LOCAL ECONOMIC DEVELOPMENT PLAN FOR TBILISI ... - LED

In the second half of the 20th century the economy of Tbilisi was based on
industrial plants producing for the demand of the Soviet Union market.
Cooperation links, legal regulations, transport infrastructure and business
environment were oriented at satisfying the needs of this type of economy,
therefore the change of production profile of entering new markets were
hardly possible.
After the collapse of the Soviet Union and, consequently, of the centrally
managed economy many manufacturing firms in Tbilisi lost their markets and
either closed down or reduced their employment and production. The system
reform, introduction of market economy and opening to new markets resulted
in a thorough transformation of Tbilisi economy.
Although some positive effects can be observed, the transformation process
is long and generates serious social problems and costs. In order to
understand the ongoing changes, we cannot view the problem as merely a
systematic one. The economy of Tbilisi is also influenced by other economic
transformation factors that do not happen only in the post-communist
countries, but are observed all over the world. These factors are:
• globalisation and increasingly free flow of knowledge and ideas,
capital, products and services as well as people among the regions
and cities of the world,
• the use of new technology by businesses, state and local
governments as well as by ordinary people,
• cultural changes in the family model and life aspirations of the young
generation.
Due to the overlapping effects of regained independence and system
transformation on the other three universal processes both Georgia and Tbilisi
are facing a great challenge.
Public officials as well as entrepreneurs and ordinary residents of Tbilisi must
understand the ongoing changes and their implications in order to take a
maximum advantage of new opportunities. They have to reduce the social
costs to minimum and concentrate their resources in the areas where the
perspectives of growth are the most promising.