This nationwide cluster mapping was conducted under EU Innovative Action for Private Sector Competitiveness in Georgia (EU IPSC), implemented by UNDP, FAO, UNIDO and IOM, and funded by EU. UNIDO’s component of the UNJP aims at strengthening the capacities of policy-makers and other stakeholders to identify and develop clusters.

As part of this component, UNIDO mapped 57 emerging and potential clusters with a focus on manufacturing and agribusiness in Georgia using the UNIDO cluster definition which defines a cluster as a sectoral and geographical concentration of enterprises and/or individual producers that produce a similar range of goods or services and face similar threats and opportunities. A cluster encompasses enterprises as well as their supporting institutions (public and private), and civil society, and academia. The report was prepared according to the UNIDO cluster development approach, which argues that a well-designed and executed cluster selection process is a precondition for a successful initiative.

The report uses two layers of analysis with both qualitative and quantitative information that has been investigated and well-elaborated. These two data sources have a complementary function in this process: quantitative analysis acts as a screening exercise that generates a preliminary, but not an exhaustive, list of existing or potential clusters in the regions. Quantitative information is triangulated and refined by a comprehensive qualitative assessment. Throughout the mapping process, a number of in-depth interviews have been conducted with various stakeholders.

To identify industry clusters, the report mostly uses Location Quotient (LQ) analysis, which measures how concentrated a particular industry/cluster is in a region as compared to the nation in terms of employment. After calculation of the LQs, the top 20 sectors with the highest LQ above 1.25 in the regions and 1.5 in Tbilisi were selected. The report aims to prioritize manufacturing industries as this is the main purpose of the study; however, due to the limited number of agglomerations in manufacturing sectors, primary agriculture and mining have also been included. The exact stages for the selection of sectors in the regions are presented below:

• Drop all sectors except agriculture, mining, and manufacturing;

• Keep sectors in which the number of companies is higher than one;

• Extract the top 20 sectors by LQs;

• Extract the top 20 sectors by number of companies in the sector;

• Keep the sectors that are covered in both categories: the top 20 sectors by LQ and the top 20 sectors by the number of companies.

In Tbilisi, sectors with an LQ higher than 1.5 and ten enterprises have been discussed.