LOCAL ECONOMIC DEVELOPMENT PLAN FOR TBILISI ... - LED

It is hard to overestimate those benefits for the city economy that are
generated by foreign investors, but we should not forget that the reasons why
those firm invest in our cit must be thoroughly analysed. It will help us to take
maximum advantage of these investments and prevent disappointment if our
expectations are unrealistic.
Foreign firms invest in order to:
• lower the production costs,
• increase the value of the invested capital,
• enter new markets,
• gain access to resources that are out of reach where they have been
operating so far.
In a longer perspective these companies transfer their business activity to new
locations that provide them with better business environment.
For a long-term competitiveness of the city economy the third phase is of key
importance. It is based on endogenic potentials and the city identity.
The development of local businesses also leads to new quality of cooperation
with foreign investors who invest their capital not only to benefit from the
consumption potential of the local market and from lower production costs,
but are also interested in finding new partners who will give them access to
better solutions. It means that financial relations change too – the investor not
only bears the costs of their business activity, but also shares their profits with
a local partner.
In order to prepare guidelines on o available economic activities it was
necessary to analyze thoroughly the industries of the strongest development
potential in the city of Tbilisi.
The Competitiveness Assessment report analyzed the role of Tbilisi economy
in the national economy as well as the city’s competitive position among other
cities in Georgia and in the region of Caucasus and Central Asia. Thanks to
the application of proposed indicators, the SWOT analysis of competitiveness
assessment both on the regional and the national level as well as due to the
results of the City team’s and outside partners’ work, a further and deeper
analysis was possible of these sectors which demonstrate a high growth
dynamics and can create new jobs.
- Tourist sector - hotel business mainly
- Construction
- Enterprises of trade, repair of vehicles, personal & household goods
- Industry
- Banking
The competitiveness assessment report described the importance and links
among the key clusters as well as their role in seeking opportunities for the
future local economy. Guidelines on available economic activities are based
on the analysis of these of the industries that demonstrate the highest growth
of economic parameters and create the most significant number of jobs.
Therefore, the Guidelines recommend certain measures to be taken in order
to take the best advantage of the opportunities identified for Tbilisi.
When analyzing the clusters a common methodology was adopted which had
been developed by the City team and the outside partners during their work
on the Tbilisi Competitiveness assessment. The analysis covers the period of
2000- 2006 and compares the situation of individual industries in Tbilisi with