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Work provides discussion of one of the most significant issues in Georgian economy ? agrarian sector development, competitiveness and effectiveness of the state policy. In particular, it analyses characteristics of agrarian sector development in Georgia and Zemo Svaneti Region, factors that affect it, its priorities and trends. On the basis of assessment of the natural resources potential of Zemo Svaneti Region the conclusion is made that in this region the focus can be made on bio production.Work studies, analyses and applies the methodological approaches for competitiveness assessment offered by different scientists, identifies factors hindering agrarian products? competitiveness and to assess their priority the ?impact-urgency? matrix. Based on competitiveness determination methodology and Porter?s diamond model we have studied strategic agricultural food sectors and their competitiveness.Work assesses the impact of the state policies dealing with cooperatives and development of the high-mountain regions on Georgia and especially on development of agrarian sector in Zemo Svaneti Region. It analyses formation of service cooperatives and the ways of improvement of Georgian Law on Development of High-Mountain Regions.Based on the performed studies, the recommendations were formulated for agrarian sector development and state policies improvement at both, national and regional levels.

KEY ISSUES OF COMPETITIVENESS OF AGRICULTURAL SECTOR (THE CASE OF ZEMO SVANETI REGION)