, especially with its strategic partner US.

198-202

Authors: TEA MUNJISHVILI

FINSIM-PRO2018 is an important component for training a financial analyst. In simulation mode the student chooses and justifies selection of the reference option of model, performs modeling on the reference option with one variable. The result of modeling is to determine the weight of input arguments in the model. It shows the importance of argument in the model. This allows the financial analyst to redistribute the resources so that the enterprise’s financial stability is maintained. The final stage of teaching is - debriefing. Here the examination of simulation results is conducted by a teacher. During the debriefing, the teacher examines the work performed and conclusions made by each student (group). Analysis of the conclusions made by the students is carried out by a special program.

207-214

Authors: ALIYEH KAZEMI, ALI KATEBI , MOHAMMAD-HOSSEIN KAZEMI

One of the challenges project managers are dealt with is management of delay in construction projects. Organizations particularly pay special attention to the efficient management of projects and make a lot of efforts to achieve this goal by reducing delay in projects. Analyzing the factors causing delay is essential with the aim of omitting them and timely implementation of these projects. On account of the importance of oil and gas projects, in this research the factors causing delay in oil and gas construction projects are taken in to the consideration. These factors are identified by using fuzzy Delphi method.

221-224

Authors: MARINA MUCHIASHVILI

Public Debt sustainability is an important factor of macroeconomic sustainability of Georgia. The decrease of economic growth rates in Georgia and increased fiscal deficit and public debt (both, foreign and internal) since 2008 year have made it actual to assess the debt sustainability of the country both, in medium term and long term perspectives. The analysis evidenced that by the 2018 most marginal indicators of debt sustainability are below the thresholds. Nevertheless, a shock tests indicate that debt sustainability is vulnerable to permanent long term and to sharp short term shocks. In order to maintain low risk for debt sustainability, the study shows that the GDP growth rate in Georgia in the medium term should be at least 7% and the budget deficit should be below 3% of GDP for the same time period.

228-230

Authors: NAZI GVARAMIA

The scientific article represents the review of the following aspects: audit organization and ways of its improvement; the essence of the audit, goals, the role and importance in market economy; audit basics, regulations and development prospects in Georgia as well as the audit experience in foreign countries. The significant place is given to organizational issues of audit, there are also presented the procedures for making an audit conclusion, its structure, form, content and status. It is also considered the next stage of completion of the audit -the review of the audit conclusion (act, recognition), the appeal process, response forms and legal aspects of the results revealed. It is argued in the paper if the development of audit activities will help entrepreneurial subjects to make decisions that are justified for improvement of management processes and financial conditions. Besides, development of audit activities is necessary to ensure the state interests of courts, prosecutors and investigators. The work was aimed at presenting the perspectives of necessity and development of audit activities in modern conditions which have been achieved in accordance with the requirements and volumes of bachelor›s work.

238-241

Authors: TCHUMBURIDZE DODO

In the article the educational-cognitive function of products of cultural sphere on the example of a specific event is discussed. Culture involves a specific area of public life where it is important to see how the creative process is going and what will be achieved. Strengthening the educational component of the products of cultural sphere is finding a positive reflection on adolescents and young people. The main consumers of the products of cultural sphere, of particularly mass cultural events (direct and indirect beneficiaries) are young people. Culture as a system of conservation, involves promoting the protection and distribution of cultural - historical heritage, organizing-managing of settling civil values through art and educational activities. It is noteworthy that by the European Commission's initiative and decision of the European Parliament, 2018 was declared a year of cultural heritage. The Government of Georgia will join the initiative. The governmental and non-governmental organizations in the field of culture should take care about supporting with foreseeing of the result based target audience implemented projects. For the purpose of preserving and preserving cultural heritage, it is important to support the cultural-education cognition projects.

246-248

Authors: MEDEA CHELIDZE, MARINE TOPCHISHVILI

The development of technologies have had a huge impact on the financial sector. The term “Fintech” has emerged by merging finance and technology, which implies start-ups that use advanced technologies in financial services. On the one hand, advanced technologies facilitate and simplify the implementation of various operations and activities, but, on the other hand, pose a real threat to the conservative banking sector. The main goal of the introduction and development of financial technologies in the banking sector is to save time, accuracy and high quality of protection.

