Fostering entrepreneurship in Georgia

Job creation and productivity growth are at the forefront of the global development agenda. The central challenge today for the government of Georgia is to find sources of long-term economic growth, particularly through private sector development. This study seeks to identify determinants of high-growth entrepreneurial activity. The study uses data from the new 2012 World Bank Entrepreneurship Survey conducted to gauge new firm growth in the formal sector in Georgia and data from World Bank Enterprise Surveys to analyse innovative activity in existing firms. It includes detailed case study analyses to complement these findings. The study finds that while a number of reforms have been undertaken to alleviate the business environment, there remain a number of constraints that inhibit the growth of entrepreneurial and innovative activity. These constraints include a major skills mismatch, insufficient research and development and ineffective industry-research linkages. While outlining broad policy directions in areas namely improving business environment, access to finance, developing skills, increasing access to markets, incentivising greater firm level research and development, and raising awareness it lays out some priority areas that the government could embark on. The government could remove bottlenecks that impede entrepreneurialism in the general business environment and design new financial policy instruments to foster entrepreneurship and innovation.