An Overview of Georgia’s Economic Growth Since 2012: Current Status, Challenges, and Opportunities for Future Development
Authors: V. Benidze
After the Rose Revolution of 2003, Georgia has achieved an unparalleled socioeconomic success. However, economic growth since 2012 has been sluggish and certainly not enough to rapidly improve the county’s standard of living that still remains substantially low compared to that in developed nations. Recent poor economic performance has shown that some key challenges need to be addressed if Georgia is to achieve high future economic growth that will decrease the poverty rate and create a middle class in the country. This paper offers in detail analysis of the economic performance of Georgia since 2012 and identifies key challenges facing the country’s economy. The main challenge going forward will be transforming Georgia from a consumption-driven to a production-oriented economy. It is identified that mobilizing domestic investment through savings, attracting foreign investment in tradable sectors and expanding the country’s export base will be crucial in the facilitation of the above-mentioned structural transformation. As the outcome of the research, the paper suggests a strategy for accelerating Georgia’ future economic growth and offers recommendations based on the relevant conclusions.
Digital Object Identifier (DOI): doi.org/10.5281/zenodo.2643910Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 462
 Gross Domestic Product, World Bank Open Data, 2019, data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=GE.
 Rankings & Ease of Doing Business Score, World Bank, 2019, www.doingbusiness.org/en/rankings.
 World & Global Economy Rankings on Economic Freedom, The Heritage Foundation, 2019, www.heritage.org/index/ranking.
 Unemployment and Poverty, National Statistics Office of Georgia, 2019, http://www.geostat.ge/index.php?action=page&p_id=143&lang=eng
 “Social-Economic Development Strategy of Georgia – Georgia 2020” Asian Development Bank, Government of Georgia, 2014, www.adb.org/sites/default/files/linked-documents/cps-geo-2014-2018-sd-01.pdf.
 Papava, Vladimer. “Georgia's Economy: From Optimism to Primitivism.” SSRN Electronic Journal, 2017, doi:10.2139/ssrn.2939627.
 Gross Domestic Product, National Statistics Office of Georgia, 2019, http://www.geostat.ge/index.php?action=page&p_id=119&lang=eng.
 “NDI Poll: Heading into the Presidential Election, Georgians Concerned about Country’s Direction, Economy, and Environment; Dissatisfied with Political Options.” National Democratic Institute, 2018, https://www.ndi.org/georgia-polls.
 “IMF World Economic Outlook - IDB Aggregates - 2017 - Islamic Development Bank - Data Portal.” Knoema, data.isdb.org/boqmnyg/imf-world-economic-outlook-idb-aggregates-2017?tsId=1020380.
 Piotr Misztal, 2011. "The Relationship between Savings and Economic Growth in Countries with Different Level of Economic Development," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 7(2), pages 17-29, August.
 Patra, Suresh, et al. “Revisiting the Causal Nexus between Savings and Economic Growth in India: An Empirical Analysis.” Egyptian Journal of Medical Human Genetics, Elsevier, 20 May 2017.
 Marwan Thanoon & Ahmad Baharumshah, 2005. "What happened to savings during the financial crisis—a dynamic panel analysis of Asian-5 countries," Economic Change and Restructuring, Springer, vol. 38(3), pages 257-275, December.
 Foreign Direct Investments, National Statistics Office of Georgia, 2019, http://www.geostat.ge/index.php?action=page&p_id=2231&lang=eng.
 Kinoshita, Yuko. Sectoral Composition of Foreign Direct Investment and External Vulnerability in Eastern Europe. IMF, 2011, www.imf.org/en/Publications/WP/Issues/2016/12/31/Sectoral-Composition-of-Foreign-Direct-Investment-and-External-Vulnerability-in-Eastern-24886.
 Charaia, V. "The Role of Multinational Enterprises' Investments in Emerging Country's Economic Development, Case of Georgia". World Academy of Science, Engineering and Technology, International Science Index 123, International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, (2017), 11(3), 721 – 724.
