The Role of Institutional Reforms in the improvement of the Georgian Investment Environment
Shengelia, T. & Berishvili, K.
Abstract:
The Paper consists of a wide range of informative materials demonstrating the improvement of economic and social state of the transitional countries. Institutional reforms are of a great importance, as successful institutional reforms encourage a greater investment inflows in the country. The only way to overcome unemployment, poverty and promote the significant economic growth is an implementation of institutional reforms along with the increase of investment activity. From this point of view, the possibilities of local funds in transitional countries, particularly in Georgia, are small. That is why the main priority is an attraction of foreign investments. But these actions are based on important institutional changes. Foreign investments are one of the driving forces of the process of globalization and are a significant element of the modern world economy. They promote restructuralization of a industry at the regional and global levels and thus ensure the integration of national economy in the world economy more effectively than trade. Foreign investments stimulate economic growth and development, providing economies with not only financing for development, but also with new technologies and better management techniques. In addition, Foreign Investments integrate production systems with one another. In this way, Foreign Investments can play a key role in the development of transitional economies and in their rapid integration into the world economy.
The Paper gives a clear picture of the Georgian economy and fields where foreign direct investments are made to illustrate how institutional reforms can create attractive business environment and promote economic growth. The study overviews the reasons of making investments in Georgia, the main tendencies of FDI in Georgia. The Paper emphasizes the following reasons why Georgia remains the attractive country for foreign investors. These reasons are: the adequate institutional reforms and free market oriented economic policy, attractive macroeconomic environment, competitive trade regulations, liberal tax code, aggressive privatization policy, modernized business licensing system, adequate technical regulation system, strategic geographic location, competitive and dynamic banking sector, Georgia is a country of ancient culture and traditions, with diverse investments sectors. The report argues, that despite the current global financial crises and Russian – Georgia War in 2008, the country remains an attractive place for foreign investors.
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APA citation
- Shengelia, T. & Berishvili, K., 2014. The Role of Institutional Reforms in the improvement of the Georgian Investment Environment. International Journal of Social Sciences, III(2), pp.81–87.