Journal number 4 ∘ Paata Giorgadze ∘

The Shortest Way of Achieving the Rapid Economic Growth and Population Welfare in Georgia

Not a single country of the world has overcome an economic crisis and has not achieved a successful development without the rational use of local natural resources. True, Georgia is more or less rich in natural resources, the world class supplies are only drinking freshwater resources.Therefore, the main condition of rapid socio-economic development of Georgia is putting the freshwater resources, which are vitally important product for people, into operation, the priority of which is determined by the following factors: high quality and competitiveness, the daily increasing demand in the world market and a short period of high return of invested capital. Capitalization of natural resources of drinking water, the use of mechanisms for its involvement in world financial resources, materialization of only 0.75% from the state reserves of natural resources of underground drinking water (301 m³/sec) on the international stock exchanges, through lon

Journal number 4 ∘ Teimuraz Beridze ∘

On the Transitional Period in Economy

The article deals with the topical issues of the theory and methodology of transitional economy. There is found the necessity of developing the theory of transitional economy and indicators reflecting the development of the transition period. Special attention is paid to the issue of ownership and management in transitional period and the need of vision of the results of the transitional period in economy. Keywords: Transitional Period in Economy; “Transitology”; “Washington Consensus”; Ownership; Property Rights; Postindustrial Development. JEL Codes: A1; A10; A11 Today, two decades after the beginning of the so-called “transitional period” from a command economy to a market economy, in a society of countries (and there are 26 of them with almost 300 million population, without of China), who have made such a transition, legitimate questions arise about the correctness and effectiveness of the taken steps. In this integrated world post-communist

Journal number 4 ∘ Améziane Ferguene ∘

Institutions, Governance and Economic Development Focus on the Developing Countries Case

As macroeconomic stabilisation and structural adjustment policies haven’t been particularly successful, it becomes increasingly necessary to consider extra economic parameters’ role in the growth process. In this context, the governance (with all that it recovers as balance powers, rational management of resources, transparency of rules, involvement of civil society, etc.) has become indistinguishably tied to the development analysis of the developing countries. Closely related to that of institutions, this notion of governance is a polysemous one. But in spite of its polysemy, the concept of governance is currently the core question of contradictory debates about the use made by the international financial organizations of the idea of “good governance”. The purpose of this paper is to assimilate and contrast the necessity of “good governance” as a prerequisite for growth and development for developing countries and to study the possibilities of econ

Journal number 4 ∘ Givi Makalatia ∘

The Fifth Factor of Production and the Budgetary Policy of Georgia

The theory of production factors is changing over time in the course of complications of economic relations. Initially three factors of production were adopted: Land, labor and equity. Further entrepreneurial skills were added as the fourth factor of production. Over time, the expansion of the production factor has become an issue again, because the process of economic reproduction became difficult due to the growth of world population and intensified competition. The paper analyzes and gives arguments on why the state's economic capacity shall be taken as a fifth factor of production. The goal of the state is to create an optimistic expectation of the future, which is important for encouraging production in the market economy. The stable supply of mentioned public goods to the market is a function of State. The modern Global financial-economic crisis has proven that the anti-crisis program is based entirely on measures to strengthen state intervention in the economy. We can say that

Journal number 4 ∘ Manana Kharkheli ∘ Ani Kimadze ∘

Small Entrepreneurship - the Inclusive Growth of the Economy and Poverty Reduction Factor in Georgia

In the article inclusive small business is considered the power, which, after theoretical and practical trainings at specially designed business incubator, will create jobs for poor and rejected groups of Georgian population and, hence, support poverty reduction in the country. In order to make the above-mentioned issues evident, the article discusses how disproportionate distribution of the income to rich and poor people causes widening of the gap between them and how this topic became a subject of concern in the United Nations Organization, Currency Fund, World Bank and etc. who acknowledged the phenomenon as the most significant challenge faced by modern times. They even conducted researches in this field. The studies showed that Gini coefficient, which measures the inequality of income distribution in the world, range between: 0,42-0.44 in Asia 0,30-0,63 in Europe 0,22-0,44 in Latin America 0,22-0,42 in Near East 0,42-0,68 in Sub-Saharan Republic. Critical threshold of G

