Tag: ISET Policy Institute
Georgia’s SME Digitalization Lags Behind EU Despite IT Growth
Digital transformation is reshaping how businesses worldwide operate, yet SME digitalization in Georgia continues to lag despite strong IT sector growth. Many small and medium-sized firms struggle to adopt key digital tools like ERP, CRM, AI, and e-commerce. This raises questions about whether Georgia’s growing tech industry is truly driving digital progress across the wider economy. A new ISET Policy Institute study tracks SME digitalization from 2020 to 2024, comparing Georgia’s progress with EU benchmarks to reveal key gaps and opportunities for growth.
Why SME Digitalization in Georgia Matters
Across advanced economies, digital technologies fuel productivity and national growth. Investments in ICT, automation, and innovation enhance resilience and efficiency. Studies show that firms using e-commerce, digital payments, and remote work tools recover faster from disruptions and perform better overall. Yet, in both the EU and Georgia, smaller firms lag far behind large enterprises in adopting advanced technologies such as ERP, CRM, and AI. Bridging this divide is central to both the EU’s 2030 Digital Decade goals and Georgia’s economic modernization efforts.
How Georgia Compares to the EU
While EU SMEs steadily embrace digital tools, Georgia trails in both basic and advanced tech.
- Only 50% of Georgian SMEs have broadband speeds of at least 30 Mbps, compared to 89% in the EU.
- Just 7% of Georgian SMEs have websites with advanced features, versus 78% of EU firms.
- Adoption of ERP, CRM, and AI systems remains minimal among Georgian SMEs.
Key Findings from the ISET Study
- In 2024, only 6–7% of small firms used ERP and 3% used CRM, compared to 68% and 41% among large firms.
- AI use was just 2% for small firms versus 20% for large ones.
- Georgian SMEs lag EU peers in ERP (7% vs 42%), social media (30% vs 56%), and AI (2% vs 13%).
- Only 3% of Georgian SMEs sell online, compared with 20% in the EU.
Economic Implications for Georgia
The SME digitalization gap threatens long-term productivity and export potential. Still, progress is visible. Fast broadband access for small firms rose from 33% in 2020 to 49% in 2024. Local e-transactions jumped 135% from 2020 to 2023, signaling growing online demand. Targeted support for digital skills, financing ERP/AI adoption, and simple e-commerce onboarding programs could help Georgian SMEs catch up with EU counterparts.
Meet the Researchers
- Ana Burduli: ISET Policy Institute.
- Zizi Galustashvili: ISET Policy Institute.
- Giorgi Papava: ISET Policy Institute.
Read the Full Report
Read the full report on the ISET Policy Institute websiteto explore the complete findings. Explore more policy briefs on economic growth and development on the FREE Network website.
Georgia’s Business Confidence Dips as Financial Sector Weakens
Business confidence in Georgia slipped slightly in Q3 2025, falling by 0.2 index points to -1.5. The decline was driven by pessimistic expectations and weaker past performance, with the financial sector showing the steepest drop. Despite this, sales price expectations rose, hinting at potential price hikes in the coming months. The survey was conducted by the ISET Policy Institute in partnership with the BIA and the International Chamber of Commerce in Georgia.
Economic Uncertainty Weighs on Business Confidence
The Business Confidence Index (BCI) measures how optimistic or pessimistic companies feel about the economy. In Q3 2025, confidence fell for the first time since early 2025, reflecting a mix of sector-specific challenges. The largest decline came from financial services, which dropped by 19.5 points, followed by trade and agriculture. Conversely, manufacturing saw a strong rebound, gaining 15.4 points compared to the previous quarter.
Why This Research Was Conducted
The BCI is a quarterly measure designed to track business sentiment across Georgia’s key economic sectors. It helps policymakers, investors, and entrepreneurs understand market trends and prepare for future changes.
Key Research Findings
- The BCI fell to -1.5 in Q3 2025, with expectations dropping to 2.0 points.
- Past performance weakened, particularly in agriculture (-22.5) and trade (-20.7).
- Sales price expectations rose sharply to 22.0, led by manufacturing (+44.4).
- Large firms’ confidence increased by 16.6 points, while SMEs’ fell by 8.2.
