Lavrenti Chiburdanidze
Doctor of Economics, Professor, Samtskhe-Javakheti State University
Lasha Chiburdanidze
Doctor of Business Administration, Associate Professor, Samtskhe-Javakheti State University
chiburdanidzelasha@sjuni.edu.ge
Abstract
Paper examines the state of foreign direct investment and development prospects in Georgia. The study revealed that Georgia, with its historical and geographical location, is an attractive investment destination and ranks second in the South Caucasus region after Turkey in attracting FDI.
The analysis of investment dynamics showed that in 2000-2015, an increasing trend was observed, with a maximum in 2015 of 1,728.3 million USD. In 2015-2020, there was a decrease to 583 million USD, and in 2022, the record figure was 2,253.4 million USD. By 2024, a decrease was again observed to 1,333.8 million USD.
The main reasons for the decline were identified as the COVID-19 pandemic (2020), the impact of the EU’s foreign economic policy, weakening economic ties, and the tense internal political situation. Furthermore, the main problems identified were the high index of perceived corruption in the public sector and difficulties in developing innovative potential.
The study developed recommendations that include: revising the national strategy to strengthen FDI incentive measures, attracting foreign investors to national projects of international importance, improving legislation in terms of insurance of political risks of investments and protection of property rights, as well as the use of preferential taxation measures for joint businesses.
The study concludes that Georgia has the potential to maintain its status as a leading investment destination in the region, which requires a comprehensive approach from the state, private sector, and civil society, and significant improvements in the investment environment.
Keywords: Capital, Foreign Direct Investment, Investment Environment, Ease of Doing Business, Gross Domestic Product.
JEL: F21; F23; O19
DOI: 10.52244/c2025.31
The article is in Georgian.
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