How to increase competitiveness of Georgian products in export markets
According to many economic theories, international trade brings benefits all nations involved in trade, regardless of level of economic development. However, as gains from trade are not always immediately visible many states with underdeveloped economies become concerned that national production will not be able to withstand the pressures of international competition. Problematically, both schools of thought can be true. International trade does improve the long-term economic welfare of nations, whilst simultaneously creating an market in which established domestic firms may fail. Georgia is heavily dependent on imported products. By the end of 2018, exports made-up a 27% share of the country’s total trade turnover.
Georgia’s commodity export structure has remained constant for many years. Automobiles, copper ore, and ferro alloy remain the largest export commodity groups – despite the fact that these products are not produced in Georgia and therefore must be re-exported. The share of domestic production in the export structure is moderate: wine and mineral waters are traditional export commodities and take a modest share in country’s export totals. The static nature of Georgia’s export structure and its focus on re-exporting goods indicates that local production has not developed to the point that it can truly compete in the international market.
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