Stimulating economic policy for attracting direct foreign investments in Georgia

Abstract

The paper presents the current situation of foreign direct investments and economic policies promoting their attraction in Georgia. It is noted that most of the investments in Georgia in 2019-2020 were made in the construction sector, the investments were less aimed at boosting sectors like agriculture and manufacturing, for which Georgia has a food base and agricultural traditions . Foreign direct investment made in the second quarter of 2022 is 40.9% higher than in the pre-pandemic period (2019). Most investments have been made in the energy, financial and agricultural sectors, which is undoubtedly to be welcomed. The current level of foreign direct investment in Georgia was achieved thanks to a stable situation, a favorable tax and investment environment for doing business and maximum neutralization by the government of external negative factors. In the post-pandemic period, the main direction of stimulating the inflow of foreign investment is the establishment of various benefits. This is used by both foreign and local investors. Benefits include fiscal, financial and other benefits. However, it should be noted that the decision of a foreign investor to invest in a country depends on a number of factors, and different types of incentives are not an important factor. Political and economic stability, existing legislation in the country, infrastructure, proper functioning of financial institutions, labor force qualifications, etc. are critical. These criteria determine the political and economic ratings of all countries of the world, which are of great importance for foreign investors when making investments. The study identified factors that promote and hinder the attraction of foreign direct investment. The development of investment projects should be based on national interests, as well as on natural, historical, ethnocultural and economic characteristics and needs of the regions. To do this, it is necessary to develop regional mechanisms for stimulating investment using tax and budget preferential levers.