The investment climate in Georgia: progress, challenges and future perspectives

Abstract

The investment climate constitutes a critical determinant of a country's economic growth, influencing both domestic
and foreign investment flows. As a small and open economy, Georgia has been actively pursuing the development of a favorable
investment environment aimed at establishing attractive conditions for investors. This article seeks to conduct a comprehensive
analysis of Georgia’s investment climate, examining the progress achieved in recent years, identifying prevailing challenges, and
outlining future prospects. Significant economic reforms implemented in Georgia have facilitated the liberalization of the
business environment, as evidenced by the country’s strong performance in the World Bank’s "Doing Business" rankings. Key
reforms have included the simplification of tax and customs procedures, the streamlining of business registration processes, and
the signing of free trade agreements. Collectively, these measures have contributed to the creation of a stable and transparent
market, enabling both domestic and foreign investors to initiate and expand their operations with greater ease. Nevertheless,
despite these advances, Georgia continues to face critical challenges that constrain the sustained growth of investment. Political
risks and associated uncertainties remain substantial deterrents to investor confidence. Moreover, the effectiveness of the judicial
system requires further enhancement to ensure the protection of property rights and the maintenance of legal certainty. Regional
infrastructural disparities also persist, with the concentration of investment in Tbilisi outpacing development in other regions.
Global economic trends, including digital transformation, the rise of green investments, and the rapid advancement of new
technologies, exert a significant influence on Georgia’s investment dynamics. In the post-pandemic context, investor interest
has notably shifted toward healthcare and digital services, while regional conflicts and geopolitical volatility have further
accentuated risk perceptions. To foster sustainable economic development, it is imperative for Georgia to diversify its investment
policy, enhance infrastructure, support innovation and technological sectors, and reform the vocational education system to
meet the evolving demands of the digital economy. The study concludes that implementing these measures will be instrumental
in strengthening Georgia’s long-term economic resilience and international competitiveness.