Journal number 4 ∘ Sofiko Dzhvarsheishvili ∘

Regional Peculiarities of Foreign Direct Investments

The issue of foreign direct investments is quite relevant nowadays and is under attention of international economical theory as it is well discussed in foreign economical literature. Foreign direct investments mean organization of new enterprise, purchasing of existing enterprise and creating of joint enterprise in nonresident country. As foreign direct investment is long-term investment it significantly affects on economic growth, which means long-term growth tendency of production, consumption and welfare. From scientists’ point of view, foreign direct investments support economic growth of all transitional country. Macroeconomic factor plays important role in attraction of foreign direct investments, namely, volume of domestic market, stability of currency and politics, development of infrastructure and qualified human resources; also investment politics of country receiver is also very important as it provides effective guarantee of legal systems and stabile functionality.

Journal number 4 ∘ Inga Khutsishvili ∘

Business Organizational Culture and its Managament

In the era of global competitiveness, rapidly developing technology and changeable social values, those organizations that constantly meet the consumers’ changeable demand for quality, service and price, prove to be successful. It is well known that, employees are key actors in achieving the goals of any organization; therefore, proper management of their physical and mental resources as well as motivating them is highly important. Motivation can be defined by different factors, and in some way it is determined by organizational culture. Organizational culture is created as a result of crossing organizational and social cultures; this is the phenomenon that teaches and makes the members of the organization behave according to the set rules; it is a certain control system and often includes unwritten laws and rules. Well formulated organizational culture guarantees the success of the organization; in order to obtain the competitive culture, constant changes are necessary. Ke

Journal number 4 ∘ Andreas Nastansky ∘ Simon Gelashvili ∘

Standardfehler von Durchschnitten für gewichtete Daten

Der Standardfehler bildet die Grundlage zur Einschätzung der Güte geschätzter Mittelwerte wie dem Durchschnitt. Im Fall einer Stichprobenerhebung wird der Stichprobendurchschnitt als Schätzer für den Erwartungswert in der Grundgesamtheit herangezogen. Bei der Anwendung von Statistikprogrammen zur Ermittlung der Stichprobenfunktionen und deren Gütemaße muss beachtet werden, ob Verhältniszahlen oder gewichtete Daten vorliegen. Die Nutzung eines Gewichtungsverfahrens kann die Komplexität der Durchschnittsbildung und Standardfehlerberechnung erhöhen. Aus der Nichtberücksichtigung dieser Faktoren können verzerrte Varianzschätzer und Standardfehler resultieren. Als Ausweg wird eine Normierung der Gewichte vorgestellt – mit dem Ziel, unverzerrte Stichprobenfunktionen zu erhalten. Hierbei werden Lösungswege präsentiert, die auch programmiertechnisch einfach umzusetzen sind. Keywords: Statistische Maßzahlen

Journal number 4 ∘ Nana Katsitadze ∘

State Policy in Tourism – Business (MICE) Tourism in Georgia

Due to high social and economic effectiveness of tourism, a great majority of the countries around the world are interested in its development. Therefore, the issues of tourism theory and practice are of great interest in scientific literature, however, the role, functions and methods of the state in the management of the sector are not specified. The complexity of the issue is determined by different tourism resources among the countries, different levels of economic and historical development and the degree of maturity of the tourism industry itself that makes it impossible to use any uniform approaches. The paper also focuses on the situation that in the developing countries, where tourism flows have greatly increased recently, the scheme to receive income from the industry still needs to be improved. Seeking to receive quick economic benefits from tourism industry, these countries pay less attention to the issues of sustainable development, which creates danger to long-term develo

Journal number 4 ∘ Akaki Gabelaia ∘

Dynamics of the Main Characteristics of Work of the Market and their Graphic Illustration on the Basis of Matlab

It is known that within so-called cobweb market model, it is considered that, at the end of each interval the price is defined from a condition of an equality of demand and supply. More precisely, the model has the form: Where D(t) denotes demand on production for a moment t, S(t) – supply of production for the same, P(t) and P(t-1) production prices, respectively for t and t-1 moments. At the same time, for all periods, price P(t) is defining from the condition S(t)=D(t). Assuming this, the price dynamics equation has the form: It is well known that presented above model leads to fluctuations around an equilibrium point (in particular, around the equilibrium price). Unlike it, the scheme of monotonous (consecutive) convergence to an equilibrium point is offered. For example, the appropriate price dynamics equation may have the for

