Georgia’s Foreign Direct Investment Policy in the Process of Moving towards the EU

Abstract

FDI flows provide capital, as well as technology and know-how and represent one of the most effective ways for integration with the global economy. Therefore the development of the appropriate policy measures to attract FDI is one of the important policy making areas in Georgia. The article analyzes Georgia’s FDI policy instruments using the conceptual framework of the UNCTAD, which distinguishes three generations of FDI policy instruments. During the last decades Georgia has made substantial reforms in the regulating institutions of the economy, including in the field of investments. At the present stage the most important objective is to carry out an effective strategy for economic and regulatory approximation with the EU. Implementation of the first generation of investment policy instruments in Georgia involved liberalization of trade and creation of the legislative basis for the open and non-discriminatory regime for foreign investors. Establishment of the Georgian National Investment Agency and Co-investment Fund were important second generation policy measures. Finally, Deep and Comprehensive Free Trade Area (DCFTA) as a completely new dimension of Georgia-EU economic relations is helpful to put FDI policy within the broad economic strategy and policy context.