Do Subsidies Foster Growth or Dependency? An Empirical Analysis of Georgian Small and Medium Enterprises
Author : Tea Kasradze, Natia Lakia 12/12/2025
Article ABSTRACT
The paper aims to assess the impact of state subsidies on the development of small and medium-sized enterprises (SMEs) in Georgia. The empirical analysis, using data from 2016 to 2025 and financial indicators for beneficiaries of the "Enterprise Georgia" program, demonstrates that subsidies have a substantial positive impact on SME revenues and assets in the short term. However, in the long run, this effect diminishes, liabilities relative to assets increase, and no significant correlation with employment levels is observed. The study concludes that unplanned subsidies with weak control mechanisms pose a risk of creating a "zombie economy" and do not generate a sustainable, positive impact on the SME sector.
Key words: subsidy, small and medium-sized enterprises (SMEs), subsidy effectiveness, co-financing, grant, SME Performance, Debt-to-Asset Ratio, Zombie Companies.
Article DOI: https://doi.org/10.55367/MQAA9456