254-258

Authors: MIRANDA GAVASHELI

Tourism plays an important role in human life and in the world economy. It is developing very rapidly and is one of the most profitable spheres in business. The development of tourism industry in small countries is of great importance. It contributes to the peaceful development of the country, creating jobs and increasing income. Researchers often have to study and evaluate the individual sectors and how they impact on region’s economy. The interest in assessing tourism in economics is very high and important. The influence of tourism on economics are often evaluating by economic impact models, such as Capacity Utilization Model-CUM, regional economic model-REMI, and Impact analysis for planning-IMPLAN. The use of such a model is of great importance to small countries, as the more becomes to study about the development of the sector, the relationship between the economic sectors is revealed better, and it is easier to assess the changes in the economy.

10-12

Authors: TINATIN GUGESHASHVILI

investment banking services to the European Union’s 28 member countries and beyond. When the United Kingdom leaves the EU and its single market by the spring of 2019, UK-based financial firms will lose their passport to do direct business with EU27 clients. Brexit thus leads to a partial migration of financial firms from London to the EU27 (EU minus the UK) so that they could continue to serve their customers there. We provide a comparison between London and four major cities that together will host most of the new EU27 wholesale market: Frankfurt, Paris, Dublin and Amsterdam. We also give a detailed picture of the wholesale markets (foreign exchange, securities and derivatives trading), the largest players in these markets (the major banks) and the underlying clearing infrastructure. London is an international financial centre, serving European and global clients. A hard Brexit would lead to a partial migration of financial firms from London to the EU27 (EU minus UK) to ensure they can continue to serve their EU27 clients. Four major cities will host most of the new EU27 wholesale markets: Frankfurt, Paris, Dublin and Amsterdam. These cities have far fewer people employed in finance than London. Moreover, they host the European headquarters of fewer large companies. The partial migration of financial firms will thus have a major impact on these cities and their infrastructures. Banks are the key players in wholesale markets. United States and Swiss investment banks, together with one large German and three large French banks, will make up the core of the new EU27 wholesale markets. Some Dutch, Italian and Spanish banks are in the second tier.

18-20

Authors: Nana Benidze

Actuarial profession is one of the few small and prestigious occupations in the world. That’s actuaries have the knowledge and skills that are necessary for financial analysis and assessment of long-term liabilities. Accordingly, actors work in a field where it is necessary to assess financial uncertainty. The typical tasks to which the actors perform are: Assessment of insurance risks from which the insurance tariffs are determined; Calculation of Technical Reserves; Statistical analysis of claims; Participation in corporate planning (for instance when companies are merging); Determine the fair price of a new insurance product; Participation in predicting the financial results of disasters; Investment programs analysis and more.

29-31

Authors: Maia Chania

We consider Georgian Social-economic safety as country’s, its regions’ territorial economic development as maintaining vitality and development, fulfilling its material and mental needs, providing steady conditions in given economic system as well as in given geographic area, providing individuals’ and society’s well-being is possible by fulfilling social, ecological and economical needs only in harmonic governing conditions. Making one of these blocks a higher priority and making them develop surely will cause frightening events. Conference designated and recieved 5 documents: • Rio de Janeiro’s declaration about development of the environment. • XXI century’s agenda • Statement on the principles of dependence on forests; • united nation’s conference about changes in climate • convention about biodiversity

39-43

Authors: Mikheil Chikviladze

There is a very important theme. The main accents there are made on the amendments in the Budget Code in 2016- 2017, namely on the distribution of revenues in the state budget of Georgia and between the autonomous republics of Abkhazia and Adjara from January 1, 2016, according to percentage indicators. There is also important space allocated for analyzing the results of implementation of the Unified Treasury Code since January 1, 2016. The topics discussed and analyzed in the article allow us to make conclusions on one hand how the factors challenging mobilizing of tax revenues can be mitigated and on the other hand, it shows how to increase the state budget through transparent revenue mechanisms can be stimulated.

47-50

Authors: Merab Vanishvili, Lekso Lemonjava

Market after the transition radically changed the financial management system in Georgia. The centralized budget system was replaced by a new budget system, based on independence and equality of budgets of different levels. The formation of income by own or regulatory taxes and freedom in their spending is considered. Georgia on January 1, 2008 from the International Monetary Fund introduced the budget classification, which is based on international standards GFSM-2001. This is a new classification, which ensures the correct public finances, fully accounting for modern requirements. Prior to the budget of the organizations using GFSM-1986 classification, classification is already quite old.

