Paper gives a clear picture of Georgian economy and fields where foreign direct investments are made to illustrate how institutional reforms can create attractive business environment and support to economic growth. But these actions are based on important institutional changes. That is why the main priority is to attract foreign investments. From this point of view the possibilities from local funds in transitional countries, particularly in Georgia, are small. The only way to overcome unemployment and poverty is significant economic growth that can be achieved b the implementation of institutional reforms and increase of investment activity. Paper encompasses a wide range and informative materials to demonstrate that for the improvement of the economic and social state of transitional countries institutional reforms has great importance because successful institutional reforms encourage investment flow.
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