The Institutions of State Business Relations

The Case of Food and Agriculture Sector of Georgia

by Tamar Jugheli (Author)
©2021 Thesis 222 Pages
Series: Emerging Markets Studies, Volume 8


State intervention in economic activities to drive development requires specific
institutional prerequisites that maintain strategic collaboration between the
state and businesses. Arguing that the design of institutions of state business
relations is critical for successful state intervention in economic activities, this
book seeks to understand the nature of the institutions of the state-agribusiness
relations in Georgia and its functional compatibilities to the institutions
of strategic SBRs. It analyses the nature of SBRs in Georgia through the lens
of the New Institutional Economics (NIE). It employs a qualitative research
strategy for the systematic collection, organization, and interpretation of the
data. Data from 39 interviews, documents on relevant regulations and laws,
and the reports from the international organizations are triangulated to address
the research question.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the author
  • About the book
  • This eBook can be cited
  • Copyright Notice
  • Contents
  • Acknowledgement
  • List of Figures
  • List of Tables
  • Abbreviations and Acronyms
  • Abstract
  • Chapter I Introduction
  • 1.1. State Intervention as a Driver of Development
  • 1.2. Georgia as a Locus of the Study: Increased State Intervention
  • 1.3. The Puzzling Area of the Economy: The Food and Agriculture Sector of Georgia in 2004–2016
  • 1.3.1. State Intervention in the Food and Agriculture Sector in 2008–2012
  • 1.3.2. State Intervention in the Food and Agriculture Sector in 2012–2016
  • 1.4. The Research Question and Theoretical Argument
  • 1.5. The Methodological Approach
  • 1.6. Contribution to Academic Debates
  • 1.7. The Road Map of the Book
  • Chapter II The Debates on State–Business Relations in the Literature
  • 2.1. The Role of SBRs
  • 2.2. Characteristics of the Strategic SBRs
  • 2.3. Institutional Prerequisites for the Emergence of Strategic SBRs
  • 2.4. Conclusion
  • Chapter III Theoretical Considerations and Operationalisation of SBRs
  • 3.1. Theoretical Considerations on Institutions and Economic Performance
  • 3.1.1. The Conceptualization of Institutions and Organizations
  • 3.1.2. Institutions Matter
  • 3.1.3. The Origins of Institutions and Institutional Change
  • 3.2. The Institutionalist Approach to SBRs
  • 3.2.1. The Game of SBRs: Play or Not Play?
  • 3.2.2. The Rules of the Game of Strategic SBRs
  • Information Exchange
  • Reciprocity
  • Credibility and Trust
  • Feedback Mechanism
  • 3.3. The Prerequisites for Emergence of Strategic SBRs
  • 3.3.1. The Structure of the Public Sector in Relation to the Private Sector
  • 3.3.2. The Structure of the Private Sector in Relation to Public Sector
  • 3.3.3. Information Exchange Mechanisms
  • 3.4. The Theory Applied to State–Agribusiness Relations in Georgia
  • 3.4.1. The ‘Ideal Typification’ of the Institutions of Strategic SBRs
  • 3.4.2. Operationalization of the Variables
  • Chapter IV Methodological Considerations for the Empirical Research
  • 4.1. Methodological Decisions
  • 4.2. Data Collection
  • 4.3. Validity and Reliability
  • 4.4. Data Analysis
  • Chapter V The Food and Agriculture Sector of Georgia –State Intervention and the Sector’s Performance
  • Introduction
  • 5.1. The First Wave of State Intervention
  • 5.2. The Second Wave of State Intervention
  • 5.3. The Performance of the Sector
  • Conclusion
  • Chapter VI The Nature of the Institutions of State–Agribusiness Relations in Georgia
  • Introduction
  • 6.1. The Institutional Setting that Maintains Strategic SBRs
  • 6. 2. The Case of Preferential Agrocredit
  • 6.2.1. The Project Overview
  • 6.2.2. State–Agribusiness Relations
  • Information Exchange
  • Reciprocity
  • Credibility and Trust
  • Feedback Mechanism
  • Conclusion
  • 6.3. The Case of Plant the Future
  • 6.3.1. The Project Introduction
  • 6.3.2. State–Agribusiness Relations
  • Information Exchange
  • Reciprocity
  • Credibility and Trust
  • Feedback Mechanism
  • Conclusion
  • 6.4. Co-Financing the Agriculture Products Processing and Storage Enterprises
  • 6.4.1. Project Introduction
  • 6.4.2. State-Agribusiness Relations
  • Information Exchange
  • Reciprocity
  • Credibility and Trust
  • Feedback Mechanism
  • Conclusion
  • Conclusion
  • Chapter VII The Institutional Prerequisites for the Emergence of Strategic SBRs
  • Introduction
  • 7.1. The Structure of the State in Relation to the Private Sector
  • 7.1.1. The Presence of the Pilot Agency: Agriculture Project Management Agency (APMA)
  • 7.1.2. State Capacity
  • 7.2. The Private Sector in Relation to Public Sector
  • 7.2.1. The Presence and Length of Existence of Umbrella Organizations
  • 7.2.3. The Capacity of the Agribusiness
  • 7.3. Information Exchange Mechanisms
  • Conclusion
  • Chapter VIII Discussion and Conclusion
  • 8.1. Main Findings
  • 8.2. Research Contribution
  • 8.3. Implications and Recommendations
  • 8.3.1. The Recommendations to the Ministry of Environmental Protection and Agriculture (MEPA)
  • 8.3.2. The Recommendations to the Pilot Agency-APMA (RDA)
  • 8.3.3. The Recommendations to the Umbrella Organisations
  • 8.4. Limitations and Future Research
  • Appendix 1
  • The List of Interviewees
  • Bibliography

