SCIENCE

FROM THE REDACTION

Summary
Estimation and forecasting of Georgia’s economic development Situational approach

Lali Chagelishvili
The work deals with the current economic situation in Georgia. Modern approaches to Economic forecasting are emphasized. It’s remarked that modern effective, dynamic economic system is not formed spontaneously and it is defined by united state strategy and management system.
The work also deals with the situational (scenario) approach to the management of economy. On the basis of analyzes the author presents three versions of situational (stage) approach: pessimistic – covering 2004-2008, realistic covering 2008-2013 and optimistic scenario 2013 – 2020.
Main characteristics of optimistic scenario are the following: putting economic zones and techno parks in action, establishing production and scientific cooperative relationships.
Finally, optimistic scenario emphasizes relationships with EU where the main purpose of the country is to meet Copenhagen criteria.

Summary
Structural Levels of National Economy
Nato Chikviladze, Georgian Technical University, Pedagogue
Maia Danelia, Georgian Technical University, Pedagogue
Teona Bagrationi, Georgian Technical University, MA
Modern management systems pay more attention to microstructure levels of national economy than to macrostructures. Within modern scientific and technological progress complication of national economy complex, its dynamic rise implies poly structure complication as well as confirmation of its change. In this case the following task is considered to be a priority: to maintain the dynamic and proportional development of united national economy complex as well as affective interaction of each its circle. Deeper structuring of developed national economy complex becomes a necessity. Entire systems, including microstructures and management tasks, should be distinguished on different structural levels.
All natural, economic and national peculiarities should be taken into consideration in order to maintain regular development of our country’s national economy. With this purpose it’s highly advisable to start working for regions that are directed towards organizing production processes of industry, agriculture, energy, transportation ad etc., according to different regions. Besides, with the total relevance among each other on the complex basis. National economy will be divided into territorial units and its elements will be relevant within regions.
Various field and territorial separation of economy has its objective reasons. Significant means of production force development is social division of labor. Division of labor perfectly reflects the level of production force development. There is a well known saying: each new enterprise is followed by further development of division of labor. Besides, division of labor has two forms: on the one hand it is creating new enterprises and fields; on the other hand it is territorial division of labor that enables to attach certain fields of production to certain territorial unit of a country.

Summary
Credit and Monetary Policy Priorities in Georgia
Demna Kvaratskhelia, Associated Professor, Globalization and Regional Integrity Research Centre Chief scientist-worker
The article deals with credit and monetary policy priorities of Georgia. It has been proved that together with the regulation of inflation processes the above mentioned policy should maintain the rise of national economy competitiveness. Reduced money demand in 2005-206 is analyzed in the article as well; therefore monetary factors are paid special attention. Money demand reduction caused deepening inflation processes. Accordingly K2 and K3 coefficients increased in 2005-2006 with lower rates in comparison with 2004. Demand for M2 and M2 money has increased with lower rates, as for demand on M0 money, it reduced in 2006 in comparison with 2005. Reduction of K0 coefficient with 5,4% reflects it.
It has been confirmed that situation in credit and monetary spheres as well as on monetary market of Georgia is directed against rising national economy competitiveness. Together with the high inflation rate, increased GEL nominal exchange rate against USD causes the growth of real exchange rate. This hampers the development of national economy.
Therefore, it is emphasized that inflation together with raising the price of national currency on foreign market (just the way it happens in Georgia) is a real damage for a small open economy.
accordingly, annual reduction of real exchange rate at least within 1% is considered to be a necessity (real exchange rate should be at leased stabilized in order to overcome the tendency of national economy production rise in price).