Journal number 4 ∘ Giorgi Morchiladze ∘

Sequencies and Difficulties in an Adoption of Innovative Process

In the modern world, because of desperate competition and globalization, any company needs the continuous care of improvement its product and business processes, thus it can achieve the success and maintain the existence in long-term period. Development of products and business-processes is always related to the innovation. Company management can do one of two things, create and implement or adopt innovation. The goal of this study is to describe the innovationadoption process, analysis of difficulties in the process and develop practical recommendations that will be important for any service provider. To achieve this goal, we set the following tasks: define concept of innovation, study innovation adoption theories, conduct practical research in Georgian companies, which provide services in financial service fields. According to our research, innovation adoption process is very complex and difficult. It’s not easy to determine whether the innovation will bring the benefit of

Journal number 4 ∘ Nino Paresashvili ∘

III International Scientific Conference "Globalization Challenges in Economics and Business"

The 3rd International Conference "Globalization Challenges in Economics and Business" dedicated to the 100th anniversary of the establishment of Tbilisi State University was held on October 26-27, 2018 at the Faculty of Economics and Business, Ivane Javakhishvili Tbilisi State University. The conference was attended by scientists both from Georgia and eight countries: France, Poland, Slovenia, Slovakia, Lithuania, Ukraine, Azerbaijan and Kyrgyzstan. On October 26, the plenary session was opened at the first building of the university by the Dean of the Faculty of Economics and Business, Professor Giorgi Gaganidze, Doctor of Law and the head of the TSU Administration Nunu Ovosiankova, Chairman of the Committee of the Sectoral Economics and Economic Policy of the Georgia Parliament Roman Kakulia, , Professor,the chair of the Theoretical Economics Department, TSU Faculty of Economics and Business, Elguja Mekvabishvili. Thay all made welcome speeches. The speakers of the plen

Economics and Business Referential and Reviewed International Scientific-Analytical Journal of Ivane Javakhishvili Tbilisi State University, Faculty of Economics and Business

