Challenges in Economic Development of SelfGoverning Cities of Georgia

The presented paper is one of the first attempts to investigate the main challenges in economic development of a specific economic unit, such as self-governing cities of Georgia (Tbilisi, Kutaisi, Batumi, Poti, and Rustavi). Difficult period of market relations formation is inseparable from the processes of transformation of cities, which is accompanied by the formation of a specific urban environment. The economic, financial and demographic development potential of the society is heavily concentrated in the cities. The necessity of economic development of cities in market conditions has brought to the fore the issue of transformation of their functional structure. The organic nature of the transformation means that the city is gradually freed from self-contained, unnatural enterprises and becomes multi-functional and socially diverse. It changes not only the production profile, but the environment as well. The paper justifies that the self-governing cities of Georgia play a crucial role in national and regional development. In these cities, the positives and negatives of the socio-economic reforms carried out in the regions, and, in general, the vector of national and regional development are especially felt in these cities. The paper examines the relationship between the growth rates of value added output in self-governing cities and the growth rates of budget expenditures. In addition, it is suggested to use a new indicator: Municipality Size. It was calculated according to self-governing cities of Georgia. This indicator would have both theoretical value (analysis, conclusions) and practical – in the development and management of economic policy at the local level. © 2023 Bull. Georg. Natl. Acad. Sci.