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

Journal number 3 ∘ Paul Krugman ∘

“A Country Is Not a Company”

College students who plan to go into business often major in economics, but few believe that they will end up using what they hear in the lecture hall. Those students understand a fundamental truth: What they learn in economics courses won’t help them run a business. The converse is also true: What people learn from running a business won’t help them formulate economic policy. Acountry is not a big corporation. The habits of mind that make a great business leader are not, in general, those that make a great economic analyst; an executive who has made $1 billion is rarely the right person to turn to for advice about a $6 trillion economy.Why should that be pointed out? After all, neither businesspeople nor economists are usually very good poets, but so what? Yet many people (not least successful business executives themselves) believe that someone who has made a personal fortune will know how to make an entire nation more prosperous. In fact, his or her advice is
2019-10-03

Journal number 3 ∘ Malkhaz Chikobava ∘ Nazira Kakulia ∘

About Modern Monetary Theory

https://doi.org/10.56079/20223/1 In scientific publications on the problems of monetary relations, "modern monetary theory" (MTT) is understood as a system of views formulated in the last two decades by a group of American and Australian economists, mostly university professors. The main stimulus for the development and popularization of the MTT was the need to create a scientific concept for overcoming such problems of the American economy as the accumulation of huge public debt, chronic budget deficits, and high unemployment. The analyzed theory offers a universal solution to these problems. The MTT contains paradoxical conclusions. Nevertheless, it is necessary to study it, in our opinion. The fact is that in the development of the MTT, balance sheet and economic-mathematical methods of analysis were widely used. It was the peculiar interpretation of the results of their application that led the developers of the MTT to extraordinary conclusions. Thus,
2022-11-30

Journal number 3 ∘ Vladimer Papava ∘

Why is the State not Run Like a Company?

Some Thoughts on Paul Krugman's Article "The Country is Not a Company". It has been more than two decades since the mistaken belief got a foothold in Georgia piecemeal that a minister should be a good manager and his professional suitability for the field in which this “good manager” becomes the head of the ministry is ignored in political circles. As a result, for years the Ministry of Finance was headed by a physicist (who even boasted of being a good manager), the Ministry of Economy – by a biologist and a physician, the Ministry of Agriculture – by a lawyer, the Ministry of Energy – by a sportsman, the Ministry of Health Care – by a lawyer first then a philosopher who was replaced by a historian. Questions arise as to whether professional education is required in taking a high political position or whether it is sufficient for a minister to be a good manager only. More specifically, who should lead the country’s economy – an
2019-10-03

Journal number 3 ∘ Gulnazi Erkomaishvili ∘

Economic Policy to Promote Industrial Development in Georgia

https://doi.org/10.56079/20223/2 In connection with the transition to a market economy, the industrial industry inherited from the Soviet economy was almost completely dismantled. In 1990-1994, compared to the Soviet era, the production of industrial products decreased fivefold and the number of jobs fourfold (National Statistical Service of Georgia, 1995). Industrial products became uncompetitive in both domestic and foreign markets. The production of machines, devices, tools, electric machines, vehicles, products of light and partly food industry was stopped. Accordingly, the level of industrial production fell, the specific share of industry in the total domestic product decreased, and industrial ties were dissolved. All this led to the deindustrialization of the country. In 1999, the Ministry of Industry of Georgia developed: the Industrial Concept of Georgia and “Strategic Programs for the Development of Industrial Enterprises of Georgia
2022-11-30

Journal number 3 ∘ Revaz Gvelesiani ∘

The Problem of Compliance of the Framework Conditions of the Policy of Economic Order with the Basic Social Values

An essential component of economic policy problems is the divorce between reality and the desired socio-economic situation. In order to overcome this problem, the necessary condition is to comply with the basic public values (freedom, justice, security, progress) of the economic policy objectives and the decisions taken to implement them. This is what determines both the rationality of economic policy decisions and the effectiveness of their implementation in practic The economic order and legal-legislative system must always be focused on the core public values and goals. This is why economic order policy strives to achieve consistency between the public value system and the formation of framework conditions of economic order. This makes it clear that order politics is of instrumental nature in achieving socio-political goals and it is fundamentally different in different socio-economic systems (Gvelesiani, Gogorishvili, 2018, 11). The more the ability to self-regulate market
2019-10-03