56-59

Authors: NAZI GVARAMIA

The scientific work presents the world concepts in the sphere of audit on the modern stage, including, of course, the experience of European countries in the mentioned direction. Main aspects of “social”, “staff” and “personnel audit” been already approved in international practice are discussed, risks connected to social audit are highlighted as well as the types of audit are described and given in Georgian commercial banks according to applicable law in our country. Besides, the work is about major issues of carrying out inner and outer audit. The work emphazises the role and importance of audit in modern management systems and this gives an opportunity to make a clear decision in connection with the quality of effectiveness of a company’s activity and its perfection. Hence, the scientific work is about the problems of importance of development of inner audit institutions in Georgian commercial banks, and recommendation offers and opinions on perfection of methodology of audit are given, accordingly.

63-66

Authors: Olena Dobrotvor

The main interest is to seek for and study new approaches to the process of teachers training in accordance with the basic principles of adult learning (andragogy). The article analyzes the forms and methods of teaching which are common practice in the national Ukrainian postgraduate education. Based upon the available sources are summarized theoretical and practical expert recommendations to overcome the existing problems and improve the training system of postgraduate education. As a result of research excellence, including foreign experience (Russia, USA) is presented the hypothesis of necessary and efficient use of specially organized training reflection for productive updates to improve teaching staff training. The concept of “reflection” has been interpreted by the Russian school of methodology of G. Shchedrovitsky as a person’s alienated idea of their actions in their own mind. The article suggests the description of the specific methods of organizing reflective attitude to teaching, which provides planning qualitative changes and a record of the results.

75-78

Authors: Tamar Beridze, Medea Chelidze, Davit Bibichadze

Time management and synchronization are the ways of time-organizing which we should use for complete realization of our possibilities and skills. According to managers of different levels (upper, middle, low), it is obvious that they don’t work with using daily plans and don’t arrange their affairs in priorities, that’s why most of them have timedeficit and don’t have rational mechanism of time-usage. Accordingly, it’s necessary to know that time-management, setting priorities, limiting useless time-losing and finding simple ways for doing aimed tasks are the guarantee of successful work and career development.

83-87

Authors: Elene Gratiashvili

This article covers the characteristics of Israel Army and Gender issues related to it.Israel is the only country, that has obligatory army service for both, men and women. After finishing school, from the age of 18, it’s necessary for everyone to serve in the military. Since the early days of Israel statehood, women have become the part of the Israel Defense Forces. In Israel, military service is recognized as a hallmark of citizenship. While the Jewish male, who served in combat roles, and risked his life, the Jewish woman in her auxiliary roles was only “freeing man for combat”. Although, women were officially allowed to serve in combat roles, their participation is still limited and Gender segregation remains to be a problem. In the end, gender equality should be promoted for solving the existing problems, that would lead to necessary changes in the Armed Forces.

96-99

Authors: Maia Azmaiparashvili

The work focuses on strategic aspects of tourism development, some of the development of international tourism in Georgia and modern trends. Political decision-making during the new tourist planning, the complex nature of tourism and the long-term perspective of its development should be included. Tourism should be sustainable and must be mixed with nature. There is a tendency of a significant increase in visitors from EU countries: Poland, Germany, France. Georgia has long been dependent on its neighboring countries because the recognition of Georgia in these countries is high. The arrival of these countries is relatively inexpensive and takes a little bit of time. But in a new era when 60% of the world’s traffic is on airways, there is no improvement in air traffic in the country, challenging challenges in aviation, and the right management is necessary to manage the processes. In 2016, the 19% growth is confirmed by the fact that Georgia is a tourist model. However, the questions remain on how this development affects people and their well-being. Following visualization, you need to develop the pace of development. There are important challenges. Georgia should work on new markets, especially in the direction of Asia and the Middle East markets, to accentuate Chinese, Japanese, Korean, Malaysian Thai and Singapore

105-108

Authors: Luara Gvajaia

The article considers the basic problems of estimation of working performance of personnel, as part of the process of organization’s personnel management. Functions of personnel management, factors that have impact on efficiency of estimation, the essence of estimation object, i.e. professional characteristic and skills are considered. The above-mentioned characteristics include the level of participation into solution of organizational problems and general organizational skills. The basic principles of estimation of performance of personnel are determined, including objectivity, purposefulness, versatility, perfection, etc. The techniques of personnel estimation are considered, such as estimation with attestation, standard and self-estimation techniques.

