Which Types of Innovation Are Leading—and Is Georgia Ready for Global Competition?

Innovation is a driving force in modern economies, but today it encompasses much more than the invention of a new product. Global practice shows that innovation typically takes four main forms: product innovation (creating or improving goods), service innovation, process innovation (improving internal operations), and marketing innovation (new ways of promotion, pricing, or distribution). The most competitive countries develop all four types systematically to boost productivity and establish themselves on global markets.

In Georgia, the picture remains modest. In 2024, only 7% of enterprises introduced a new or significantly improved product to the market, and the same share applied to service innovation (Geostat, 2025). This is far below the European average of over 53%, and significantly lags behind innovation leaders like Finland, Germany, and Switzerland, where the share exceeds 70% (OECD, 2024).

Process innovation is relatively more common in Georgia. Many companies attempt to improve internal operations, whether through optimizing production, digitizing accounting systems, or upgrading logistics and human resources management. In 2024, 10% of enterprises updated their marketing strategies (including packaging, pricing, and after-sales services), 9% focused on improving production processes, and over 9% worked on administrative innovations. These figures show that companies tend to prioritize changes that directly affect costs or sales, which is a pragmatic but narrow approach.

In contrast, product and service innovation remains less frequent. This can partly be explained by the higher risk and investment involved in developing entirely new offerings. However, globally, this is precisely where innovation is heading—new products or services often serve as breakthrough mechanisms that redefine market dynamics and give firms a competitive edge.

Despite low overall numbers, one encouraging detail emerges: most Georgian firms that do innovate, develop solutions in-house. In 2024, over 81% of product and process innovations were developed internally. While this highlights a certain level of self-reliance, it also reflects the lack of collaborative innovation—joint efforts with universities, research institutions, or even other businesses are rare. Globally, open innovation ecosystems are becoming the norm, where cross-sector partnerships are key to breakthroughs.

In leading economies, innovation is increasingly tied to digital transformation, green technologies, and data-driven decisions. The adoption of AI, automation, and big data has become standard. According to McKinsey, 75% of global firms have already started integrating AI into their operations. In Georgia, such technologies are entering the market slowly, and mostly through isolated examples rather than systemic change.

This is further reflected in companies’ strategic focus. Only around 47% of Georgian firms prioritize product quality as a key strategy, pointing to a cautious and short-term orientation rather than a visionary innovation agenda.

In sum, the most prevalent innovation types in Georgia remain focused on internal process improvements and marketing adjustments—tactical changes aimed at efficiency or sales growth. Far fewer companies are investing in bold, technologically advanced product or service innovations, which are increasingly necessary for global competitiveness.

If Georgia aims to become not just a consumer of innovation but a creator, it needs a long-term vision that embraces all types of innovation. This includes fostering collaboration, improving access to funding, and building an ecosystem where taking calculated risks is not punished but encouraged—through policy, finance, and culture.