Journal number 3 ∘ Lali Khikhadze ∘

The relevance of using digital and cognitive technologies in small businesses in the conditions of a global pandemic

https://doi.org/10.56079/20223/3 Taking into account the global conjuncture at the modern stage, innovations and cognitive thinking play a key role in the effective development of small and medium-sized businesses. The rapid development of digital technologies and the emergence of diverse digital platforms gave an impetus to the transformation of entrepreneurial behavior and the conduct of entrepreneurial activities from the real to the virtual sphere.A special sector of private business - small and medium enterprises play an important role in the development of the economy and contribute significantly to ensuring sustainable and inclusive economic growth. Small and medium-sized enterprises, with the potential of employment growth and job creation, as well as their contribution to the development and growth of the economy, can be the cornerstone of the economy of any country in the world. The impact of the COVID-19 pandemic on small businesses since
2022-11-30

Journal number 3 ∘ Inga Balarjishvili ∘

About the Failure of Political Coase Theorem

Economic institutions and behavior models are endogenous variables and represent an obvious or non-obvious agreement (contractual process), the result of the collective actions of economic and political agents. From this follows the question: under what conditions can be achieved Pareto-effective political agreement among the social agents about the creation of economic institutions? In other words, does political Coase theorem work or not, which suggests free and voluntary exchange of economic and political rights and consequently, effective institutions. As in the case of Coase “starting” theorem, the basis for such collective actions (exchange of powers) is to increase the collective benefit or public wealth. This gain can be distributed among the members of the public and may increase their individual benefits or compensate economic and political “victims.” Thus, changes in institutions and behavior models, as Pareto-improvement, are common interest. This
2019-10-03

Journal number 3 ∘ Gunter Hofbauer ∘ Daniel Maier ∘

Literature Analysis About the Impact of the CDO on Company Success

https://doi.org/10.56079/20223/4 The purpose of this article is to identify a potential influence of a Chief Digital Officer (CDO) on company’s success. To do so, the CDO position is analyzed and put in context with existing research regarding upper echelons and consequences of digital activities. The research approach is theoretical and analytical and provides an intensive literature analysis concerning the connecting topics. Firstly, general facts and characteristics of CDOs will be presented. Secondly, the monetary influence of digital activities in former studies will be examined. Thirdly, upper echelon theory and attention-based view theory will be discussed with regard to organizational issues. In a final step, the topics mentioned are put into context with each other. The aim is to prove that the employment of a CDO might be able to influence the financial outcome of a company. As an intermediate finding it can be stated that the CDO Position
2022-11-30

Journal number 3 ∘ Mamuka Khuskivadze ∘ Lia Totladze ∘

Conceptual Aspects of Human Capital Measurement

https://doi.org/10.56079/20223/5 The hyper-competitive global economy of the twenty-first century has become an era of innovation, technology, productivity, new knowledge and skills and focused on sustainable and inclusive growth. Human capital is one of the fundamental factors for ensuring sustainable and inclusive growth. The process of human capital formation is long and is influenced by many factors. Its measurement is one of the actual issues. The article discusses the analysis of both theoretical concepts of human capital measurement, as well as measurement problems. We consider three approaches for human capital measurement: The Cost-Based Approach - measures human capital by looking at the stream of past investments undertaken by individuals, households, employers and governments. The Income-Based Approach - measures human capital by looking at the stream of future earnings that human capital investment generates over the lifetime of a person. The
2022-11-30

Journal number 3 ∘ Ineza Gagnidze ∘

The Fourth Industrial Revolution - The Most Important Challenge of Higher Education in Georgia

World-renowned research centers are forecasting particularly rapid growth rates of economy in anticipation of the Fourth Industrial Revolution. It is assumed that some of the work will be replaced by artificial intelligence. Creation of completely new jobs is also expected. And for those jobs that remain in the future, skills upgrades will be especially relevant. Undoubtedly, the country of the size of Georgia cannot determine the "weather" and trends in the development of the world economy. It is especially difficult to select the correct vector of development in the above conditions. Against this background, it is necessary to define the priority directions of economic development of Georgia. It should focus on inclusive growth and production of inelastic demand products. In order to introduce innovations, gain new niche in international markets and provide economic leadership in the region, we think it is necessary to establish an entrepreneurial model at the universities in the
2019-10-03

Journal number 3 ∘ Demur Sitchinava ∘ Murtaz Maghradze ∘ Rusudan Seturidze ∘

Analysis of the Distribution and Use of the State Scholarship (Case of the Faculty of Economics and Business of TSU)

https://doi.org/10.56079/20223/6 The country's expenditure on education shows the level of social development of the society and the attitude of the state and society towards this process. A society with a high level of education increases highly qualified human capital and accelerates the country's development. Therefore, most countries are trying to increase their spending on education. The main goal of the research is to study the current state of academic performance of scholarship and non-scholarship students at the Faculty of Economics and Business and to determine how qualitatively, effectively and fairly the financial resources allocated by the state for education are used and what is the motivation of scholarship students to study. The article substantiates the theoretical conclusions raised in the published work. The article discusses the issues of funding of educational grants and scholarships
2022-11-30

