Georgia Profile

FOCUS ON SETUP SHOP & DOING BUSINESS

TABLE OF CONTENT
SU M MA R Y …… … …… …… … …… … …… … …… …… … …… … …… … …… …… … …… … ….. 5

KE Y F A C TS ...... ..... ...... .. ........ ...... ...... ...... ...... ... ........ ...... ...... ...... ...... . .. ........ ...... ...... . 8

SO CI A L

INT R OD U C TIO N … … … …… … …… … …… … …… …… … …… … …… … …… …… ….. 10

HIS T OR Y O VE R VIE W … …… … …… … …… … …… …… … …… … …… … …… …… ….. 11

DE M O GR APH I CS … …… …… … …… … …… … …… …… … …… … …… … …… …… …. 12

GE O G R APHI C AL SE T TIN G … …… … …… … …… … …… … …… … …… … …… …… …. 15

MIN RA L RE SO U R CE S … …… … …… … …… … …… …… … …… … …… … …… …… …. 16

CO MM UN IC A TI ON S YS TE M … … …… … …… … … …… … …… … …… … …… …… …. 17

SO CI AL IN S T I TU T ION … …… … …… … …… … …… …… … …… … …… … …… …… … 18

E DU C A TI ON …… … …… …… … …… … …… … …… …… … …… … …… … …… …… … 19

POL T IC AL S Y S TE M … … …… … …… … …… … …… …… … …… … …… … …… …… …. 21

LE G AL S Y S TE M … …… … …… … …… … …… … …… …… … …… … …… … …… …… … 23

HU MAN AN D THE UN IVE RSE … …… … …… … …… …… … …… … …… … …… …… … 24

LIV IN G CON DI T ION S … …… … …… … …… … …… …… … …… … …… … …… …… …. 26

BU SI N E S S C US T OM S AN D P RA C TI CE S …… … …… …… … …… … …… … …… …… … 27

CON C LU SI ON …… … … …… … …… … …… … …… …… … …… … …… … …… …… ….. 28

EC ON OM Y

GE O R GI A PE R FO RM AN CE … …… … …… … …… … …… … …… … …… … …… …… … …… … ….. 30

E CON O MI C A C TI VI T Y … …… … …… … …… … …… …… … …… … …… … …… …… …. 31

FO RE I GN DI RE C T IN VE S T ME N T …… … …… … …… …… … …… … …… … …… …… … 34

T RD AE IN DI C A TIO R S … …… … …… … …… … …… …… … …… … …… … …… …… …. 36

T RD AE R E S T RI CA T ION S …… … …… … …… … …… …… … …… … …… … …… …… …. 40

E X TE N T O F E CO N O MI C A C TI VI T Y N O T IN CL U DE I N C ASH TR ANS A C TI ON … …… … 41

DE VE LO PME N T IN SC IE N CE AND TE CH NOL O G Y … …… … …… … …… … …… …… … 42

A PP EN D IC E S

APPE N DI X -1 D OIN G B US I N E SS IN GE OR G IA … … …… … …… … …… … …… …… …. . 43

APPE N DI X -2 HI S TO R Y TI ME LINE : GE OR G IA … … …… … …… … …… … …… …… … .. 45

APPE N DI X -3 M AP OF C O UN TR Y … … …… … …… …… … …… … …… … …… …… ….. 49

RE FE RE N CE …… … …… …… … …… … …… … …… …… … …… … …… … …… …… … …… … ….. 50

TABLE INDEX
TABLE 1 DEMOGRAPHICAS INDICATORS ………………………………………………………………. 12