113-115

Authors: Dodo Chumburidze

In this article we are talking about the relationship, which is typical for educational and cultural sphere. It is clear, that successful educational projects have positive impact on cultural sphere. On the development of the educational and cultural Sphere influences social, economic and political current factors in the country. Manager must foresee the relationships and specification of educational and cultural sphere, which is prerequisite of education creative and self-actualize generation. For managers in cultural sphere for reaching successful result is helpful the Strengthen of educational projects. Under The criteria of organizational success is considered the manager with experience, which has good knowledge of the specification of this sphere and owns modern management approaches. It should be noted, that the success of the organization is result of managerial decision.

120-123

Authors: Nino Letandze

In the article the basic concepts of tourism business safety are considered, the author’s classification of the major risk factors arising in the organization of tourist activity is given. The presence of risks and the opinion of the owners of travel agencies proves that this business is not so simple as it seems at first glance. And like any business, it requires a thorough and thoughtful approach. Therefore, planned investments in the tourist business require an assessment of the degree of risk, the determination of its magnitude and the application of measures to a decrease. Monetary policy is an integral part of a single state economic policy. The inflation rate in Georgia in October 2016 compared to the previous month was 0.5%, in comparison with October 2015, the consumer price index decreased by an average of 0.2%, as in our food basket imports are 80%, with an increase the number of tourists, the demand for food products is growing and, accordingly, the demand for imports is growing. The increase in the number of visitors is in favor of the Georgian economy, but according to experts on economic issues, it contributes to inflation processes. We believe that in order to prevent these processes, we need the right monetary policy and effective solutions of the national bank.

10-16

Authors: Givi Bedianashvili

The modern stage of globalization is characterized by a number of specific peculiarities of post-industry development,among which, in our view, the formation of knowledge-based economy (knowledge economy) is important. It is noteworthy that globalization complements the knowledge economy with the dimensions of global scale such as resource-technological, informational, communicative and institutional structures. According to postindustrial theory, the key resource of post-industrial economy is information and knowledge, and the main type of manufacturing activities is the high level of automated production. Among the main technologies, science inclusive technologies are used, and from the types of economic activities, a range of industry services is most common. If in the pre-industrial society agricultural sector was a determining factor, in the industrial society, it is the industry. In the post-industrial society theoretical knowledge in universities (where knowledge is generated and accumulated) becomes the determinant. These features are clearly reflected in the categories, such as the knowledgeable society, the knowledge society and the knowledge - value society. The important thing here is that the core of the society is the knowledge economy, while human capital is the main factor of development. It should be noted that in the process of forming the knowledge economy, the innovative aspect of entrepreneurial activities is of a particular importance in the context of all business entities. Therefore, the effectiveness of the overall innovative process depends on the efficient functioning of knowledge-based entrepreneurship, which in its own turn contributes to the development and implementation of innovative entrepreneurial policies by the state. The innovative entrepreneurial policy should envisage the formation of the institutional component, its systematic modernization in dynamics, compliance and synchronization of general formal institutions and business culture as an informal institution.

21-25

Authors: Mikheil Tokmazishvili

The economic prospects of small countries are associated with the historical and political context of their institutional development, as well as with the rules of economic regulation. These countries have different historical experience and peculiar cycles of the development, which is one of the important criteria for their classification. All small countries have insufficient resources for the development of the economic sectors. Unlike large countries, they experience acute need for regional integration, and compensation of scarcity of the resources is possible only through the development of intensive foreign trade. Dependence on foreign trade relations creates high risks of transferring of regional problems. Accordingly, small countries are painfully impacted by the global economic crises. Comparative analysis indicates that in the last 20 years Central and Eastern European countries are more vulnerable to the economic challenges, rather than the post-soviet countries. During the economic cycles production of industrialized European small countries has failed and the average annual rate of growth has declined, but reducing the economy was lower than in other countries. In the post-socialist small countries of Eastern and Central Europe declining of the average growth rate, also frequency and duration of cycles of the economy were much higher. Integration of these counties into the European markets was more painful than the process of rebuilding of post-soviet countries trade relations in the traditional historical markets. At present the situation is complicated by the fact that the association with the EU and the Eurasian Union (DCFTA and EAEU) are two opposing vectors, which post-communist countries face to, in order to make choice for their future perspectives.

