Challenges of Economic of Georgia: Good and Bad EconomicGrowth

Abstract

The Georgian economy has been undergoing serious transformations over the
years. The reforms carried out by the government affected all spheres of the
economy - health care, education, industry, the military-technical complex,
etc. The annual growth of the economy is approximately 4.8%. The EU,
partner developed countries and donor international organizations allocate
huge financial resources for the implementation of the changes planned by
the government. Despite this, the economy of Georgia is in a difficult situation.
The reason of economic stagnation in which the country has been for years is
an extensive vector of development of the national economy. Investment
projects carried out in the country in recent years are extensive in most cases.
These projects are aimed at increasing current profits. They mostly are not
oriented to long-term perspective. Intensification projects based on scientific
and technical progress that are capable to change the level of production
qualitatively are few. Despite the lack of an innovative scientific and technical
background the economic indicators are increasing. However, the analysis of
the indicators’ growth factors shows the lack of development of the national
economic system. The data does not reflect the real economic statement and
point to an extensive (so-called bad growth) growth of the national economy
and will lead to economic and political crisis. The intensive and extensive
factors of economic growth is discussed and analyzed in the paper. The
recommendations and measures are developed by the authors for improving
the economy through the intensification of production processes.