HUMAN CAPITAL TRANSFORMATION AND BUSINESS POTENTIAL UTILIZATION FACTORS IN THE AUTONOMOUS REPUBLIC OF ADJARA

Iamze Surmanidze

Batumi Shota Rustaveli State University

Georgia

https://orcid.org/0000-0002-4389-9250

The aim of the article is to assess the potential of human capital development and the level of their economic activity in the Autonomous Republic of Adjara. The article describes the features of the formation of human capital in the region, the necessity of its development along with the factors of using business potential for sustainable socio-economic development of the region.

The article highlights the dangers and threats that threaten the future development of human capital and small and medium-sized businesses in Adjara, the need to implement adequate measures is noted. Finally, it was determined that the correct policy for the formation and effective use of competitive human capital, the promotion of innovative entrepreneurship, the optimal use of local resource potential, and the implementation of policy stimulating production are the most important strategies for the development of the region.

Although the potential of human capital development in Adjara is great, the level of their economic activity is decreasing, i.e. skills are not being used properly, so it is necessary to implement adequate measures. The dangers and risks that threaten the future development of human capital and small and medium businesses in Adjara are highlighted. In particular, the outflow of qualified labor resources due to the economic crisis; aging of the population and reduction of the labor force; Insufficient financial resources to provide competitive staffing. The dangers of intellectual and qualified labor resource outflow and migration are especially acute in the mountainous municipalities of Adjara.

All of the listed problems are obstacles to the development of regional business, which in itself prevents the improvement of the population's welfare and the quality of life. Economic growth and development will be supported by the training of highly qualified workforce and human capital. Competitive human capital is the main resource for the innovative development of both the region and the country. It is the transformation of human capital that determines the development of innovative economy. Innovative potential is a determining factor of business competitiveness. In the conditions of increasing competition, it is very important to raise entrepreneurial skills and innovative knowledge for production oriented to market demands. Therefore, it is necessary to form human capital focused on innovative development. The labor force and small enterprises do not have the necessary resources to make changes in the structure of human capital, therefore it is important to directly involve the employer and the state in the formation of human capital to improve the quality of human capital. Promotion of innovative entrepreneurship is important in regional business development. Therefore, we believe that it is necessary to mobilize investments to open highly productive, innovative competitive enterprises.

The development of human capital depends on demographic trends, on the potential of the labor force in the region, on the threats its solution measures which should be taken for its resource provision. Those problems that have a negative influence on the demographic balance will directly hinder the socio-economic development of the region, therefore it is important to pursue a policy focused on demographic security. This policy involves preventing population decline and aging; stopping migration processes; strengthening human capital; raising the standard of living.

In addition to demographic factors, of course the development of the business sector in the region is determined by the resource potential and business environment. The geographical location and natural diversity of the Autonomous Republic of Adjara, with its distinctive individuality, creates resource potential and the possibility of increasing the competitiveness of the territorial unit. It is important to use unused resources rationally.

Adjara municipalities have different economic spectra. Some economic sectors are less highlighted due to scarcity of existing resources or unsuitable business environment. For example, industry, trade, transport, construction are at the lowest positions of development in the highlands of Adjara. Unlike the municipalities of Batumi, Kobuleti and Khelvachauri, there are no special industrial zones or business incubators for business in the municipalities of Keda, Shuakhevi and Khulo. In this regard, there are local problems: inconsistency of the development of the industry with the potential of existing resources. Agriculture, agro-sector and tourism have a significant share in the structure of the economy of Adjara highlands, where local people are mostly self-employed. Agriculture is a traditional industry and one of the main sources of income for the local population, despite the dangers of low soil and erosion risks in the highlands. We consider that the lack of jobs, the process of migration from the village to the city, the problem of property registration, the low level of entrepreneurial skills, infrastructural problems, access to finance and the Internet, etc., are the factors hindering economic development in the highlands of Ajara.

Despite of great agricultural potential of Adjara, many agricultural products are imported, while it is possible to increase the supply of local products to the market; increase tourism potential; development of agro sector; promotion of small and medium entrepreneurship and formation of appropriate environment.

During the pandemic, import-dependent sectors are especially acute, so it is important to increase local production in the region. Accordingly, it is very important to focus on the development of those sub-sectors that have the greatest potential in the Autonomous Republic of Adjara. Such areas of agriculture are production of citrus, tea, nuts, tobacco, grapes, fruits, fish, poultry, beekeeping, animal husbandry, etc. These available resources can be turned into competitive directions.

Thus, the correct policy of formation and effective use of competitive human capital, promotion of innovative entrepreneurship, optimal use of local resource potential and implementation of production stimulating policy is the most important strategy for the development of the region. Sustainable socio-economic development of the region is directly related to the transformation of human capital. We believe that optimal complex use of economic and human resources of Adjara will be the basis for business development in the Autonomous Republic of Adjara.

Keywords: Human capital, regional business, innovative entrepreneurship, business potential, demographic resource.