GEORGIAN ECONOMY LAGS BEHIND ITS NEIGHBOURS
By M. Alkhazashvili

Messenger.ge
Monday, September 18, 2006, #176 (1196)

Regardless of the frequent bombastic pronouncements from the top of
the Georgian political tree concerning the leaps and bounds Georgia
is making economically, most of the population live on the verge
of crushing poverty, and the economic growth of Georgia is lagging
behind its Caucasian neighbours, Armenia and Azerbaijan.

World Bank just named Georgia the best reformer inn the world in
terms of the ease of doing business this year. But in spite of this
encouraging data, Georgian economic development is far from enviable.

Unemployment and underemployment is huge, with vast swathes of the
rural population basically engaged in subsistence agriculture. Though
the government has recently come up with some eye catching initiatives
to tackle this problem, it is unclear how well thought out they are,
and just how successful they will be.

Economic expert Emzar Jgerenaia thinks that in spite of introducing
some new reforms and simpler regulations, major problems exist in
implementing them effectively. Writing in the newspaper Rezonansi
expert Soso Archvadze points to the example of Georgia’s southern
neighbour Armenia, where annual GDP per capita is USD 4700, well
ahead of Georgia’s USD 3300.

The richest of the South Caucasus countries is Azerbaijan. Of course
Azerbaijan owes this wealth to its hydrocarbon reserves, and risks
becoming over dependant on this industry and succumbing to ‘dutch
disease’: the deindustrialisation of a country’s economy after the
discovery of natural resources.

However, over the past two years more than 200 000 new jobs have been
created in Azerbaijan and President Aliyev is promising still more.

Georgia’s current economic woes are very much conditioned by its
political instability. The conflicts in Azerbaijan and South Ossetia,
the Internally Displaced Person problem, and a history of forceful
changes of leadership are not exactly the stuff of which economic
success stories are made.

Georgia must pursue its reforms with more focus, and make sure that
they are implemented by a fait and independent judiciary, which at
present is lacking, otherwise Georgia will continue to lag behind
its neighbours.