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Journal number 3 ∘ Irma Lang
PESTEL Analysis of the Business Environment of Georgia and the United Stats of America



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 countries economic, investment and financial indicators. According to the obtained results, relevant conclusions were made; The rating scores of Georgia and the United States of Americawere also studied. According to the 2020 report presented by the international analytical and research organization The Economist Intelligence Unit, the USA remains in the category of "deficient democracy", which was removed from the category of "full democracy" in 2016 due to the erosion of public trust in the country's institutions. Georgia, as a "hybrid regime" country, has a low score in the world rating. Democratic institutions and the rule of law are not enough to sustain a successful democracy. It is important to strengthen the civil society sector and involve them in policy discussions. People's involvement in democratic and accountable decision-making is a prerequisite for a truly active democracy.

The USA has trade relations with more than 200 countries. The United States is the second largest exporter of goods in the world, Georgia ranks 121st in terms of exports. According to the Legatum Institute's 2019-2020 Prosperity Index, which measures well-being in 167 countries around the world, Georgia is ranked 53rd, behind the US, which ranks a rather high 18th in the world.In the Doing Business 2020 report presented by the World Bank, Georgia is among the leaders in the ease of doing business. Among 190 economies of the world, Georgia is in 7th place with a score of 83.7, and the United States is in 6th place with a score of 84.0. The business environment of Georgia faced significant challenges in the last period, 2019-2020. The Global Competitiveness Report published by the Economic Forum comprehensively measures a country's competitiveness, the quality of the macroeconomic environment, the state of institutions and technological achievements. According to the Global Competitiveness Index, during the analysis period of 2019, among 141 countries Georgia improved its position the 74th place, with a total of 60.6 points, and the USA took the 2nd place with 83.7 points. Georgia's competitiveness depends on many factors, including macroeconomicstability, improvement of infrastructure, healthcare, education and standard of living. Improvement of production level, implementation of new technologies and a number of other important factors in long-term planning and implementation also played a factor. By increasing international competitiveness, Georgia can drastically reduce unemployment and poverty levels and achieve stable economic growth.The Heritage Foundation's Index of Economic Freedom annually examines 180 countries and determines their level of freedom. According to the 2020 study, Georgia advanced to the 12th position in the world ranking and earned a historical high of 77.1 points. For the growth of the country's economy it is necessary to attract investments which requires the creation of a favorable investment climate in the country. One of the most urgent requirements of the economic policy of Georgiais to promote the integrated and consistent development of competitiveness and growth factors.

The Gini coefficient in economics, as calculated by the World Bank, is a measure of statistical dispersion that measures income inequality andwealth inequality within a nation. From the 2018-2019 report, it is clear how much Georgia's income inequality indicators lag behind the USA.

Georgia has made significant progress in creating innovative digital services for business development.It has, however, only made a small amount of progress in terms of firms technological development and innovative capabilities. Despite the overall weak performance, the United States of America remains one of the most competitive economies in the world. It is still a center of innovation, leading in technology improvement and development in areas such as nanotechnology, environmental technology and biotechnology.

Air pollution is a growing environmental challenge for Georgia and the USA. Indoor and outdoor air pollution has a significant impact on human health. Protection of the environment, maintaining its sustainability and rational use of natural resources, along with the sustainable development of agriculture, represents an important challenge and is one of the priority directions of the Government of Georgia.

In the Corruption Perception Index of Transparency International, which measures the level of corruption perception in the public sector and is based on the assessments of businesses and experts, compared to the 2020-2019 data Georgia is represented in the 45th place with a total of 55 points decrease. As for the USA, with a decrease of 67 points, it is in the 27thplace.

The article illustrates that despite the implementation of a number of systemic reforms in Georgia, the country’s indicators in the world rankings are relatively low.This requires additional efforts from the governmentwhich should be aimed at improving the business environment.


Keywords: Georgia, USA, Business Environment, PESTEL Analysis, Factors.

JEL Codes: M20, M21, M29