ISSN 1987-5789 ESSN 2587-5426 doi 10.52340	Journal number 4 ∘ Paata Giorgadze ∘ The Shortest Way of Achieving the Rapid Economic Growth and Population Welfare in Georgia Not a single country of the world has overcome an economic crisis and has not achieved a successful development without the rational use of local natural resources. True, Georgia is more or less rich in natural resources, the world class supplies are only drinking freshwater resources.Therefore, the main condition of rapid socio-economic development of Georgia is putting the freshwater resources, which are vitally important product for people, into operation, the priority of which is determined by the following factors: high quality and competitiveness, the daily increasing demand in the world market and a short period of high return of invested capital. Capitalization of natural resources of drinking water, the use of mechanisms for its involvement in world financial resources, materialization of only 0.75% from the state reserves of natural resources of underground drinking water (301 m³/sec) on the international stock exchanges, through lon Journal number 4 ∘ Teimuraz Beridze ∘ On the Transitional Period in Economy The article deals with the topical issues of the theory and methodology of transitional economy. There is found the necessity of developing the theory of transitional economy and indicators reflecting the development of the transition period. Special attention is paid to the issue of ownership and management in transitional period and the need of vision of the results of the transitional period in economy. Keywords: Transitional Period in Economy; “Transitology”; “Washington Consensus”; Ownership; Property Rights; Postindustrial Development. JEL Codes: A1; A10; A11 Today, two decades after the beginning of the so-called “transitional period” from a command economy to a market economy, in a society of countries (and there are 26 of them with almost 300 million population, without of China), who have made such a transition, legitimate questions arise about the correctness and effectiveness of the taken steps. In this integrated world post-communist Journal number 4 ∘ Améziane Ferguene ∘ Institutions, Governance and Economic Development Focus on the Developing Countries Case As macroeconomic stabilisation and structural adjustment policies haven’t been particularly successful, it becomes increasingly necessary to consider extra economic parameters’ role in the growth process. In this context, the governance (with all that it recovers as balance powers, rational management of resources, transparency of rules, involvement of civil society, etc.) has become indistinguishably tied to the development analysis of the developing countries. Closely related to that of institutions, this notion of governance is a polysemous one. But in spite of its polysemy, the concept of governance is currently the core question of contradictory debates about the use made by the international financial organizations of the idea of “good governance”. The purpose of this paper is to assimilate and contrast the necessity of “good governance” as a prerequisite for growth and development for developing countries and to study the possibilities of econ Journal number 4 ∘ Givi Makalatia ∘ The Fifth Factor of Production and the Budgetary Policy of Georgia The theory of production factors is changing over time in the course of complications of economic relations. Initially three factors of production were adopted: Land, labor and equity. Further entrepreneurial skills were added as the fourth factor of production. Over time, the expansion of the production factor has become an issue again, because the process of economic reproduction became difficult due to the growth of world population and intensified competition. The paper analyzes and gives arguments on why the state's economic capacity shall be taken as a fifth factor of production. The goal of the state is to create an optimistic expectation of the future, which is important for encouraging production in the market economy. The stable supply of mentioned public goods to the market is a function of State. The modern Global financial-economic crisis has proven that the anti-crisis program is based entirely on measures to strengthen state intervention in the economy. We can say that Journal number 4 ∘ Manana Kharkheli ∘ Ani Kimadze ∘ Small Entrepreneurship - the Inclusive Growth of the Economy and Poverty Reduction Factor in Georgia In the article inclusive small business is considered the power, which, after theoretical and practical trainings at specially designed business incubator, will create jobs for poor and rejected groups of Georgian population and, hence, support poverty reduction in the country. In order to make the above-mentioned issues evident, the article discusses how disproportionate distribution of the income to rich and poor people causes widening of the gap between them and how this topic became a subject of concern in the United Nations Organization, Currency Fund, World Bank and etc. who acknowledged the phenomenon as the most significant challenge faced by modern times. They even conducted researches in this field. The studies showed that Gini coefficient, which measures the inequality of income distribution in the world, range between: 0,42-0.44 in Asia 0,30-0,63 in Europe 0,22-0,44 in Latin America 0,22-0,42 in Near East 0,42-0,68 in Sub-Saharan Republic. Critical threshold of G Journal number 4 ∘ Sofiko Dzhvarsheishvili ∘ Regional Peculiarities of Foreign Direct Investments The issue of foreign direct investments is quite relevant nowadays and is under attention of international economical theory as it is well discussed in foreign economical literature. Foreign direct investments mean organization of new enterprise, purchasing of existing enterprise and creating of joint enterprise in nonresident country. As foreign direct investment is long-term investment it significantly affects on economic growth, which means long-term growth tendency of production, consumption and welfare. From scientists’ point of view, foreign direct investments support economic growth of all transitional country. Macroeconomic factor plays important role in attraction of foreign direct investments, namely, volume of domestic market, stability of currency and politics, development of infrastructure and qualified human resources; also investment politics of country receiver is also