DEVELOPMENT OF SMALL AND MEDIUM ENTREPRENEURSHIP AND FORMATION OF A MIDDLE CLASS IN GEORGIA

Abstract

Formation of a strong middle class in Georgia requires a development of small and medium entrepreneurship. As a result of implementation of a rational economic policy and realization of the knowledge and technology based approach in this field, increasing the number of employment, improvement of the national enterprise possibilities, enhancing the competitiveness of the production and growth of the overall level of prosperity of population could be achieved. Small and medium enterprises have been growing during the recent years, however, the growth rate is not sufficient. Share of the population belonging to the middle class is still low in Georgia. According to the studies conducted by the World Bank, in 2014 only 7% of the population of Georgia belonged to the middle class. According to the economic statistical study conducted in Georgia in 2018, share of the population belonging to the middle class in 2016 was 16%. The same study, with exclusion of the employment factor, shows the growth of the above-mentioned share to 24,6%. Ignoring the employment – very important determinant of the middle class – naturally puts the last figure far from reality. Current income inequality and high level of poverty negatively impact formation of the middle class in the country. In order to achieve the growth of the small and medium entrepreneurship, and respectively, growth of the middle class share, the following actions should be taken by the Government of Georgia: Increase of the scale of small and medium entrepreneurship programs, maximally inclusion of the regions; Support of the start-ups, formation of innovative economy; Promotion of the entrepreneurial education, formation of the corresponding environmental system for the export oriented industries; Maintaining political and economic stability.