Total factor productivity analysis according to the size of economic activity and sectors in Georgia (მთლიანი ფაქტორული მწარმოებლურობის ანალიზი ეკონომიკური საქმიანობის ზომისა და სექტორების მიხედვით საქართველოში)

The main driver of Georgia’s economic growth during the transformation period was domestic demand for supported remittances, capital flows, and economic liberalization, which led to increased productivity through sectoral redistribution. According to the World Bank’s 2018 report, the main challenge for the country is the high rate of sustainable economic growth. According to the same report, in order to boost sustainable economic growth and double GDP by 2030, the government needs to reorient its economic policy from foreign investment to productivity.The study of the phenomenon of productivity is of great scientific, cognitive and practical importance at the present stage. Based on the above, within the framework of the scientific grant project of Ivane Javakhishvili Tbilisi State University, Faculty of Economics and Business – „Small Business Factor Productivity and Export Capabilities in Georgia”, we aimed to investigate the relationship between enterprise size and productivity in terms of economic activity. McMillan’s and Rodrik’s methods were used to analyze productivity, using which we calculated the trend of labor productivity in a separate size category. We used the Olley and Pakes approach to assess overall factor productivity. We first discussed labor productivity by type of economic activity for small, medium, and large enterprises. The paper found that if large enterprises were leading in terms of labor productivity in 2006, then the situation would change and the productivity of small and medium enterprises would be equal to that of large enterprises. The study of the total factor productivity of small, medium and large enterprises has shown that in general large enterprises are more productive than small and medium enterprises. However, it is interesting to analyze the relationship between size and productivity in terms of economic activity.
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Economic sector, factor productivity, production factors, enterprise size
Economics and Business, №1, 2020, pp. 119-137