What This Means for Georgia’s Economy
The mixed results suggest a split recovery. Large companies remain optimistic, while smaller firms face challenges like weak demand and limited access to finance. Rising price expectations may indicate inflationary pressure in late 2025. Future research will likely focus on whether optimism in manufacturing can offset weakness in finance and trade.
Read the Full Report
Explore the full analysis on the ISET Policy Institute website. You can also find more policy briefs on economic growth and development on the FREE Network website.
Unlocking Export Potential of Georgia: Strategic Insights for High-Growth Sectors and European Market Expansion
A new report by the ISET Policy Institute provides a comprehensive analysis of Georgia’s fastest-growing export sectors, revealing significant opportunities for small and medium-sized enterprises (SMEs) to increase their export potential to European markets. Supported by the European Union and the United Nations Development Programme (UNDP), the study identifies six key sectors in Georgia that demonstrate strong potential for export diversification and market expansion across Europe.
High-Growth Sectors in Georgia: Key Findings and Export Opportunities
This detailed ISET report blends both quantitative data and qualitative insights from industry stakeholders, highlighting the top six sectors:
- manufacture of beverages,
- transport,
- telecommunications,
- computer and information services, and
- manufacture of wearing apparel.
Each of these sectors is shown to have substantial export competitiveness, growing demand in European markets, and opportunities for sustainable growth despite existing challenges.
Beverage Manufacturing in Georgia: High Export Potential for Wine and Spirits
One of the highest-ranking sectors in Georgia is beverage manufacturing, particularly in the production and export of wine, mineral water, and spirits. Although Georgia’s beverage exports are growing rapidly, the report reveals untapped potential in the European Union market. By enhancing certification processes and building export capacity, Georgia’s beverage industry could significantly increase its presence in Europe, particularly in high-demand niche markets like organic wines and premium spirits.
Digital Economy Growth: Telecommunications, Computer, and Information Services
Georgia’s telecommunications, computer, and information services sector is another high-potential industry. With SMEs contributing 84% of turnover in computer services, the sector plays a vital role in Georgia’s digital economy. Demand for these services is growing across Europe, making this sector a key driver for future export growth. The report suggests targeting European digital markets and strengthening public-private partnerships to further enhance the sector’s international competitiveness.
Strategic Recommendations to Boost Georgia’s Export Competitiveness
The report provides actionable recommendations to further boost Georgia’s export performance. These include improving infrastructure quality, expanding access to financing for SMEs, and encouraging public-private collaboration. To stay competitive in European markets, Georgian SMEs are advised to focus on green technology adoption, niche market targeting, and meeting international quality standards through certification improvements.
Preparing Georgia for Sustainable Export Growth and European Market Integration
With significant export potential across multiple sectors, Georgia is poised to expand its presence in European markets. By investing in strategic policy frameworks and fostering SME growth, the country can accelerate its economic integration with Europe. Georgia’s small and medium-sized enterprises (SMEs) have a crucial role to play in driving sustainable economic growth and export diversification in the coming years.
About ISET Policy Institute
ISET Policy Institute is the leading economic policy think tank in Georgia, specializing in research, training, and policy consultation in the South Caucasus region. The institute focuses on promoting good governance and fostering inclusive economic development.
For more information, visit ISET Policy Institute.
To read more policy briefs published by the ISET Policy Institute, visit the Institute’s page on the FREE Network’s website.
Disclaimer: The opinions expressed in policy briefs, news posts, and other publications are those of the authors and do not necessarily reflect the views of the FREE Network and its research institutes.
Media (de)Polarization Index | July 2024
In July 2024, the Georgia Media Polarization Index saw a notable rise due to several key political events. For instance, the United States indefinitely postponed the “Worthy Partner 2024” military exercise. Additionally, President Salome Zurabishvili returned proposed Pension Law amendments to Parliament for further review. Moreover, she appointed a non-judge member to the Supreme Council of Justice, though the court later suspended this member. However, during periods of opposition party unification and Georgian athletes’ successes at the Olympics, the index experienced a decline.
Interactive Chart: Polarity Index Only – July
Media (de)Polarization Index – 2020-2024 (as of July 2024)
What is the Georgia Media Polarization Index?
The Georgia Media Polarization Index, created by the ISET Policy Institute, serves as a powerful tool for measuring the level of political bias and polarization across Georgia’s leading media outlets. This index examines the political dissimilarities in news coverage, offering a clear, data-driven analysis of media bias in Georgia.