Journal number 3 ∘ Elene Pitskhelauri ∘

The Tendency of Public Attitudes towards Science and Technology in Eastern and Central European Countries

The development of science, technology and innovation is acknowledged to be one of the most important priorities in the EU member countries. In 2010 the aim of the Lisbon strategy was to focus on knowledge economy in the context of research and innovations. In 2001 the program "society and science" has been launched by the EU Research and Development Department; the Program covers the strategies for strengthening the link between science and citizens. In 2007, in the 7th Framework Program for Research and Technological Development the concept "Science and society" turned into a vision "science in society" that aims to support the engagement of society and strengthen reciprocal dialogue between science and civil society. Surveys are carried out systematically in order to study opinions and attitudes of EU society towards science, technology and innovation. Based on the results of surveys it becomes clear in which areas the citizens in Europe desire scientific research
2019-10-03

Journal number 3 ∘ Irma Lang ∘

PESTEL Analysis of the Business Environment of Georgia and the United Stats of America

https://doi.org/10.56079/20223/7 The articlecompares and contrasts the business environment of Georgia and the world's largest economy, the United States of America. PESTEL analysis was used for the political, economic, social, technological, environmental and legal factors that have a significant impact on both country's macro environments. The PESTEL analysis outlines the current trends, priorities, goals and objectives of the two countries. Cooperation between Georgia and the United States of America in the political, economic and cultural spheres has a long history. The United States of America and Georgia each considers the other a strategic ally. The bilateral relations of the countries have undergone qualitative changes. Friendship based on equality and respect for state sovereignty distinguishes the strategic relationship between these two countries. Leading international organizations 2017-2021 reports were used to analyze the factors of the
2022-11-30

Journal number 3 ∘ Iza Bukia ∘

How to Overcome the Barriers for Entrepreneurial Activity in Georgia

A number of actions are being taken to develop and promote entrepreneurship in Georgia. It is expressed both in the development and implementation of various strategies and in tax reform. However, entrepreneurs still face various problems and barriers. 120 entrepreneurs were interviewed. The purpose of this paper is to identify the barriers to entrepreneurial activity and the problematic issues facing them; identifying the gaps in Georgia's tax system in terms of entrepreneurs and identifying the type of tax with the greatest pressure; also identifying barriers to other non-tax aspects for entrepreneurs. The development of the entrepreneurial environment and the promotion of entrepreneurs are very important for the state. A number of tax reforms have been implemented in Georgia (Introduction of special taxation regimes; the so-called profit tax Introduction of Estonian model; liberalization of tax sanctions; implementation of a United Treasury Code; Automatic VAT refund
2019-10-03

Journal number 3 ∘ Lia Kiladze ∘

An Analysis of the Differences and Similarities between Social Entrepreneurship and Corporate Social Responsibility

https://doi.org/10.56079/20223/8 The presented paper makes the analysis of differences and similarities between social entrepreneurship and corporate social responsibility. It describes the practice of business sector involvement in solving social issues on the example of two different forms of entrepreneurial activity (traditional and social entrepreneurship). The paper reviews in detail the features that characterize social enterprises and responsible businesses, and analyzes the importance of business involvement in solving social issues. The comparison method was used for the study, which focused on the research of social enterprises and corporate social projects. Specifically, social enterprises and social projects implemented by business firms with similar goals in the same geographical zone were selected and compared to each other. The study of the targeted social enterprises reveals that it is entirely possible for a company to achieve commercial and
2022-11-30

Journal number 3 ∘ Maya Gogokhia ∘

On the Issue of Regulation of the Securities Market

https://doi.org/10.56079/20223/9 Financial market is institutionally represented by the financial system. The segments of the decentralized financial system correspond to the sectors of the financial market. Financial relations are formed outside the financial market - in the form of a public financial system. The structure of the decentralized financial system is the relationship between the banking sector and liquid securities markets. The financial structure as a source of ways and mechanisms of economic development is the subject of discussions. In recent years, there has been an increase in the convergence of sectors of the financial system. The financial structure continues to transform. The principles of regulation are the main basic on which the practical actions of the state to regulate the securities market should be based. In contrast to state regulation of the market as a whole, that is, regulation of macroeconomic
2022-11-30

Journal number 3 ∘ Zumrud Nadjafova ∘

The Main Structure and Directions of Diversification of the Economy of Azerbaijan