32-35

Authors: Tsitsino Dzotsenidze, Anna Kiriakidi

The choice of physics as a model for the development of economic theory, a methodological direction which has been particularly dominant since the Second World War, has increasingly been criticized by economists, and not only by evolutionary economists, but by members of a variety of schools. Many of these critics see biology as an alternative methodological direction that merits investigation. Modelling economics on biology is not a new idea; it is an attempt to revisit a number of questions which were left behind at the turn of the twentiieth century. Thus the fundamental question is whether the concept of evolutionary economics was abandoned prematurely, or for good reasons. At present, it seems that the unifying position of these different “evolutionists” seems to be a growing contempt with the neoclassical economics, especially to its simplifying assumptions, which take inventions, innovations and dissemination of information as external variables The concepts that Schumpeter used have been a source of inspiration for Neo-Schumpeterian and new evolutionary economics. His indication that evolution is an endogenous change process, his equilibrium propensity, and his non-equilibrium concepts, his emphasis on uncertainty, and his indication that the nature of economics evolution is imbalanced actually demonstrate that Schumpeter could be categorized both in Neo-Schumpeterian and new evolutionary economics categories.

46-54

Authors: Regina Demianiuk

Currently, logistic operators play a significant role in European economies and globally. They enable customers to find an offer which is suited to their individual needs and allow for optimization of their own supply chains. In the article, the author attempts to identify the leaders of European logistic market as well as characterize service activities of selected leader companies. Contract logistics constitutes 41% of the European logistic market. Logistic operators are one of the largest companies of this sector in Europe and around the world. Protection of goods, safety of transport, on time deliveries and care of natural environment are priorities of the activity of TFL entities. Operators, leaders of the European logistic market have developed, dedicated and standardized network. Logistic operators constantly monitor processes in the supply chain and they are able to provide optimal solutions for logistic chains, taking into account needs and specification of each industry. The operators can provide many convenient solutions for their business partners by virtue of highly skilled employees, available infrastructure, processes and innovative systems implemented by the operators.

58-62

Authors: Oksana Cheberyako

The budget system is the leading element of public finances and the structure of state is a determining factor in the formation of the budget system. In the unitary countries, which include Ukraine, the budget system unites two links: budget of central government and local budgets, otherwise in the federal states there is the third link: members of federation’s budgets. Local governments are the largest element of the budget system in Ukraine (totally there were 12,052 independent local budgets to 01.12.2010), but now their number is reduced in the connection with the financial decentralization and the creation of integrated communities. Local governments are independent, and the main sources of revenues are own, fixed revenues and іnter-budget transfers. The main forms of іnter-budget transfers contain the basic subsidy, subvention, reversible subsidy, additional subsidies. Transfers are the most common tools of financial support to local budgets; that the volume of local budget revenues was sufficient to delegated and own powers, and to provide public services is not below the minimum of social guarantees.

71-75

Authors: SHota Shaburishvili

Inclusive business is an emerging field in Georgia. For Inclusive business successful samples and sharing information (as on national level as on international level) are necessary. Inclusive business models include people with low incomes on the demand side as clients and consumers, and on the supply side as employees, producers and entrepreneurs at various points in the value chain. They build bridges between business and people with low incomes, for mutual beneit. The beneits from inclusive business models go beyond immediate profits and higher incomes. For business, they include winning new consumers, expanding the workforce, and strengthening supply and delivery chains. And for people with low incomes, they include meeting basic needs, having sustainable earnings, and achieving higher productivity. In addition, the models can be designed in a way that uses environmental resources sustainably.

82-90

Authors: Gocha Tutberidze, Givi Rakviashvili, Ketevan Pipia

In this paper, the (Generalized) Gini, Hoover, Theil and Atkinson indexes are calculated for the Republic of Georgia, for his neighbor states Armenia, Azerbaijan, Iran and Turkey, for some post soviet countries including the Russian Federation,for leading states of European Union, for USA, China and Japan. Previously only a small part of this indices were calculated,for example by United Nations, World Bank, CIA of USA, University of Texas and so on. An attempt was made to apply these calculations with the aim of building a mathematical model of the economic structure of Georgian society. It was known that Gini and Hoover indexes can be calculated by different formulas, it is proved that these formulas actually give the same results. It is also considered the economical sense of above mentioned indexes in the terms of axioms which L. Bellu defined in some documents of Union Nations.

96-99

Authors: Badri Gechbaia

The rapid industrial development demands the corresponding rate of the agricultural development in order to ensure the reliable food supply for the population. The fall of the agricultural industry, the unprofitability of the agricultural producers do not allow to solve the mission of reliable food supply correspondingly with the social-economical situation. It was stated that an agricultural region may be developed effectively only in case of more or less grouped system of supporting and relational branches that form the clusters in the region.