TABLE 1.2 DISTRIBUTION OF POPULATION ……………………………………………………………… 13
TABLE 2 MINERAL RESOURCES ………………………………………………………………………… 16
TABLE 3 COMMUNICATION MEDIUMS ………………………………………………………………... 17
TABLE 4 SCHOOL ENROLMENT ………………………………………………………………………… 20
TABLE 5 POLITICAL STRUCTURE ……………………………………………………………………….. 21
TABLE 5.1 MAIN POLITICAL PARTIES IN GEORGIA ……………………………………………………….. 22
TABLE 6 ECONOMIC STATISTICS ……………………………………………………………………….. 31
TABLE 6.1 PRINCIPLE INDUSTRY …………………………………………………………………………. 32
TABLE 7 FDI FLOW IN ECONOMIC SECTORS …………………………………………………………… 34
TABLE 7.1 FOREIGN DIRECT INVESTMENT BY COUNTRIES ………………………………………………. 35
TABLE 8 GEORGIAN TOP EXPORTS BY COUNTRIES IN 2009 …………………………………………… 36
TABLE 8.1 TOP PRODUCT EXPORTED IN 2009 …………………………………………………………… 36
TABLE 8.2 GEORGIAN TOP IMPORTS BY COUNTRIES IN 2009 …………………………………………… 37
TABLE 8.3 TOP PRODUCT IMPORTED IN 2009 …………………………………………………………… 37
TABLE 8.4 EXCHANGE RATE AGAINTS USD ………………………………………………………………. 39
TABLE 9 WORLD BANK: DOING BUSINESS INDICES RANK ……………………………………………... 43

CHART INDEX
FIGURE 1 MIGRATION AND GROWTH RATE ……………………………………………………………. 12
FIGURE 2 SEX RATION …………………………………………………………………………………… 12
FIGURE 3 ETHNIC GROUP DISTRIBUTION IN TOTAL POPULATION ……………………………………… 13
FIGURE 4 LANGUAGE DISTRIBUTION IN TOTAL POPULATION ………………………………………….. 13
FIGURE 5 POPULATION: RELIGION ……………………………………………………………………… 14
FIGURE 6 GROSS DOMESTIC PRODUCTION GROWTH ………………………………………………….. 31
FIGURE 7 INCOME PER CAPITA GROWTH RATE ………………………………………………………… 31
FIGURE 8 INFLATION RATE ……………………………………………………………………………… 32
FIGURE 9 UNEMPLOYMENT RATE ………………………………………………………………………. 32
FIGURE 10 GDP STRUCTURE BY SECTOR CONTRIBUTION ……………………………………………….. 33
FIGURE 11 INDUSTRY VALUE ADDED GROWTH RATE ……………………………………………………. 33
FIGURE 12 FDI NET INFLOW OF GDP ……………………………………………………………………... 34
FIGURE 13 FDI BY ECONOMIC SECTORS ………………………………………………………………….. 34
FIGURE 14 GEORGIAN TOP EXPORTER CONTRIES ………………………………………………………... 36
FIGURE 15 TOP PRODUCT EXPORTED IN 2009 …………………………………………………………… 36
FIGURE 16 GEORGIA TOP IMPORTER COUNTRIES ……………………………………………………….. 37
FIGURE 17 TOP PRODUCT IMPORTED IN 2009 …………………………………………………………… 37
FIGURE 18 EXTERNAL TRADE OF GEORGIA (BOP) ………………………………………………………... 38
FIGURE 19 GEORGIAN LARI EXCHANGE RATE TREND AGAINST US DOLLAR ……………………………... 39

