Economic Challenges in Georgia: Assessing Good and Bad Growth

The Georgian economy has undergone significant transformations over the years due to government-led reforms that have impacted various sectors, including health care, education, industry, and the military-technical complex. Despite substantial financial support from the European Union, partner countries, and international donor organizations, Georgia’s economy faces challenges. The prolonged economic stagnation can be attributed to an extensive development approach, characterized by investment projects primarily focused on short-term gains rather than long-term sustainability. While economic indicators show growth, a closer examination reveals deficiencies in the national economic system. The data reflects an extensive (often referred to as “bad growth”) expansion of the national economy, driven by investment projects aimed at immediate profits. However, these projects lack a forward-looking perspective and fail to harness scientific and technical progress for qualitative production improvements. The absence of innovative scientific and technical foundations underscores the need for a shift toward intensive growth strategies. In this paper, we delve into both intensive and extensive factors of economic growth. We explore how investment projects can be reoriented to prioritize long-term benefits and sustainable development. Our recommendations emphasize the intensification of production processes, fostering innovation, and creating a robust economic ecosystem that transcends short-term gains. By addressing these challenges, Georgia can navigate toward a more balanced and resilient economic future.