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Transfer of know-how to small and mid-size businesses in Georgia – White paper

This report has been prepared in the framework of the project “Transfer of know-how to small and mid-size businesses” of the International Visegrad Fund (IVF) and USAID. It summarizes the conditions of the SME sector (small and medium size enterprises) in Georgia, identifies the main problems in their development and provides recommendations for further interventions based on the Czech experience, existing literature and a survey implemented among SME stakeholders.

Georgia generally receives favorable evaluations of its business environment. It ranks high in indices of economic freedom and is among the top countries with respect to ease of starting and doing business. On the other hand, the SME sector suffers from several problems. The most serious obstacle to SME development seems to be in the area of finance; access to finance is difficult for SMEs and the cost of credit is high. Human capital and innovations are among the weak points of Georgian SMEs as well.

 The different shortcomings of the environment and markets call for different interventions. The paper is roadmap of concrete activities – it contains a  set of recommendations to support SMEs development drawn on three different sources:  first, the theoretical foundations of entrepreneurship policy, second, the Czech experience and know-how in the SME sector, and finally, the ideas of local experts and stakeholders generated during interviews and workshops.

Activities and recommendations have been divided into “generic,” which relate to a particular determinant of business environment and have an impact across industries and sectors such as access to financing, education, developing skills training, R&D, innovation, export strategy, start-ups, and those which are  “sector-specific,”   such as banking, health and agriculture. Political stability, the main problem in Georgia, is beyond the scope of possible interventions.