SUMMARY

The objective of this study is to make country there are many political parties. Country is still in
profile, in order to draw some conclusions shift phase to develop a better democratic
regarding doing business. While observing this country, recent amendment in Georgian law, shift
information, caution must be taken to interpret the power from President to Prime minister. It is
the meaning of this information, and understand a good sign for become a full-fledged democratic
the target country reaction. That is, the exercise republic country.
centers on the search as to whether the market
will be suitable for doing business. Georgia has made significant progress since the
2003 "Rose Revolution" in the quality of
Georgia is a small country of 4.6 million people, governance and business environment. On the
located on the southern flanks of the Caucasus different international organization rank indices,
Mountains with a land area of 69,700 square Georgia scored really very well such as doing
kilometers. It shares borders with Russia in the business 12th out of 180 nations in 2011
north, Turkey and Armenia in the south, comparisons to other region countries. Rapid
Azerbaijan in the east and has a coastline on the reforms and new legislation have liberalized the
Black Sea in the west. Georgia's location between economy and created favorable conditions for
the Black Sea, Russia, Armenia, Azerbaijan, and industry development and investment. Low Tax,
Turkey gives it strategic importance as a transit liberal trade regimes, simplified licensing and
corridor. It is developing as the gateway from the permitting procedure, and developing
Black Sea to the Caucasus and the Caspian basin. infrastructure made the Georgia best possible
Population of Georgia is the very good indication country for doing business and investment.
to develop international expatriate business
society in compare to land area and existing Economic growth in Georgia is on track to reach
business opportunity. Lower birth rate is a 4.5 percent next year, and it could be double that
serious issue for the country as a country can face by 2012-2013 as tourism, the banking sector and
the ageing problems within 30 years. Georgia’s exports advance and foreign direct investment
recorded history date back more than 2500 years grow. Georgia had become a regional investment
old, which consist of many facts about the hub during 2005-2007. Private investors are
country and impacted on Georgian present day seeking to expand from Georgia into the
Caucasus, central Asia, Ukraine, Turkey but
society.
foreign direct investment decreased over the
Georgian people have a relationship oriented past two years because of the worldwide
approach. Country has rich resources of mineral, financial crisis and conflict with Russia. The falls
which could also be another opportunity for were being compensated by investment coming
investment in a mining sector. Agricultural land in through international institutions. This helped
and weather make its added gain to produce keep the country’s currency stable. Lari is the
organic food, which is quite demandable in a most stable currency in the region from last five
western market as well as in Asian market. years instead of global financial crisis effect on it.
Political situation is now more stable, although

5 SUMMARY | SOCIOECONOMIC PROFILE

Foreign direct investment decreased because of which plans to buy natural gas from Azerbaijan
the worldwide financial crisis and Russian and transport it across Georgia to the Black Sea.
conflict, but there is a serious increase in the Georgia is no more relied on an aggressive
inflows,” International financial institutions such neighbor country for it energy need. There is gas
as the World Bank, the European Bank for flowing from north to south, crossing Georgia
Reconstruction and Development and the Asian from east to west 1.5 percent of the world’s total
Development Bank, which are investing in oil consumption crosses Georgia, and Georgia
projects such as hydro power plants and electricity exporters to all neighboring countries,
highways, were important drivers of this including Russia.
increase.
Country has a strong presence in an international
Relations between Georgia and neighboring organization as Georgia is a member of the UN,
Russia reached a low in 2008, when the two OSCE, World Bank, IMF, EBRD, World Trade
countries fought a five-day war over the Georgian Organization (WTO), Council of Europe, and
region of South Ossetia. However, Georgia is now Organization for Democracy and Economic
politically stable, and a recent deal with Bulgaria, Development-GUAM.

6 SUMMARY | SOCIOECONOMIC PROFILE

KEY FACTS

Name of the country Georgia
Capital Tbilisi
Area 69,700 km2
Border countries Russia, Azerbaijan, Armenia ,and Turkey
Population 4.6 mln
Ethnic group Georgian 83.8%, Armenian 5.7%, Azeri 6.5%, others 2.5%, Russian 1.5%
Languages Georgian 71%(official), Russian 7%, Armenian 7%, Azeri 7%, others 7%

Religion Orthodox Christian 83.9%, Muslim 9.9%, Armenian-Georgian 3.9%, Catholic
0.8%, Other 0.8%, none 0.7%
Currency Lari (GEL)
Gross domestic product (GDP) US$ 11.9 bln
GDP Per Capita US$ 2,447.35
Inflation 1.7%
Unemployment 16.4%
International dialing code +995
Internet domain .ge
Main exports Scrap metal. Machines. Chemicals, oil transport, citrus fruits, tea, wine
Main import Fuel, machines and parts, grains and other food, medicine
*Source of facts citied in the reference list of secondary sources

