What’s Missing from Georgia’s Innovation Policy? Lessons from Small High-Tech Economies

Innovation is increasingly seen in Georgia as a pathway to economic growth — yet the current policy environment still falls short of creating a system where innovation naturally emerges, matures, and scales. As of 2024, innovation activity remains low: only 7% of enterprises introduced a new or significantly improved product or service (Geostat, 2025).

This raises a key question: What is Georgia’s innovation system missing — and how have small countries like Estonia, Israel, and Slovenia managed to succeed?

These countries share a few core traits: long-term vision, strong university systems, flexible financial tools, and governments that act not as passive funders, but as strategic coordinators of innovation.

Estonia – E-government as a platform for innovation
Estonia’s innovation journey didn’t start with private tech companies, but with the digital transformation of the public sector. E-governance created demand for new tech solutions and helped generate a culture of start-up building. The government actively supports this through a dedicated start-up fund, which combines financing, mentoring, and access to international markets.

Israel’s success is built on research-intensive investment. The state funds tech incubators that offer early-stage start-ups access to labs, capital, and expert networks. Over time, it has also created a talent pipeline where universities are tightly linked to private sector and defense innovation. This has turned scientific potential into globally competitive products.

Slovenia – Smart use of European instruments
Slovenia leverages EU tools strategically. Small and medium-sized firms frequently access Horizon Europe grants, while the country supports green innovation and encourages R&D through targeted tax incentives. Slovenia didn’t just align with EU frameworks — it internalized them into its national policy structure.

Georgia, by contrast, faces several gaps:

• R&D spending is still critically low, around 0.2% of GDP (compared to over 2% in OECD countries);
• Collaboration between universities and businesses is weak, with almost no co-developed research projects;
• Public policy lacks a clear path from idea to market — support for start-ups exists, but it’s fragmented and not tied to long-term growth.

Moreover, the private sector rarely takes innovation risks, partly due to small market size and partly due to a lack of financial tools. In contrast, countries like Estonia and Israel have built public mechanisms for risk-sharing — such as grants, co-investment schemes, and targeted subsidies.

So, what lessons can Georgia take? First, innovation rarely grows on its own in small economies — it needs active comprehensive coordination.
Second, innovation doesn’t live in business or academia alone — it thrives in systems that connect the two. Third, one-off initiatives are not enough — Georgia needs a coherent innovation strategy that supports companies from idea to prototype, from market entry to global scale.

If Georgia is serious about using innovation as a driver of development, its policy must move from declarations to action — with more funding, stronger institutional links, and incentives that make private risk-taking possible.

Small countries have already proven that innovation doesn’t depend on size — it depends on vision, coordination, and mechanisms that turn good ideas into real-world products.