Introduction

Entrepreneurship and SME development play a crucial role in speeding up the economic development of transition economies. Although entrepreneurship exists in all environments it flourishes in the conditions where it is supported. Transition economies, as well as Georgia, are characterized by inefficient framework conditions that present barriers to productive entrepreneurship and SMEs to develop and benefit the economies in their full potential.

Purpose

The Thesis aimed at answering the following research questions:

1)      To what extent the framework conditions necessary for promoting productive entrepreneurship and SME development exist in Georgia?

2)      What are the perceived barriers to entrepreneurship and SME development in Georgia?

3)      In what ways is entrepreneurship and SME development encouraged and supported in Georgia?

Method

The thesis consists of theoretical data such as literature review, secondary data presented by previous studies, and primary data collected by conducting interviews with Georgian entrepreneurs and representatives of governmental bodies and NGOs engaged in improving a business climate in the country.

Conclusions

The study revealed that basic framework conditions for developing entrepreneurship are present in Georgia. Although inefficiencies and institutional gaps give rise to a number of barriers to entrepreneurship and SME development. They are mostly presented by inefficient tax system and financial framework. Despite their efforts towards fostering favourable business environment, GoG, as well as NOGs could do a better job in improving an indirect support in terms of abolishing imperfections in the taxation system, as well as directly providing finance, training and effectual information flow to existing and potential businesses.