8 KEY FACTS | SOCIOECONOMIC PROFILE

INTRODUCTION

Georgia known officially from 1991 as the Republic of and they think of themselves as an Eastern
Georgia, until 1990 it was Soviet Union state. It absorbed Mediterranean culture.
into Russian Empire in the 19th century. It has been
independent of three years (1918-1921) following the Georgia has attracted the attention of a range of other
Russian revolution, and it was forcibly incorporated into countries, with different interests and ambitions. It seeks
the USSR until the Soviet Union dissolved in 1991. to strengthen a republic and achieve greater economic
Georgia was an ancient kingdom of Colchis and stability. It has a potential to come to be an important
Kartlilberia. In the first century A.D., it came under an and developed economy of the black sea & Eurasia
influence of Roman, and Christianity became the country region. Coming years appears very prosperous in business
the state religion in the 330 AD. It was the second and social growth of the country because its future on the
country to adopt Christianity. Georgia dominated by restoration of the ancient Silk Road economies as a
Eurasian transportation system corridor, using Georgia's
Persian, Arabs, Mongol and Turks.
geography as a bridge for the transit of goods, including
Georgia is strategically located at crossroads between oil and gas, between Europe and Asia. Georgians are
Europe and Asia (Eurasia). Georgia is bordered to the renowned for their hospitality and artistry in dance,
west by the black sea, to the north by Russia, to the south theater, music, and design. Georgian Government has
by Turkey and Armenia, and the east by Azerbaijan. Most been taken affirmative action after 2003 Rose revolution,
of Georgia is located in the South Caucasus, while a toward economic and social reforms, making significant
portion lies in North Caucasus. Throughout the centuries, impact in country society as well as on the economy. It
it has been dominated and settled by Greeks, Romans, could become most important service hub in the region
Persians, and Turkish tribes, Arabs, Mongols and because of access in Europe and Asia, though finding
Russians. Georgia was also on one of the branches of the trained talent is still a problem in country, but govt. step
Silk Road, which carried trade from China and India to toward vocational studies making shift in order to ease in
Europe hence the Georgian people have been influenced find talent. As the country adopted free market economy
by many cultures, both Asian and European. The model like Singapore and doing business in the country
Georgians resembles Greeks and Turks in appearances, become easy gives to attractive invest ground for FDI.

10 INTRODUCTION | SOCIOECONOMIC PROFILE

HISTORY OVERVIEW

Georgia’s recorded history dates back more than 2500 Georgia was absorbed into the Russian Empire in the 19th
years old. Georgia has historically found itself on the century, Independent for three years (1918-1921)
edges of great empires, and Georgians have lived following the Russian revolution. It was forcibly absorbed
together in a unified state for only a small fraction of into USSR until Soviet Union disintegrated in 1991 and
their existence as people. Much of Georgia's territory was Georgia restored independence from Russia same year.
fought over by Persian, Roman, Byzantine, Arab, Mongol, Present-day Georgia is rapidly growing economy.
and Turkish armies from at least the 1st century B.C. Progress on market reforms and democratization has
through the 18th century. The zenith of Georgia's power been made in the year since independence but progress
as an independent kingdom came in the 11th and 12th has been complicated by Russia assistance and support to
centuries, during the reigns of King David the Builder and the breakaway regions of Abkhazia and South Ossetia.
Queen Tamara, who still ranks among the most After a series of Russian and separatist provocations in
celebrated for all Georgian rulers. In 1783 the king of summer 2008, Russian troops pulled back from most
Kartli (in eastern Georgia) signed the Treaty of Georgievsk occupied the breakaway areas, but large portions of
with the Russians, by which Russia agreed to take the Georgia proper as well. Russian unilaterally recognized
kingdom as its protectorate. In 1801, the Russian empire the independence of Abkhazia and South Ossetia. This
began the piecemeal process of unifying and acquiring action was strongly condiment by most of the world
Georgian territory, and for most of the next two centuries nations and international organizations.
(1801-1991), Georgia found itself ruled from St.
Petersburg and Moscow.