103-105

Authors: Lashari Kurdashvili

In recent years, tourism has become one of the most dynamically developing priority direction of Georgian economy. Tourism and hospitality industry attractiveness is due to the country's unique diversity of natural resources, cultural and historical monuments, sea and mountain resorts, curative mineral and thermal waters, favorable geographic location and many other positive factors. However, today's post-Soviet Georgia tourism industry is still weak and is in formation-development process. State government realized significant and positive measures to support tourism sector. Improved legal framework, introduced preferential taxes, tourism businesses became available for sale of state and bank loans, foreign investment was attracted to the winter ski resorts, hotels, holiday homes, roads and other tourism infrastructure facility constructions. The author believes that tourism is one of the most dynamic sectors of Georgian economy in recent decades. The objectives of this foundation are: the unique natural resources, convenient geographical location and other factors, which contribute to the attractiveness of Georgia. The paper discusses that the main condition for the development of enterprises of hospitality industry is human capital, shows that the continuous education employees of this area is an important factor in the reproduction of human capital.

109-112

Authors: Tinatin Medzmariashvili

The state procurement plays an important part in sustainable development of national economy. As a result of conducted reforms, the country has acquired the most transparent state procurement system during the past years, which is being permanently improved and enhanced. The continuous process of globalization had an important impact on state procurement policy. State procurement agency accomplished various arrangements within the framework of international cooperation, which will promote the further improvement of state procurement-related processes in Georgia.

123-125

Authors: Irma Dikhaminjia

In the present paper we tried to discuss teaching methods and practices for successful preparation of students for contemporary carriers. The paper discusses teaching methods and practices for successful preparation of students for contemporary carriers. With the fast development of technologies, requirements to workforce are constantly changing. One of the main goals of the university is to equip students with the necessary knowledge and skills for their chosen carrier, therefore it is crucial to define necessary skills, to reveal problems in existing teaching methods and structural approaches, and to transform education philosophy of the lecturer accordingly. Paper describes how previous teaching methods were adjusted to new challenges and how the role of the lecturer as a central figure of the auditorium changed towards more managerial-like duties. The paper also considers the well-established experience practices in foreign universities, considering co-operation and internship possibilities, especially in STEM fields. Work environment for STEM graduates are among the fastest-changings, therefore the university should not only educate students for current job requirements, but also anticipate expected changes and adjust teaching practices accordingly. For this purpose it is necessary that university has constant relation with the possible job market in form co-op and internship. By reviewing various literature in this area and the authors experience, the paper shows the advantages of the students who got real-life practices during their education compared to those who were mostly educated theoretically.

130-132

Authors: Ioseb Kartvelishvili, Tea Todua

In the last period of time, security in wireless networks and quality of service, became very important and it is a subject of active researches. Communication signals which are extended in some environment can be received by someone else. Companies and individual users must recognize potentially existing problems and try to prevent them. Every system which needs to secure has some deficiencies in it. These deficiencies or part of them can be used by attacker. Subsequently, for providing security of the system it is important to consider all possible threats and at tacks which can be performed against the system. Security mechanisms must provide system security by considering the given threats, attacks and deficiencies. In this article questions of security of wireless networks are discussed, it analyzes possible threats and the appropriate mechanisms of protection. The most common forms of threats of wireless networks (non-authorised access, Denial of service, DoS and man-in-the-middle attacks) are described by its own properties and are given recommendations for security issue.

137-141

Authors: Murman Kvaratskhelia

The article discusses the challenges facing Georgia during the globalization period. The peculiarities of transition to the principles of the market economy of the country, analysis of macroeconomic indicators, especially dynamics of GDP (gross domestic product) in recent years. In addition, the essence of economic security and the importance of the country’s economic development stabilization process is analyzed. The main issues that the article highlights are economic security indicators such as demographic safety, economic and economic development trends, economic security, poverty level indicators, population revenue trends, relative poverty and employment issues.

151-154

Authors: George Kuchava

Article represents a short review about how CMS-Content Management System was created and developed, it shows his current environment, also represents its strong and weak sides. In this article you can read comparison analysis of PHP and Python and there are also reccomendations how to fix weakness of CMS and also shows the way how to create new CMS. Creation of new CMS with Python code is on the way.

