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Khatia Udesian, Dali Sologashvili: Analysis of direct foreign investments in Georgia

INTRODUCTION
Georgia is approaching the big family of the European Union, which is achieved
through consistent and gradual steps, following European principles and values. The
EU candidate status is an opportunity for Georgia to access additional financial
resources, which implies gradually access to those programs and instruments that are
available to countries in the process of joining the EU. Economic benefits include an
increase in foreign direct investment.

The experience of Eastern and Central European countries, as well as the Balkan
region, has shown that the largest amount of foreign direct investment enters the
country when negotiations with the European Union begin or the country is granted
the status of a candidate for the European Union (Bujiashvili, The importance of
candidate status and its practical benefits 2024). This is due to the fact that real estate
prices have not yet increased and EU directives and regulations have not been fully
implemented. The relevance of foreign direct investment as a source of economic
activity has grown rapidly in recent decades. In 2000, it accounted for 22% of the
world's gross domestic product, and in 2016 it reached 35% (Carril-Caccia and
Pavlova 2018).

In modern society, foreign direct investment is often considered as a vital source of
sustainable development of a country (Kardos 2014). Foreign direct investment
remains a priority as an essential pillar moving forward towards a developed market
economy (Apostolov 2016).

LITERATURE REVIEW
Over the past three decades, the number of people living in extreme poverty in the
world has decreased dramatically. Nevertheless, the difference between the richest
and the poorest countries is very large. In 1776, when Adam Smith wrote The Wealth
of Nations, the richest country in the world was about four times richer than the
poorest, and today the richest country in the world is 400 times richer than the poorest
(World Bank 2016). This was driven by knowledge, diversification and export
composition, all areas in which foreign direct investment plays an important role
(Wire and Matthews 2023).

Direct foreign investments are one of the important prerequisites for the economic
development of the country. Foreign direct investment is a key element of
international economic integration, as it creates long-term and stable linkages between
economies (Hayes 2023). Foreign direct investment is a long-term capital investment
in a business by a non-resident (Forbles Georgia 2022).

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