Note: Appendix -2 History timeline of Georgia

11 HISTORY OVERVIEW | SOCIOECONOMIC PROFILE

DEMOGRAPHICS

Table 1 Demographic indicators
Total population 4.6 million (2010 est.)
Growth Rate -1.08%
Birth Rate 10.66 births/1,000 population
Death Rate 9.65 deaths/1,000 population
Migration Rate -4.26 migrant(s)/1,000 population
Urbanization 53% of total population (2008 est.)
Rate of urbanization -0.6% annual rate of change (2005-10 est.)
Literacy rate 100%

Figure 1 Migration and growth rate
-4 -1
-4.1 2004 2005 2006 2007 2008 2009
-1.05
-4.2
-4.3 -1.1
-4.4
-4.5 -1.15
-4.6
-1.2
-4.7
-4.8 -1.25
Migration rate(%) Growth rate(%)

Figure 2 Sex ratio

1616234
2000000 1503360

1500000
Population

1000000
395929 453110
345071 302103
500000

0
0-14 15-64 65 years and over

Male Female
Source: CIA - The World Facts, 2010

12 DEMOGRAPHICS | SOCIOECONOMIC PROFILE

Table 1.2 Distribution of population
Age 0-14 years: 16.1% (Male 395,929/Female 345,071)
15-64 years: 67.6% (Male 1,503,360/Female 1,616,234)
65 years and over: 16.4% (Male 302,103/Female 453,110) (2010 est.)
Sex at birth: 1.127 male(s)/female
under 15 years: 1.15 male(s)/female
15-64 years: 0.93 male(s)/female
65 years and over: 0.66 male(s)/female
Total population: 0.91 male(s)/female (2010 est.)
Ethnic Group Georgian 83.8%
Azeri 6.5%
Armenian 5.7%
Russian 1.5%
other 2.5% (2002 census)
Language Georgian 71% (official)
Russian 9%
Armenian 7%
Azeri 6%
other 7%
Religions Orthodox Christian 83.9%,
Muslim 9.9%,
Armenian-Gregorian 3.9%
Catholic 0.8%
other 0.8%
none 0.7% (2002 census)
Geographical areas Regions Main City
Guria Tbilisi (Metro city)
Imereti Kutaisi
Kakheti Batumi
Kvemo-Kartli Rustavi
Mtskheta-Mtianeti Zugdidi
Racha-Lechkhumi and Kvemo Svaneti Gori
Samegrelo-Zemo Svaneti Poti
Samtskhe-Javakheti Akhaltsikhe
Shida Kartli Sukhumi
Samtredia
Khashuri
Senaki
Telavi

Figure 3 Ethnic group distribution in total population Figure 4 Language distribution in total population
Georgian
84% Azeri Russian
6% Georgian 9%
71%
Armenian
6% Armenian
7%
Russian
Azeri
Other 1%
3% Other 6%
7%
Source: CIA - The World Facts, 2010


Observation: Georgian population growth trend is Figure 5 Population: Religion
really negative. It appears within 30 years Georgia
could face the ageing crisis. Therefore, there is a Orthodox
need of population growth. Compare to any Indian Christian
city with the population of 5 million, Georgia has a 84%
big advantage to make faster growth to implement Muslim
reforms because of its literacy rate. In the ratio of 10%
Area and population, there are very good
opportunities to build expatriate society, which Armenian-
Georgian
could make pressure on international politics to
None 4%
secure country independence and from any future Catholic
0% Other 1%
aggression from neighbor countries. This could be
Source: CIA - The World Facts, 1%
the best possible way to secure country future and
create more opportunities for everyone.