18-27

Authors: Vladimer Papava

Georgia today stands at crossroads between two alternatives: to continue rapprochement with the European Union (EU) on a basis of the Association Agreement (and to ultimately pursue membership through a lengthy, drawn-out process), or to join the Eurasian Economic Union (EAEU), a much simpler prospect. Georgia has long made clear that it favors engagement with Europe and Euro-Atlantic institutions; however, discussion of Georgia’s rapprochement with Russia is becoming more and more topical as a result of uncertainty in modern Georgia-Russia relations and the establishment of the EEAU. This essay clarifies the main differences between the EU and EAEU in the wider context of Georgia’s future. The EAEU started operations in 2015 and at present includes five member-countries – Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. Georgia is located between two member states – Armenia and Russia – which creates new challenges for Georgia’s development. Georgia and the EU signed the EU-Georgia Association Agreement in June 2014. Despite this agreement, talks on Georgia’s rapprochement with Russia have recently reignited, largely sparked by the establishment of the EAEU. When analyzing the suitability of these two organization for Georgia, it is important to consider the essential differences between them: • The EU was initially set up as an economic union, with the aim of promoting the economic development of its member states. Although the EAEU contains the term “economic” in its title, this union is not so much a means of economic development as it is a mechanism through which Moscow seeks to maintain and increase its political influence on the member states. • The EU is, with the partial exception of some Eastern European member states, an association of developed economies, while the EAEU is comprised solely of underdeveloped post-Soviet economies deficient in their market institutions and lagging behind global standards in technology. • Transparency International’s Corruption Perceptions Index demonstrates an essential disparity between the EU and EAEU on the issue of corruption. The most corrupt state in the EU according to this ranking is Bulgaria (75th of 175), while the least corrupt in the EAEU is Belarus (79th). For comparison, Georgia ranks 44th. • For a country to join the EU, it must meet certain standards set by Brussels in areas such as democratic institutions, human rights, freedom of speech and expression, and market economy. Furthermore, only after an applicant country has met European standards in the above areas is the issue of formal membership placed on the agenda. In order to encourage rapprochement with the EU, Brussels has adopted special formats of cooperation – for instance, the European Neighborhood Policy (ENP) instrument and the Eastern Partnership (EaP). Georgia is a participant in both formats. It is through the application of the EaP framework that Georgia has managed to successfully traverse the rather difficult path towards the entry into force of the Deep and Comprehensive Free Trade Area (DCFTA) and the Association Agreement. Unlike the EU, the EAEU has virtually no complex preconditions for membership. On the contrary, Moscow’s aim is to expand the union in order to increase its political influence on member-states via economic leverage, with no concern for economic and political standards such as those emphasized by the EU. • When the essential differences between the EU and the EAEU are summed up, it can be concluded that Georgia can more easily attain membership in the latter than in the former. However, this evokes a separate question: why would Georgia, a country with a more or less EU-level standard of corruption, enter into the much more corrupt EAEU, which lags behind the EU in institutional and technological terms, and serves Moscow’s political objective of strengthening Russian control over the member states? The answer, of course, is that it would not be in Georgia’s interest to pursue EAEU membership. Moreover, it is important to emphasize that the so-called “commensurability barrier” for the EAEU is much more significant than for the EU. Ruslan Greenberg, a Russian economist, outlines this issue through the comparison of the Commonwealth of Independent States (CIS) and the EU Greenberg shows that an alliance of countries is streamlined and possesses a higher chance of success when the commensurables (sizes) of the member countries are more or less comparable. When an alliance of countries is formed, the states concerned should make a decision on the areas where they are ready to relinquish part of their sovereignty in favor of the supranational governing bodies of the association. When the commensurability of the countries is more or less analogous, reaching consensus on this matter is easier than when one country and its economy are several times larger in size than those of all the other constituents of the union put together. In this case, the largest country finds it difficult to imagine how it can be expected to yield a share of its sovereignty equivalent to that of much smaller states. As a result, this large country attempts to relinquish far less of its state sovereignty than it obligates the other smaller member states to surrender, thereby maintaining a dominant position in the association. One of the reasons of the EU’s success is also the fact that it consolidates relatively large and simultaneously commensurably more or less homogeneous countries, such as Germany, Great Britain (before the implementation of Brexit), Italy and France, and relatively small but commensurably comparable countries, such as Belgium, Ireland, the Netherlands, and others. According to Greenberg, the “commensurability barrier” for the CIS was rather high, since the Russian economy accounted for 67-70 percent of the entire economy of the CIS. This barrier is even larger in the EAEU, as Russia’s constitutes over 82% of the entire economy of the union. The issue of, the “commensurability barrier” is a further indication that the EAEU does not have a high chance of success and an additional