How the Media Polarization Index Works
The Media Polarization Index utilizes a weighted average to assess political dissimilarities between various Georgian media outlets. Media sources with higher ratings exert greater influence on the overall results, providing a more comprehensive understanding of political content distribution. This method helps in identifying where each media outlet stands on the political spectrum, allowing users to visualize the extent of media bias.
Importance and Application of the Media Polarization Index
The Georgia Media Polarization Index is crucial for researchers, policymakers, and media watchdogs focused on monitoring media bias and polarization trends. It provides valuable insights into how Georgian media outlets shape political discourse and evolve over time. The findings from the index support efforts to promote balanced media coverage, inform policy decisions, and encourage dialogue on the media’s influence in Georgia’s political landscape.
About ISET Policy Institute
ISET Policy Institute is the leading economic policy think tank in Georgia, specializing in research, training, and policy consultation in the South Caucasus region. The institute focuses on promoting good governance and fostering inclusive economic development. For more information, visit ISET Policy Institute.
To read more policy briefs published by the ISET Policy Institute, visit the Institute’s page on the FREE Network’s website.
Disclaimer: The opinions expressed in policy briefs, news posts, and other publications are those of the authors and do not necessarily reflect the views of the FREE Network and its research institutes.
Georgia (de)Media Polarization Index: Measuring Political Bias Across Media Outlets
The Georgia Media Polarization Index, developed by the ISET Policy Institute, is a key tool for measuring political dissimilarity across the country’s leading media outlets. This Index captures the level of polarization in Georgian media by examining the political differences in news coverage. It offers a clear, data-driven approach to understanding media bias.
What the Media Polarization Index Measures
The Media Polarization Index uses a weighted average to measure political dissimilarities between various Georgian media outlets. Ratings determine the weight assigned to each outlet, so higher-rated sources have a greater influence on the results. The Index evaluates how different the political content is across these media platforms. This creates a clear picture of where each media outlet stands in terms of political bias.
The Role of Natural Language Processing (NLP) Models
To build the Index, the ISET Policy Institute uses advanced Natural Language Processing (NLP) techniques. The analysis relies heavily on two models: Word2Vec and Doc2Vec. These models analyze the language in political news articles and extract deeper meanings from the content.
The Doc2Vec model, specifically trained for the Georgian language, plays a central role in this process. It was developed using a large collection of over 250,000 political news articles from diverse media outlets in Georgia. This training allows the model to interpret nuanced meanings in political news. As a result, it provides a highly detailed analysis of media content.
How the Index Measures Dissimilarity
The Doc2Vec model is applied to political news articles from several prominent Georgian media outlets, including Imedi, Mtavari, TV Pirveli, 1TV (Public Broadcaster), Formula, PosTV, and Rustavi2. Using cosine similarity metrics, the model maps the articles into a high-dimensional space. The cosine similarity metric then measures how closely the political content of one outlet aligns with others. A wider angle between vectors, or a smaller cosine similarity, indicates greater political dissimilarity between media outlets.
Clustering Media Outlets Based on Bias
One of the most important insights from the Index is the identification of media clusters. The Index not only measures political dissimilarity across all outlets but also identifies clusters of outlets with similar political biases. The politically biased dissimilarity is calculated by comparing the total dissimilarity with the average dissimilarity within these clusters. This helps the Index identify both the overall level of polarization and the specific biases between different media groups.
Application of the Media Polarization Index
The Georgia Media Polarization Index is an essential tool for analyzing political bias and dissimilarity across Georgian media outlets. It provides critical insights for researchers, policymakers, and media watchdogs who monitor how media bias and polarization evolve over time. The findings from the Index can guide policy decisions, support the push for more balanced media coverage, and encourage constructive dialogue on the media’s role in shaping political discourse in Georgia.
About ISET Policy Institute
ISET Policy Institute is the leading economic policy think tank in Georgia, specializing in research, training, and policy consultation in the South Caucasus region. The institute focuses on promoting good governance and fostering inclusive economic development. For more information, visit ISET Policy Institute.
To read more policy briefs published by the ISET Policy Institute, visit the Institute’s page on the FREE Network’s website.
Disclaimer: The opinions expressed in policy briefs, news posts, and other publications are those of the authors and do not necessarily reflect the views of the FREE Network and its research institutes.