Investment processes in transitional period and ways of its encouragement (ABSTRACT)

Natia Kasradze

Economic crisis has had a grave effect on the investment activity of Georgia.

Therefore, analysis of country’s investment process acquires much importance. The given analysis includes the volume of internal and external investments as well as the structure and dynamics; investments in capital assets; sources of investment financing and their profitability; revelation of investments cycle phases; downfalls, crisis, recovery and growth including the explanation of crisis reasons.
In general, the analysis of investment field during the years of reform (1990-2004) reveals the fact that irrespective of some economic stability symptoms sharp negative trends have been preserved in the conditions of transition economy. Therefore, nowadays ideology and technology of macroeconomic regulation can not provide growth of investment activity and fundamental increase of economic efficiency. That is why it is necessary to determine particular target guiding lines of investment in the conditions of transition period.
– It is important to single out investment fund as a constituent of state budget with the purpose of investment activity growth;
– A state must use centralized investments purposefully as credits and not as permanent budgetary financing;
– A part of centralized investment funds should also be used for the development of small business;
– To spur private investment it is necessary to expand legal framework and minimize investment risk by means of insurance system and state warranty;
– Due to the objective limit of state investment resources, a problem of choosing investment process directions should be solved in an optimal way;
– It is necessary to recover financial stability in the country and to include banks in the investment activity of business sector;
– It is essential for a country in crisis to create all conditions for attracting foreign investments.