The economy of the Republic of Azerbaijan relies heavily on its natural resources, the main resource, it should be noted, is oil. The economic crisis that began in recent years, the fall in oil prices and the devaluation of the manat affected the economic processes in Azerbaijan. In 2012, the head of state signed a decree approving the Azerbaijan 2020: A Look into the Future Development Concept. After conducting a brief SWOT analysis of the economy of Azerbaijan, we understand that a deliberate policy to strengthen the oil sector for the development of the non-oil sector is a priority and direction for diversifying the national economy. The main strategic view of the further development of the economy of Azerbaijan is the effective use of existing resources to achieve sustainable economic growth and high social well-being, creating conditions for the protection and defense of human rights and freedoms, and their active civic participation in the public life of the
2019-10-03

Journal number 3 ∘ Mirian Tukhashvili ∘

Population of Kakheti: Dynamics and Ethnic Structure

https://doi.org/10.56079/20223/10 For the development and implementation of a rational demographic policy, it is of great importance to reveal the regularities of the transformation of the number and structure of the population of Georgia. The object of our research is the population of the Kakheti region, which has undergone significant changes over the past centuries. The article discusses the main trends of population size and ethno-structural changes – issues of the ratio of the Georgian population and diasporas of Georgia, annexed by the Russian Empire, the Soviet Republic and the post-Soviet Kakheti region. During the considered period, the specific weight of the diasporas in the entire population continuously increased due to the permanent implementation of the intensive immigration policy in Georgia, which was under imperial rule. The same situation was in the population of the Kakheti region, where the contingent of national minorities increased.
2022-11-30

Journal number 3 ∘ Ramaz Putkaradze ∘

The EU Candidate Countries and Georgia’s Prospects for European Integration

The article analyzes some comparisons between Georgia and the candidate and potential countries of the EU. Many papers of Georgian and foreign scientists economists have been devoted to the study of trade and economic relations between Georgia and the EU, but less attention has been paid to the research of Georgia and the candidate countries of the EU. The study uses the CAGE distance method, which has not been well studied in Georgian scientific literature. At present, the number of the EU candidate countries and potential candidate countries is seven. Georgia's convergence with the European Union and its further integration depend in part on deepening cooperation between EU candidate countries and the EU. The enlargement of the European Union and the admission of new member states will also affect relations between other European countries and the EU. Thus, for example, Bulgaria's and Romania's admission has resulted in Georgia's (and not only) European Neighborhood Policy,
2019-10-03

Journal number 3 ∘ Amiran Berdzenishvili ∘ Kakha Ketsbaia ∘

Social Stratification Profile of Contemporary Georgian Society

https://doi.org/10.56079/20223/11 The article deals with the social stratification structure of contemporary Georgia society. Such important issues as the post-Soviet transformation of the stratification structure of Georgian society and the main factors determining its contemporary social profile are discussed from the viewpoint of social sciences. The idea that the social stratification structure of contemporary society is characterized by pathology expressed in the article is argued via analysis of the factual material given in the article. In the article, the above-mentioned problem is analyzed from the theoretical-sociological aspect. The authors admit that Georgian sociological literature is not abundant in the analysis of such problems, therefore works of the Georgian authors in the sphere of economical sciences are used (P. Gugushvili and others). According to the conclusion drawn on thebasis of
2022-11-30

Journal number 3 ∘ Nato Kakashvili ∘

Reinsurance: The Essence, Forms, and Importance of Financial Stability in Insurance Companies

Reinsurance - is an independent form of insurance. Its purpose is to protect the insurer from possible financial loss. Through reinsurance the insurer can increase the volume of its insurance portfolio, the insurance company can protect itself from the dangers of great loss, the insurance company can take on full risk, and subsequently it can insure itself with the help of other insurance companies. Reinsurance can minimize risks such as: risk of accidental loss, risk of changes, risk of error. Reinsurance aims at creating a balanced insurance portfolio, ensuring financial sustainability and cost-effective insurance operations. Analysis of regional (geographical) diversification of reinsurance by insurance premiums allows us to conclude that the noted form of risk reduction is highly diversified regionally; insurance premiums are unevenly distributed depending on the forms of insurance. Globally, reinsurance is done on the risks associated with property, which are caused by the high
2019-10-03