Language is another advantage of the country.
Georgian is a primary language of 4.2 million people
in country but still Russian is most spoken secondary
language in Georgia. Russian language is the
language for 180 million people, which give an idea
for expansion of business activity in other CIS
regions. Recently, the government adopted English
to become a mandatory language to be taught in
school from one grade, which is also a good
indication to produce a future international
workforce.


GEOGRAPHICAL SETTING

Location Caucasus range. The Lesser Caucasus range, which runs
parallel to the Turkish and Armenian borders, and the
Georgia is situated on the Black Sea at the junction of
Surami and Imereti ranges, which connect the Caucasus
Eastern Europe and Asia. Georgia is a mountainous
Mountains, create natural barriers that are partially
country. The northern geographical boundaries run along
responsible for cultural and linguistic differences among
the Great Caucasian Range, which include the Main
regions. Because of their elevation and a poorly
Caucasian Range, and its other chains stretch to the
developed transportation infrastructure, many mountain
south. The southern boundary coincides with the
villages are virtually isolated from the outside world
mountainous system of the Minor Caucasus, including the
during the winter. Earthquakes and landslides in
Meskheti-Trialeti volcanic plateau, Southwestern Asia,
mountainous areas present a significant threat to life and
bordering the Black Sea, between Turkey and Russia, with
a sliver of land north of the Caucasus extending into property.
Europe. Georgia share borders with Russia (723 km) to Georgia has about several rivers, many of which use for
the north, Turkey (252 km) and Armenia (164 km) south power small hydroelectric stations. Drainage is into the
west, Azerbaijan (322 km) to the south-east, and the Black Sea to the west and through Azerbaijan to the
Black Sea to the west coast line (315 km). Caspian Sea to the east. Country longest river is the
Mtkvari (formerly known by its Azerbaijani name, Kura,
Climate which is still used in Azerbaijan), which flows 1,364
Georgia's climate is continental climate. Its climate kilometers from the northeast Turkey across the plains of
affected by subtropical influences from the west and eastern Georgia, through the capital, Tbilisi, and into the
Mediterranean influences from the east. The Greater Caspian Sea. The Rioni River, second largest river in
Caucasus range moderates the local climate by serving as western Georgia, rises in the Greater Caucasus and
a barrier against cold air from the north. Warm, moist air empties into the Black Sea at the port of Poti. Soviet
from the Black Sea moves easily into the coastal lowlands engineers turned the river lowlands along the Black Sea
from the west. Climatic zones are determined by distance coast into a prime subtropical agricultural land,
from the Black Sea and by altitude. The plains of eastern embanked and straightened many stretches of river, and
Georgia are shielded from the influence of the Black Sea built an extensive system of canals. Deep mountain
by mountains that provide a more continental climate. gorges forms topographical belts within the Greater
Caucasus.
Topography
In spite of its small area, Georgia has one of the most Temperature
varied topographies of the former Soviet republics. Country temperature recorded in summer average 20° C
Georgia lies mostly in the Caucasus Mountains, and its to 24° C and winter 2° C to 4° C. Humidity is lower and
northern boundary is partly defined by the Greater rainfall averages 500 to 800 millimeters per year.

15 GEGOGRAPHICAL SETTING | SOCIOECONOMIC PROFILE

MINERAL RESOURCES

Georgia is rich country in minerals, and it has significant for ferro alloys' production. Categorized list of minerals
minerals resources reserve. There are many kinds of found in Georgia given below.
economic mineral mined during soviet era, as fall of
USSR, the Georgian minerals mining decline. A range of Georgia has a main role in the world minerals. Georgia is
mineral commodities were mined in Georgia, including a transportation route for oil and gas shipments out of
the Caspian region to world market. Therefore, it is a
arsenic, barite, bentonite, coal, copper, diatomite, lead,
manganese, zeolite, and zinc, among others. The country significant country. Three large gas and oil exported
had been a major producer of high-grade manganese ore pipeline constructed in the region pass through Georgia.
for about a century, and ore reserves were significantly These include the Baku-Tbilisi-Ceyhan (BTC) pipeline, the
depleted. Part of the manganese was used within Georgia Baku-Tbilisi-Erzurum (BTE) pipeline for gas and oil
transport.