Summary
Population Aging – Global Challenge
Tamaz Zubiashvili
At the contemporary stage population aging is a world-wide phenomenon. Population is growing older in countries throughout the world. According to the US Population Reference Bureau By 2050, nearly 1.2 billion of the expected 1.5 billion people age 65 or older will reside in today’s less developed regions. Just 22 percent of the world’s older people will live in what we today call more developed countries. This demographic transformation will profoundly affect the health and socioeconomic development of all nations.
Population aging is usually defined as the percentage of a given population age 65 or older (and sometimes the percentage ages 60 and older). More than 21 percent of Japan’s population is age 65 or older, making it the world’s “oldest” major country. The world’s 20 oldest countries are all in Europe. Europe should remain the world’s oldest region well into the 21st century. The older share of population is expected to more than double between 2000 and 2030 in Asia and Latin America and the Caribbean. Aging is occurring more slowly in sub-Saharan Africa, where relatively high birth rates are keeping the population “young.”
There are several demographic indices of aging—the aging index, median age, and support ratios—that compare different portions of a given population. One straightforward indicator of age structure is the aging index, defined here as the number of people age 65 or older per 100 children under age 15. At the turn of the century, only a few countries (such as Italy, Germany, Bulgaria, and Japan) had more older people than youth ages 0 to 14.
The inexorable momentum of population aging around the world will likely become the most significant demographic process of the 21st century. Continuing shifts in population age structure will require new social sensitivities and innovative policy responses. Demographic aging has implications for a wide range of human behavior, and researchers increasingly recognize the need for multidisciplinary approaches to the aging process. Since population aging entails many different consequences, it must become the subject of interdisciplinary studies.

Summary
Organizational development perspectives Multinational companies
Tamar Ghambashidze
Development of modern business, especially international business, is greatly depended on a customer’s estimations, as the latter is the most representative expert. It’s also depended on countries’ economic and legal relationships as well as market competitiveness. Irrelevance within various parts of a system usually becomes a source of any change. It is certainly true with international companies as well, being an open system and including different economies and societies. The article deals with the role of institutional subjects regulating international business, such as: political sphere, investment climate, management – staff, technological development and national economic development. State bodies define legal frameworks, taxation and customs policy that on their part form economic sphere. Institutions like Supervisory Board, proprietors meetings, stock exchange mechanism participate in the operation of investment sphere. Management – staff defines liabilities and authorities relationship mechanism between administration and staff. Technological sphere regulates relations within the sphere of technology related to distribution of resources, liabilities and obligations among managers and staff (job territory, job control); national economic sphere covers market. Following these relationships prices and direction of technological development are determined.
R. Martin defines 4 constituents of crisis syndrome:
1. Entrepreneurial view;
2. Decision making and sale;
3. Mutual connection;
4. Safety mechanism;
Different companies are taken as examples to discuss functioning of the above mentioned mechanisms.

Summery
The role of transnational corporations in the World Economy
George Turkia
The present article deals with the definition of transnational corporations, their main characteristics and criteria. It also deals with main types of corporations, their development stages and main peculiarities of transnational corporations according to each level.
The role and the meaning of transnational corporations in the world economy is clearly shown in the article.
According to the data of the world famous magazines ‘Fortune’ and newspaper ‘Financial Times’, the world’s biggest transnational companies have been analyzed by filed groups and countries.
If in 1950’s advantage of American companies was obvious, in 1980’s western European countries’ firms were dominant. As for the latest period the number and the role of transnational corporations from the developing countries (especially Asian Dragon countries – Taiwan, South Korea, China) have been increasing.
The world’ 500 biggest companies included ÐÀÎ «Ãàçïðîì», «ËÓÊîéë», and ÐÀÎ «ÅÝÑ» in 2003.
It is feasible in nearest future that among transnational corporations share of the third world new industrial and transitional economy countries firms will increase.
The article also deals with the importance of attracting foreign capital for countries, negative and positive outcomes of transnational corporations’ activities in countries;
Strong transnational corporations, the economic power of which is much more that that of countries’ potential, totally changes the world economy management system. Accordingly, sovereign states (including Georgia) have to be more accountable in the world’s economic relationships with these new subjects first in the sphere of economics and then in politics.