very important as it provides effective guarantee of legal systems and stabile functionality. Journal number 4 ∘ Inga Khutsishvili ∘ Business Organizational Culture and its Managament In the era of global competitiveness, rapidly developing technology and changeable social values, those organizations that constantly meet the consumers’ changeable demand for quality, service and price, prove to be successful. It is well known that, employees are key actors in achieving the goals of any organization; therefore, proper management of their physical and mental resources as well as motivating them is highly important. Motivation can be defined by different factors, and in some way it is determined by organizational culture. Organizational culture is created as a result of crossing organizational and social cultures; this is the phenomenon that teaches and makes the members of the organization behave according to the set rules; it is a certain control system and often includes unwritten laws and rules. Well formulated organizational culture guarantees the success of the organization; in order to obtain the competitive culture, constant changes are necessary. Ke Journal number 4 ∘ Andreas Nastansky ∘ Simon Gelashvili ∘ Standardfehler von Durchschnitten für gewichtete Daten Der Standardfehler bildet die Grundlage zur Einschätzung der Güte geschätzter Mittelwerte wie dem Durchschnitt. Im Fall einer Stichprobenerhebung wird der Stichprobendurchschnitt als Schätzer für den Erwartungswert in der Grundgesamtheit herangezogen. Bei der Anwendung von Statistikprogrammen zur Ermittlung der Stichprobenfunktionen und deren Gütemaße muss beachtet werden, ob Verhältniszahlen oder gewichtete Daten vorliegen. Die Nutzung eines Gewichtungsverfahrens kann die Komplexität der Durchschnittsbildung und Standardfehlerberechnung erhöhen. Aus der Nichtberücksichtigung dieser Faktoren können verzerrte Varianzschätzer und Standardfehler resultieren. Als Ausweg wird eine Normierung der Gewichte vorgestellt – mit dem Ziel, unverzerrte Stichprobenfunktionen zu erhalten. Hierbei werden Lösungswege präsentiert, die auch programmiertechnisch einfach umzusetzen sind. Keywords: Statistische Maßzahlen Journal number 4 ∘ Nana Katsitadze ∘ State Policy in Tourism – Business (MICE) Tourism in Georgia Due to high social and economic effectiveness of tourism, a great majority of the countries around the world are interested in its development. Therefore, the issues of tourism theory and practice are of great interest in scientific literature, however, the role, functions and methods of the state in the management of the sector are not specified. The complexity of the issue is determined by different tourism resources among the countries, different levels of economic and historical development and the degree of maturity of the tourism industry itself that makes it impossible to use any uniform approaches. The paper also focuses on the situation that in the developing countries, where tourism flows have greatly increased recently, the scheme to receive income from the industry still needs to be improved. Seeking to receive quick economic benefits from tourism industry, these countries pay less attention to the issues of sustainable development, which creates danger to long-term develo Journal number 4 ∘ Akaki Gabelaia ∘ Dynamics of the Main Characteristics of Work of the Market and their Graphic Illustration on the Basis of Matlab It is known that within so-called cobweb market model, it is considered that, at the end of each interval the price is defined from a condition of an equality of demand and supply. More precisely, the model has the form: Where D(t) denotes demand on production for a moment t, S(t) – supply of production for the same, P(t) and P(t-1) production prices, respectively for t and t-1 moments. At the same time, for all periods, price P(t) is defining from the condition S(t)=D(t). Assuming this, the price dynamics equation has the form: It is well known that presented above model leads to fluctuations around an equilibrium point (in particular, around the equilibrium price). Unlike it, the scheme of monotonous (consecutive) convergence to an equilibrium point is offered. For example, the appropriate price dynamics equation may have the for Journal number 4 ∘ Giorgi Morchiladze ∘ Sequencies and Difficulties in an Adoption of Innovative Process In the modern world, because of desperate competition and globalization, any company needs the continuous care of improvement its product and business processes, thus it can achieve the success and maintain the existence in long-term period. Development of products and business-processes is always related to the innovation. Company management can do one of two things, create and implement or adopt innovation. The goal of this study is to describe the innovationadoption process, analysis of difficulties in the process and develop practical recommendations that will be important for any service provider. To achieve this goal, we set the following tasks: define concept of innovation, study innovation adoption theories, conduct practical research in Georgian companies, which provide services in financial service fields. According to our research, innovation adoption process is very complex and difficult. It’s not easy to determine whether the innovation will bring the benefit of Journal number 4 ∘ Nino Paresashvili ∘ III International Scientific Conference "Globalization Challenges in Economics and Business" The 3rd International Conference "Globalization Challenges in Economics and Business" dedicated to the 100th anniversary of the establishment of Tbilisi State University was held on October 26-27, 2018 at the Faculty of Economics and Business, Ivane Javakhishvili Tbilisi State University. The conference was attended by scientists both from Georgia and eight countries: France, Poland, Slovenia, Slovakia, Lithuania, Ukraine, Azerbaijan and Kyrgyzstan. On October 26, the plenary session was opened at the first building of the university by the Dean of the Faculty of Economics and Business, Professor Giorgi Gaganidze, Doctor of Law and the head of the TSU Administration Nunu Ovosiankova, Chairman of the Committee of the Sectoral Economics and Economic Policy of the Georgia Parliament Roman Kakulia, , Professor,the chair of the Theoretical Economics Department, TSU Faculty of Economics and Business, Elguja Mekvabishvili. Thay all made welcome speeches. The speakers of the plen