Table 2 Mineral resources
Energy mineral resources Oil, Coal, Dark coal and Hydropower
Metallic mineral resources Bentonite, Copper, Iron, Manganese, Zinc, Gold, Silver, Lead, Barit,
Molybdenum and Strychnine
Non-metallic mineral resources Diatomite, Arsenic, Barite, Zeolite, Chalcedony, Agate, Talc, Dolomite,
Fluxing limestone, Kaolin, Fireproof clays, Hydrargyrum, Benthonic clays,
Glauber’s salt, Cement, Quartz sand, Gypsum and anhydride, Tuff, lavas and
marbles
Water and Gas mineral resources Mineral waters, Peat and Treatment muds
Land resources Forests- and woodland- 34%, Arable land-9%, permanent crops-4%,
Permanent pastures-25% and other- 28%

Georgia seemed to have potential resources for gold market economy standards for evaluating reserves and,
mining. It had not obtained the investment backing therefore, should be considered only highly prospective
required to sustain a major mining venture. The Georgian for precious metals". Georgia has been able to attract a
State Geology Committee announced that, based on limited number of international investors, and the future
Soviet records, the country had reserves of 8 million troy prospects for mineral development will depend on the
ounces (almost 250 t) of gold, and 48 million troy ounces government prospect to allow the foreign firms for
(almost 1,500 t) of silver. independent exploration. To some extent, this could give a
country valuable promotion to attract additional FDI.
A March 2007 report by the London based Hardman & Co.
stated that "Georgia had never been explored using

16 MINERAL RESOURCES | SOCIOECONOMIC PROFILE

COMMUNICATION SYSTEMS

Recently, telecommunication industry, especially mobile information technology operation in Georgia. Increased
communication experienced robust growth now in usage of the internet also introduces many technological-
Georgia, more than 6 fold telecommunication related investment opportunities.
penetrations growth recorded in the country. Many
companies already tapped market but there is still space The mobile communication has become important for
Georgia because of its geographical settings. Fixed-line
available for new entrants in telecommunication industry.
Domestic and International services are increasingly networks in many places out dated and a mobile phone
accessible for private use. Country has extensive fiber represents the only means of communication, specifically
optic network, 3. 5G system has been introduced in the as mobile coverage has been provided for virtually in the
country, 17% mobile user using a 3G technology, which whole Georgia. A telecommunication has become one of
appeared good perspective for a private company to start the fastest growing sectors in the Georgian economy

Table 3 Communication mediums
Country code +995
Telephone (Land line) 650,000 (limited coverage area)
Mobile cellular 4.0 million
Broadcast media 8-Privately owned TV stations
2- State-run public broadcaster
Several major commercial TV stations
2- state-owned public radio broadcaster operator networks
Several dozen private stations broadcast
Internet country code .ge
Internet hosts 110,680
Internet users 1.024 million