Summary
Main peculiarities of Modern Small and Medium Business
Tamar Rostiashvili
There are no united international criteria defining small and medium sized business. Some people believe that it is defined by the number of employed people in enterprise that should not exceed 500; others believe that capital turnover indicators are used as additional criteria. There are people who consider enterprise’s real estate volume to be an advantage.
The first thing small and medium sized business uses while competitive battle with large companies is flexibility, mobility, ability of territorial maneuverability. We can distinguish the following four major strategies of small and medium enterprises: coopering, optimal size, participation in large company’s products, and participation in large company’s sale system. Mobilizing and strengthening positions, turning a medium sized company into a large one and changing profile.
Small and medium enterprise has both its strengths and weaknesses. Aspiration of initiative, flexibility of an enterprise, risk, and innovative activities may be considered as their strength.
According to an American researcher large corporations are the spine of American economy; small enterprise is its muscles (2).
The following are weakness of small business: financing challenges, high sensitivity towards economic changes, private problems, low level of specialization, and liability for absence of information.
As a conclusion, precondition of small and medium sized businesses’ existence is states stimulating support.

Summery
Georgia’s Foreign Trade Development Trends within Globalization
Ramaz Putkaradze
Foreign Trade turnover of Georgia comprised of USD 6456,9 million in 2007 where export is USD 1240,2 million, and import is USD 5216,7 million. Export share in foreign trade turnover is only 19,2%. As for import share – it is 80,8% . Accordingly import coverage by export is 28,8% (import is 4,2 times more that export). These are the lowest indicators among CIS (and among other countries as well).
Significant part of Georgia’s foreign trade turnover is related to CIS countries (36% of foreign trade). It should be emphasized that 28,0% of foreign trade turnover is related to 27 countries of European Union. Georgia enjoys GPS Plus scheme with EU.
Georgia’s largest trading partners are Turkey (13,6% of trade turnover), Ukraine (10,4%) Russia (9,8%), Azerbaijan (8%), Germany (6,9%), the US (5,5%) Bulgaria (3,8%), United Arab Emirates (3,6%), China (3,3%), Turkmenistan (2,7%) etc.; According to Georgia’s foreign trade main good’s structure analysis export goods structure is not depended on import goods structure. Import is not oriented on invested goods. As for export, it is directed to raw materials and ready production share is low in it.
Georgia’s foreign trade relationships are characterized by number of challenges and peculiarities:
First – Georgia’s balance of trade is characterized by negative balance of trade. Export is growing but not significantly. In comparison with import it increases slower (import is 420% more than export)
Second – special attention should be paid to promoting Georgia’s export and decreasing the country’s foreign trade balance (USD 4 billion);
Third – share of developed countries in Georgia’s export should grow. It will increase competitiveness of Georgian export production. Increasing cooperation with developed countries will not just encourage local production, but will also attract investment. Number of joint stock companies as well as small and large companies should increase.
Fourth – Georgia’s trading and economic cooperation scopes should significantly increase with the EU member states.
Fifth – Russian Federation has a unique role and importance in Georgia’s foreign trade relationships. Russian market is of utmost importance for exporting Georgian wine, mineral waters and agricultural goods.
Sixth – strengthening Georgian Lari promotes and increases import and discourages export.
Seventh – Department of Statistics of Georgia should not be subjected to the ministry of economic development of Georgia (like in any civilized country, for example Federal Statistics Service of Germany). It will significantly increase society’s confidence towards the data provided by them. Even today, well known contrast comparison method shows different results of trade turnover with many countries.
Eighth – perspective of using Georgia’s transit potential is already a reality. This will significantly increase Georgia’s trade and economic cooperation with the world’s commonwealth and will encourage Georgia to find its deserving place in world trade within globalization.

Summery
Ways of rising economic and ecological effectiveness while using forest lands
Mikheil Chikovani
The author deals with the effective usage of Georgia’s forest lands, economic and ecological methods, showing forest resources indicators. You can find productivity Indicators as well as forms of economic management in the article. Forest arrangement structure is analyzed according to laws.
The authors remarks that in order to improve forest economic management and to take a well care of it, even at soviet time, forests have been divided into three groups, and 98% of Georgian forests go to the first group, where using wood is limited. The rule is being violated today.
The author also remarks, that effective management of economy in a forest, arranging scientifically proved effective economic operations are obligatory for any proprietor of forest.
According to author most of forests in Georgia are of low productivity. Increasing the scope of reconstruction works as well as developing tourism in the forests should be considered as the prior direction
Author also gives corresponding conclusions and recommendations with the purpose of increasing economic and ecological effectiveness of the above mentioned works and using forest lands effectively according to market economy demands.