CEU Electronic Theses and Dissertations, 2020
| Author | Arziani, Georgy |
|---|---|
| Title | Determinants of Foreign Direct Investment in Georgia Economic Growth and Structural Transformation |
| Summary | This thesis gives an overview of major developmental policies and analyses how the changes in the global economic order impacted current strategies of modernization. Existing research identifies a number of factors that constrain economic development and advises on their improvement in order to ensure the unhindered flow of productive investment. This thesis applies an influential growth diagnostics approach to the analysis of the determinants of foreign direct investment inflows to Georgia between 2004 – 2019 and finds that human capital has become a major constraint. Georgia offers a generally attractive environment for investment, but its capacity to attract investment is underutilized. I argue that by focusing on the supply- side bottlenecks, such as, for instance, lack of human capital, scholarship neglects the problem of the lack of demand under uncertainty, which has major negative impacts on the developmental perspectives of emerging economies. A new analytic framework for FDI attraction that addresses these issues is proposed. State-led investment promotion is a key to success as it enables countries to reinforce the benefits of structural reforms by attracting FDI and ensuring the demand for improvement. However, Georgia's state capacity is low and, therefore, Georgia fails to fully utilize its developmental potential. This argument is derived from the analysis of the performance of Georgia’s Investment Promotion Agency. Grave failures, such as institutional turmoil and chronic understaffing undermine its efficacy. Keywords: economic development, binding constraints, Georgia, foreign direct investment |
| Supervisor | Carsten Q. Schneider |
| Department | Political Science MA |
| Full text | https://www.etd.ceu.edu/2020/arziani_georgy.pdf |
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