 Loans by Purpose, National Bank of Georgia, 2019, www.nbg.gov.ge/index.php?m=306&lng=eng.
 Distribution of employed by economic activity, National Statistics Office of Georgia, 2019, https://bit.ly/2HJFUZd.
 “Welfare Monitoring Survey 2017.” UNICEF Georgia, 2017, www.unicef.org/georgia/reports/welfare-monitoring-survey-2017.
 “Georgia Urbanization.” Georgia Urbanization - Demographics, www.indexmundi.com/georgia/urbanization.html.
 Brockman, Paul and Michayluk, David, How Does Financial Literacy Affect the Savings Decision? (September 29, 2015). CIFR Paper No. 078/2015. Available at http://dx.doi.org/10.2139/ssrn.2667283.
 Samwick, Andrew A.. “Is Pension Reform Conducive to Higher Saving?” Review of Economics and Statistics 82 (2000): 264-272.
 Georgian Pension Reform. Ministry of Economy and Sustainable Development of Georgia, 2016, Final Report, March 2016. www.economy.ge/uploads/meniu_publikaciebi/ouer/Goverment_Report_on_pensions_Final_ENG.pdf.
 “Pension Agency to Select Investment Board Members.” Georgia Today on the Web, georgiatoday.ge/news/14983/Pension-Agency-to-Select-Investment-Board-Members-.
 Budget Deficit % GDP, 2018, mof.ge/en/4555.
 “Explore Economies: Georgia.” Doing Business 2019, World Bank, 2019, www.doingbusiness.org/en/data/exploreeconomies/georgia.
 “Nations in Transit 2018: Georgia Country Report.” Georgia Country Report | Freedom House, 2 Oct. 2018, freedomhouse.org/report/nations-transit/2018/georgia.
 Erkekoglu, H, Kilicarslan, Z. (2016). Do Political Risks Affect The Foreign Direct Investment Inflows To Host Countries?. Journal of Business Economics and Finance, 5 (2), 218-232. DOI: 10.17261/Pressacademia.2016219263.
 Shah, Mumtaz Hussain. “The Significance Of Infrastructure For Fdi Inflow In Developing Countries.” Journal Of Life Economics, 2014, Doaj.Org/Article/Af333c8cf55d40c7a6f99401e23dc445.
 Benmaamar, et al. “Georgias Transport and Logistics Strategy.” Open Knowledge Repository, World Bank, Washington, DC, 1 Jan. 2015, openknowledge.worldbank.org/handle/10986/22097.
 “The Global Competitiveness Report 2017-2018.” World Economic Forum, www.weforum.org/reports/the-global-competitiveness-report-2017-2018.
 Namchavadze, Beso. “We Spend More and More on Low Quality School Education.” www.transparency.ge, Swedish International (Sida), 2018, www.transparency.ge/sites/default/files/we_spend_more_and_more_on_low_quality_school_education.pdf.
 External Trade, National Statistics Office of Georgia, 2019, http://www.geostat.ge/index.php?action=page&p_id=134&lang=eng.
 EBRD/WB (2013), “Business environment and enterprise performance surveys – Georgia country profile”, webpage, EBRD, www.enterprisesurveys.org/data/exploreeconomies/2013/georgia.
 McIntyre, Robert. “The Role of Small and Medium Enterprises in Transition.” UNU-WIDER, 17 Nov. 2016, www.wider.unu.edu/publication/role-small-and-medium-enterprises-transition.
 Schumpeter, Joseph Alois. Capitalism, Socialism and Democracy. 3rd ed., Harper Perennial Modern Thought, 2008.
 R&D expenditure (% of GDP), World Bank Open Data, 2019, https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS?locations=GE&view=map.
 Agriculture value added (% of GDP), World Bank Open Data, 2019, https://data.worldbank.org/indicator/NV.AGR.TOTL.ZS.
 “Georgia: Recent Trends and Drivers of Poverty Reduction.” World Bank, 2016, www.worldbank.org/en/country/georgia/publication/georgia-poverty-assessment.