Journal number 3 ∘ Gunter Hofbauer ∘

Blockchain Applications in Business Processes Exemplified for Procurement

The purpose of this article is to introduce the application of the blockchain technology to a specific business process in procurement and to provide an updated concept. The blockchain technology is a very promising technology and facilitates a variety of applications for digitalization in business processes. Many appliances are already in use and benefits in terms of effectiveness and efficiency can be stated. The transfer to procurement will be made on a conceptual basis. The scientific approach is analytical and theoretical, answering the research question about the applicability of the blockchain technology in business operations, exemplarily analyzed for the procurement management process. The application of this digital technology in the context of the procurement activities is described. In order to do this, a generally admitted procurement process is introduced as a basis for scientific discussion. In summary, three major applications of the blockchain were identified and
2019-10-03

Journal number 3 ∘ Miron Tugushi ∘

Some Issues of Human Resource Management in Public Service of Georgia

On any level of Public Service, the principles of "prevailing public interest" should be respected most of all, which implies that the goals set before the public service must be achieved by the least cost of any resources. Maintaining public service should not be a great financial “burden” for the government budget. It should be noted that the leadership of the Georgian government administration with the participation of foreign experts has developed and implemented the plan of actions for the reform of public governance for 2019-2020, but, unfortunately, the probably results of the above reform are not specifically defined in this plan, it is not shown how the current state of public service will be changed, particularly, in the field of human resource management. At present, in the Georgian government administration there are employed 227 specialists. Accordingly, the costs of their job compensation (salary, additions, bonuses), office and other expenses makes a
2019-10-03

Journal number 3 ∘ Amiran Berdzenishvili ∘ Nino Durglishvili ∘ Ilona Gogia ∘

Georgian Students Digital Competences

The paper discusses one of the essential skills for human existence in the modern knowledge society, namely digital competence, which is a combination of knowledge, skills and attitudes necessary for the use of digital technologies. It is through digital technologies that one can perform operations such as problem solving, communication, information retrieval, content creation and dissemination. In the Georgian society, digital technologies have become an integral part of the daily lives of citizens. Learning the skills necessary to use them is a topical issue in modern social sciences. The paper is an attempt to study the digital skills of students in Georgian society. In recent years, the number of mobile internet users has increased, which can be explained by the availability of new generation mobiles and faster internet service. Most students are engaged in cultural-educational communication activities while using the Internet every day. They are Internet and social media users,
2019-10-03

Journal number 3 ∘ Mariam Meqvabishvili ∘

Globalization and Social Media

The article is dedicated to two great events in the modern world that are closely interconnected to each other - these are globalization and social media. Today everyone recognizes "globalization" in all areas of social life - economy,politics, culture, ideology, religion, etc. - On the basis of common economic globalization every area has come under the influence of globalization. Humanity of the 21st century does not have enough time to analyze the unexpected processes of globalization, in which it has occurred. The transformation of all spheres of life has become the third millennium’s constant, so deepening in the changes that affect the social life is of utmost importance. This will enable us to find new forms of existence and independently participate n the globalization process. As a Canadian philosopher Herbert Marshall McCluhan defines this virtual planetary transformation - the world has compressed to the "village" scale. This process was significantly contributed
2019-10-03

Journal number 3 ∘ Lela Jamagidze ∘

Institution Importation in Georgia-EU Trade Relations

The goal of the present paper is to discuss import of trade related institutions from EU into Georgia. The role of EU as an exporter of its policies and norms out of its external borders and, hence, an important source of changes in the trade environment of Georgia is discussed in Europeanization and EU’s external governance context (studied by Schimmelfennig & Sedelmeier (2006), Lavenex (2004), Borzel (2011), etc).The focus is on trade policy reforms and the instruments applied to facillitate Georgia’s institutional harmonization with EU. The reforms are analyzed since the start of bi-lateral cooperation, from PCAs to the conclusion of the Association Agreement. Exported trade-related institutions are based on general EU principles of democracy, peace and stability and aim at greater market integration with Georgia. EU as an external stimulator of changes on the one hand and costly and difficult steps undertaken by Georgia on the other, determine the progress in
2019-10-03

Journal number 3 ∘ Natia Tetunashvili ∘ Bidzina Javshanashvili ∘

Important Change in National Legislation - New Customs Code

The article discusses the new Customs Code and its important issues related to harmonization of the Georgian and European legislation and ensure approximation of Georgian legislation to EU law. The objective and purpose of the article is to analyze legislative history of customs code of Georgia, project of new customs code and its main differences with the current tax code. The main object of article is the content structure and the basis of the new customs code - the relevant part of ASSOCIATION AGREEMENT between the European Union and the European Atomic Energy Community and their Member States of the one and, Georgia - of the other part. Keywords: Customs code, customs procedure, harmonization of national legislation. JEL Codes: K20, K23, K34 მნიშვნელოვანი ცვლილება ეროვნულ კანონმდებლობაში - ახალი საბაჟო კოდექსი
2019-10-03