Entrepreneurship and Innovation - Major Job Creators
03 October, 2013
Entrepreneurship and Innovation - Major  Job Creators
Fostering high-growth entrepreneurship and innovation is paramount to job creation and sustainable growth in Georgia - this was the key message sent by the round table held by the World Bank in Tbilisi on 24 September 2013. This discussion was jointly organized by the World Bank, Ministry of Economy and Sustainable Development, the International Chamber of Commerce and the Georgian Small and Medium Enterprise Association. The discussion also benefited from the release of the newly prepared World Bank study “Fostering
Entrepreneurship in Georgia”.
Private sector creates 9 out of 10 jobs in the global economy. Therefore, creation of attractive investment climate and conducive business environment for new business entries and growth of private sector are crucial for sustainable economic growth of the country, poverty reduction and growing prosperity of the nation. In Georgia however the share of small and medium businesses in GDP remains small – below 20% of GDP - and is much lower as compared to many countries in the neighborhood (like Armenia where SME contributes 42% to GDP) or in Europe and Central Asia region (ECA), with an average 60% share of SME in GDP. According to the World Bank 2013 report, Georgian innovative firms create 30% more jobs and are much more competitive in the domestic and global markets than non-innovative firms. Therefore, fostering growth of entrepreneurship and creating environment for scaling up and rapid growth of innovative and more productive firms should become one of the key priorities of the country’s development goals.
The Fostering Entrepreneurship in Georgia report presents the results of the special survey of Georgian micro, small and medium companies held in 2012. The paper analyzes factors that inhibit growth of entrepreneurial and innovative activity of Georgian firms, such as difficulties in SME access to finance, especially for start-up companies, deficient knowledge and technology transfer, limited skills, absence of special Government program in support of entrepreneurship and innovation. The report offers recommendations on how to enhance entrepreneurial culture and foster innovative entrepreneurship. Similar to many countries in the ECA region and, in particular, EU member economies, the government of Georgia can facilitate - jointly with the private sector - entrepreneurialism by raising importance of entrepreneurship, improving the general business environment, increasing access to markets, information and supporting skills development, facilitating access to finance and creating special instruments and institutions to encourage innovation, increasing firm-level research and development (R&D) and commercialization, facilitating knowledge and technological spillovers to increase firm-level productivity.
“Job creation and productivity growth are at the forefront of today’s global development agenda,” said Henry Kerali, World Bank Regional Director for the South Caucasus.
George Kvirikashvili, the Vice Prime Minister and Minister of Economy and Sustainable Development of Georgia underlined that the ministry considers development of entrepreneurship to be of vital importance for the country’s economic growth and therefore plans to initiate and support activities which would result in job creation, SME and start-up support.
During the round table discussion, the senior government officials, representatives of the business community, including business and SME associations and private firms, education and research institutions, innovation and information society, civil society and donor organizations agreed on the need for a comprehensive reform in the SME area.

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