ECONOMIC TRANSFORMATION IN THE CAUCASUS - GEORGIA'S ROLE IN FINANCIAL SYSTEM

Historically, the Caucasus region has constituted a critical nexus of trade routes and strategic interests nevertheless, for centuries, persistent political instability and economic isolation have impeded the full realization of its economic potential. The legacy of the Soviet system, coupled with the political disintegration that followed in the post-1990s era, has profoundly shaped the region’s economic structures. In the case of Georgia, the transition from a centrally planned economy to a market-based system introduced substantial challenges, necessitating deep structural adjustments and comprehensive reforms, a process that continues to be of critical relevance and urgency today. At the present stage, despite numerous challenges and obstacles, Georgia is perceived as an economically liberal and investment-attractive country, striving to establish itself as a financial hub within the Black Sea region. The country’s macroeconomic indicators, fiscal policies, and a stable banking sector contribute to its growing and increasingly significant role in both regional markets and the broader international financial system and networks. The present research conducts a comprehensive analysis of Georgia’s role in the economic transformation of the Caucasus region from a historical perspective to the contemporary era. It does systematically explore the fundamental drivers that enabled Georgia to overcome economic crises and progressively integrate into regional and global financial markets. Special focus is placed on the structural reforms undertaken during the 2000s, notably the strengthening of the financial sector, the enhancement of the business climate, the modernization of the banking system, and the negotiation and signing of international trade agreements. The study makes particular emphasis on Georgia’s participation in multilateral economic platforms and its efforts to deepen ties with the European Union, emerging and developed economies of Asia, and global investment markets. Regarding future prospects, the study highlights both the opportunities and challenges facing Georgia. It examines the critical areas necessary for the development of the country’s financial markets, emphasizing the need for deeper economic diversification, the integration of technological innovations, and the enhancement and effective utilization of labor productivity. These measures are essential for Georgia to maintain its competitiveness and to secure a significant and leading position within the global economic system. The paper also underscores the importance of addressing geopolitical risks, as well as challenges related to energy security and state stability, all of which exert a considerable influence on the country’s future economic development. In conclusion, Georgia’s historical trajectory, contemporary accomplishments, and forward-looking strategic planning collectively pave the way for the country to position itself as a leading economic center in the Caucasus region and to expand its influence within both regional and global financial markets.