37-42

Authors: Mikheil Tokmazishvili

This paper focuses on the currency rate changes and the impact of the currency fluctuations on trade flows. Through the empirical estimation of trade relations and exchange rate fluctuations, it is concluded, that the frequency of the foreign exchange fluctuations and the currency cycles were not reflected on Georgia-Turkey trade relations sufficiently. Trade flows were relatively dynamical. This case does not fully correspond to the widespread opinion according to which the exchange rate instability has a negative impact on trade relations, creates uncertainty and gives rise to the adverse effects of the expectations of business activity. Impact of the exchange rate fluctuations on the countries' trade relations changes in the short and long term has different characteristics. Explanation of the export-import changes in short and medium term through the national currency exchange rate cycles does not show the correlation between them; and in the long-term - the national currency devaluation effect on dynamics of the trade relations was very slow. Foreign trade was sustainable, and the country's national currency fluctuations did not have a significant role in the trade changes. Moreover, impact of the exchange rate on the ratio of export and import and national currency appreciation has not led to the deterioration of export conditions.

52-59

Authors: Mikheil Jibuti

Georgian officials haven, t set free from Soviet herritage to manipulate and twist statistical data for political purposes.Such political arithmetics is used to embellish reality in order to show off success. This situation is damaging effective ruling of the country as the right orientation is lost. Sometinmes these conseguences go further. We can assume that a new ruling modal SOLOKRATIA (Constitutional majority of Parliament relies on one individual who is out of government) has been created after 8, October, 2016 Parliamentary election. Conseguentry, analizing statistical data having been created at different places with different reasons is the result of falsified elections.

68-73

Authors: Akaki Bakuradze

Along with the disappearance of the idea of communism completely new ideological project sprung with the name of ‘globalization’. To be candour, the main aim of globalization is unification of the people of the world into a single, whole one (?!) that covers political, cultural, religious and other unified aspects of life and etc. According to the dictionary definition, ‘integracio’ is the unification of different parts into a single unit. T. Levit was the first to use this term with its economic connotation. The disadvantages of the globalization are as follows: fast spread of crisis situation in certain countries; hindering the movement of short-term capital, increasing the number of international financial swindlers; drawbacks due to improper condition of a national economy, administrative government, legal system for the developing countries and the states with transitive economy; intensifying international organized crime; ignoring national peculiarities; intensifying illegal migration and trafficking and etc. If Georgia is intensely drawn into the processes of world integration it will be a loser in a general sense because Georgia is absolutely unprepared in terms of aforementioned resources. In this process a lot remains to be invisible but its results are obvious and realistic. Everything depends on the decision made by others being thousand miles away. The way-out is building ‘The South Caucasian Region’. In order to reach the aim it is necessary to scientifically evaluate and analyze the attempts of ‘unifications’ of historical neighbours and their results among which Russia’s annexation period is included; optimal ways of moving to a new culture of political and economic existence should be chosen and the main item_ the role of Georgia and ‘its function as a middleman’ should be defined in planning and implementing a new idea of building an unified Caucasian House.

81-88

Authors: Givi Lemonjava

The transmission mechanism’s work is a very complex process which varies from time to time to meet objective of monetary policy. Official interest rate variations via transmission mechanism of monetary policy effects economic outputs and inflation, with some lags and the results deviate from policy objectives. The extent of variations depend on many factors but key factors are: level of financial system development, expectations and confidence, central bank’s independence, and country’s fiscal position. Because of weaknesses of these factors in developing countries like Georgia, Central bank on top of the transmission mechanism should employee strict control over monetary aggregates’ expansion process.

96-99

Authors: Vasil Khutsishvili

The article analyzed the experience of developed countries, macroeconomic policy, economic regulation, the overall economic development of the main aspects of the laws. Discussed the urgent and essential problems and tasks, such as in the production of its downturn and overcome the economic crisis, the perfection functioning of the securities market, cautious and prudent fiscal and monetary measures, and the scope of legislative acts to regulate.

106-109

Authors: Ioseb Kartvelishvili, Tea Todua

In this article the basic concepts about components and technology of wireless sensor networks are provided; all types of wireless networks are considered (personal, local, regional, global, sensor); features of their structures and methods of application are described.