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This publication is a doctoral thesis, supervised by Professor Herman W. Hoen and Professor Joachim Ahrens, and submitted to the University of Groningen to acquire Ph.D. Working on this research was a thought-provoking journey, which contributed to my professional and personal development. The process of learning to manage time, to discipline self, to cope with stress, and to defeat procrastination accompanied this journey. We, academic researchers, often remark that working on a research project is a lonely journey. I could not have reached the end of this journey without the professional and personal support of the individuals I have met on the road of my life, exchanged ideas, and shared time with during short or long breaks from the writing process.

First, I want to express my immeasurable gratitude to my supervisors Professor Herman W. Hoen and Professor Joachim Ahrens. As a Ph.D. candidate, I had the luck to have very supportive, inspiring, modest, and friendly supervisors. Undoubtedly, I could not have completed this research without the outstanding guidance, thought-provoking feedback, and constructive criticism provided by both professors. The meetings and discussions with the professors were always appealing, giving hope that it is possible to get through the tunnel and see the light at the end. Throughout this 4-year journey, Professor Herman W. Hoen and Professor Joachim Ahrens contributed much to my professional development as an academic researcher. Over time, my supervisors read the dissertation chapters and kindly provided substantive feedback that visibly improved the quality and coherence of the dissertation’s argument and messages.

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I also want to express immense gratitude to the Governance in Emerging Economies (GEE) Research Group, run by the University of Groningen and PFH Private University Göttingen. This research is the product of the regular meetings and discussions with colleagues from the GEE team, which unites energetic, and motivated intellectuals from Germany, South Korea, Uzbekistan, Turkey, Russia, Kazakhstan, and Georgia. The team meetings were always thought-provoking, giving the fuel for further work. Having been part of the GEE research team allowed me to receive excellent knowledge in institutional economics and industrial policy, to develop academic and policy research skills. I am very grateful to the GEE group’s team leader, Christian Timm, who has always been supportive, sharing his experience regarding the various stages of the dissertation writing, reading the chapters of the dissertation, and providing constructive feedback. I want to express my gratefulness to my colleagues Axel Woelk, Cenk Sinar, Diana Usmanova, Franziska Wehinger Misook Choi, Yana Zabanova, and Zhanat Mur-zakulova for the exchanged ideas and feedback.

I am very grateful to the Volkswagen Foundation, which financially supported this Ph.D. project for three years, as a part of the initiative ‘Between Europe and the Orient –A Focus on Research and Higher Education in/on Central Asia and the Caucasus.’

This research could not have been completed without the respondents’ support, who showed their interest in the research topic, dedicated their valuable time to the interviews, and shared their experiences. Predominantly, I want to thank Irakli Kochlamazashvili, Lasha Zivzivadze, Salome Gelashvili, and Mindia Gaphrindashvili for their generous support, without which it would have been challenging and, in the most cases, impossible to get contacts and to reach the respondents during the fieldwork in Georgia.

