CLUSTER DEVELOPMENT ECONOMIC POLICY IN GEORGIA

Abstract

Tinatin Lomsadze E-mail: Tinatin.lomsadze184@eab.tsu.edu.ge Master of Economics, Ivane Javakhishvili Tbilisi State University Tbilisi, Georgia https://orcid.org/0002-0009-1190-6353 Abstract: Since the second half of the 20th century, many works have been devoted to the process of agglomeration of industries and the economic benefits obtained from it. The concept of an industrial district appears for the first time since 1890, when Alfred Marshall calls this term a geographical concentration of specialized industries in the territory of a region. In industrial districts, industries apply vertical integration, create subsidiary industries and specialize according to individual branches of the economy. Geographical concentration of specialized industries can be accompanied by additional economic benefits, through the reduction of production and transportation costs. Convergence effect makes possible the formation of various educational and cultural institutions around the industries, as well as the development of entertaining, recreational, residential spaces and etc. Finally, the process of localization becomes the reason for the formation of such a structural-dynamical entity as an urban agglomeration. As a rule, one or more scientific-research centers are located in urban agglomerations and knowledge and innovations are spread in horizontally integrated industries. In such conditions, the development of "creative industries" takes place. The area where "creative industries" are developed is referred to as "creative region". In "creative regions" the convergence effect combines knowledge and innovation, which creates a completely new dimension for industrial development. Michael Porter, professor of Harvard University, focuses on the importance of the effect of convergence in the spread of knowledge and innovation in industries. Professor Porter proposes a diamond rule for industrial competitiveness, which is based on the dissemination of knowledge and experience accumulated in educational institutions and scientific-research centers and in this process state institutions, central government and local self-government play a key role. In this way, a Triple Helix model of cooperation is created, which Professor Porter calls a diamond of competitiveness, or a Cluster in another way.