On a personal note, I want to thank my friends Dr. Salome Baslandze, Dr. Yauheniya Varabyova, Niccolo Fiorentino Polipo, Dr. Douglas Rugh, who expressed interest in reading the introductory chapter of the dissertation and provided valuable feedback. I am very grateful to my friend Dr. Adina Maricut-Akbik, who has always been interested in my dissertation writing progress, generously shared with me her academic expertize, which was always the source of opening new, more straightforward approaches. I am indebted to Thomas Hart-kopf, whose emotional feedback was crucial. He shared his positive energy, hu-mour, and laughter, encouraged me to move forward and made me believe that I could successfully reach the end of the tunnel. I am thankful to my friends Dr. Salome Minesashvili, Dr. Mina Sumadi, and Dr. Nikoloz Tokhvadze, who have been on their road to Ph.D in the same period, shared their progress and breakthroughs and made the Ph.D. journey a less lonely process. I also want to express my gratitude to Aleksi Aleksishvili, Dr. Elene Jibladze, Houcem Eddine Daoud, Irinka Mezurnishvili, James Joseph, Julian Kocher, Katrin Chimento, Ketevan Babiashvili, Dr. Lasha Chochua, Mariam Azarashvli, Lauren Billingsley, Maka Chitanava, Natalia Shatirishvili, Rahiela Mustafovska, Salome Gvetadze, Salome Tvaloldze, Shota Gvaramadze, Tamara Fernandez Mino, Dr. Tanja Dramac and Thea Goginashvili for their friendship, attention, shared opinions and feedback in various stages of this journey.

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Finally, I want to express my gratitude to my family for providing love and encouragement. I am indebted to my aunt Ciuri and parents, Naili and Tamazi, who have, always encouraged my brothers and me to study well, making us believe that learning is our key responsibility to ourselves and to the society. I am very grateful to my brother, Levani, who is always inspiring me to be open to changes and opportunities that life offers and to explore my intellectual and personal potential fully. I am very grateful to my brother, Shalva, my sister-in-law Tamuna, my niece Barbare and nephews Giorgi, Luka, and Saba, for their unconditional love and support.

I also thank all whom I was not able to name here.

Berlin, October 8, 2020
Tamar Jugheli

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Fig. 1.1.The shares (%) of agriculture, industry, and services in total value added, 2004–2016

Fig. 3.1.The model: the institutionalist approach to SBRs

Fig. 5.1.The annual growth of the budget allocation of the MoA and its share of government spending, 2008–2016

Fig. 5.2.Credit to Georgia’s food and agricultural sector, 2008–2016

Fig. 5.3.Growth in productivity and value-added in the food & agricultural sector

Fig. 5.4.The structure of employment

Fig. 5.5.The structure of value added (VA)

Fig. 5.6.The dynamics of the export of the food and beverages, its share in total export and in world agriculture export

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Tab. 1.1.The Research Approach: Analyticism (Jackson, 2011)

Tab. 3.1.The Research Approach Analyticism (Jackson, 2011) Applied to the State Agribusiness Relations in Georgia

Tab. 3.2.The Operationalization of Information Exchange

Tab. 3.3.The Operationalization of Reciprocity

Tab. 3.4.The Operationalization of Credibility and Trust

Tab. 3.5.The Operationalization of the Feedback Mechanism

Tab. 3.6.The Operationalization of the Prerequisites for the Emergence of Strategic SBRs

Tab. 4.1.The Characteristics of the Selected Cases, 2015-2018


ISBN (Hardcover)
Publication date
2021 (April)
Berlin, Bern, Bruxelles, New York, Oxford, Warszawa, Wien, 2021. 222 pp., 10 fig. b/w, 11 tables.

Biographical notes

Tamar Jugheli (Author)

Tamar Jugheli is a political economist specialized in state interventions, the role of institutions, state-business relations, and economic development. In 2021, Tamar Jugheli obtained a Ph.D. from the University of Groningen (UG), Netherlands, for the research entitled ‘The Institutions of the State-agribusiness Relations in Georgia.’ In 2012 she obtained an MA in public policy from the Central European University (CEU), Budapest, Hungary, and in 2009 – MA degree in economics from the International School of Economics at TSU (ISET), Tbilisi, Georgia. In 2006, she acquired BA in the English language and literature from Ivane Javakhishvili Tbilisi State University (TSU), Tbilisi, Georgia. Dr. Tamar Jugheli acquired more than eleven years of progressive experience in economic development research & consultancy. She has experience working in the public sector, academia, economic research think tank, and the private sector at research, managerial and teaching positions.


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