17 COMMUNICATION SYSTEM | SOCIOECONOMIC PROFILE

SOCIAL INSTITUTION

Georgians share many social attitudes with neighboring In the event of divorce, the law stipulates that mothers
Mediterranean cultures. Tradition, loyalty to friends and given custody of children. Recent trend show in urban
family, and generosity toward guests are viewed as areas in nuclear families, people prefer hire nanny for
important values. Nepotism—the system by which children take care because of both working parents.
relatives help each other get jobs—is considered Nevertheless, in complex family structure, women have
honorable. Important relationships might help a child been more responsible for brought up their child or if
enter a university, gain a promotion for a family member, there are elder people in family then they help in taking
or give a close friend a new business opportunity. caring of children.
According to a Georgian proverb, "A guest is sent by
God." Guests are always treated generously in a Georgian Marriage and Courtship
home, even if the host cannot really afford it. Guests Georgian constitution requires the free consent of both
usually bring a symbolic gift, such as flowers or spouses for marriage, the minimum age for marriage at
chocolates, when they visit. Even if an enemy crosses a 18 years for both men and women. In exceptional
Georgian threshold, he or she must be treated well and circumstances, marriage may be authorized from age of
not harmed. The best way to show respect for guests is to 16 years. According to United Nation, report estimated
honor them with a keipi , or feast. The keipi is a central 16% of Georgian girls between 15 and 19 years of age
part of Georgian social life. were married, divorced or widowed. There are cases of
arranged marriages in rural areas, which usually found in
Family Muslim community in country and practice in old
In urban area, Georgian family structure follows nuclear conventional family.
family structure. Increasing unemployment in a past two
Female/Male roles
decade had also compelled people to move in cities, and
The constitution of Georgia supports the principle of
adopting smaller ways of life. From last two decades,
equal right for men and women. However, the current
there has been significant changing in a traditional way of
situation in the country creates many challenges for
life. Despite this fact, only half of Georgian families
women. Women’s lives have changed dramatically after
adhere to the nuclear structure, and 50% families are still
collapsed of Soviet Union in 1991. Georgia faced into a
following complex or joint family structures.
period of internal politics conflict, until 1994 Georgian
Dynamics of family GDP contracted by 72%. Nevertheless, from 1995 the
economy began to recover. Until 2006, 51% Georgian
Parental roles were living below the official poverty line. Following
Georgian constitution gives guarantees an equal right for economic changes affected social atmosphere, poverty
both men and women in parental authority. Traditionally, and unemployment have been a persistent problem in
women do domestic chores and men exert authority Georgia. As most emigrants were men, increasing
within the family, but attitudes are changing. In urban numbers of women are now the sole provider for their
areas, many women work and some earn higher earnings families. About 50% of Georgian women are unemployed;
than their husband does. As a result, parental authority those who do work earn, on average, only half as much as
within the family is increasingly shared by both spouses. men.

18 SOCIAL INSTITUTION | SOCIOECONOMIC PROFILE

EDUCATION

"Knowledge is all about the learning of our past in university level after 12 grades. However, students are
generation. The transmission of knowledge from one passive toward recent amendment in education; new
generation to another is what education is all about." reform seems shock for students. In soviet era every
university in a Georgia had the own entrance exam
Georgia has attained world-class levels of a combined system, in which practice of bribery was very common to
primary, secondary and tertiary education system.
get admission. With starting of Unified National
Georgian education system divided into elementary (six Examination, Government officials are claiming “We have
years; age level 6-12), basic (three years; age level 12-15), finally come up with a system that almost surely excludes
and secondary (three years; age level 15-18), alternatively any possibility of bribe-taking.” New reform in the
vocational studies (two years). Students with a secondary education system in Georgia shook everyone in the
school certificate have access to higher education. Only country. This is a radical change going on in a Georgian
the students who have passed the Unified National
education system.
Examinations may enroll in a state-accredited higher
educational institution, based on ranking of scores he/she Role of education
received at the exams. Most of these institutions offer
Education in Georgia is mandatory for all children aged
three level studies: a Bachelor's Programme (3–4 years); a
from 6-14. During Rose Revolution, the condition of
Master's Programme (two years), and Doctoral
education suffered terribly. In particular, higher education
Programme (three years).
was deeply affected. This meant an unbalanced ratio of
The high human development countries index shows, untrained workers to the demand of society. This
Georgia education index 0.90 is comparable to other deficiency was identified, and the government
countries like Singapore (0.86), which signifies. Georgia's commitment to reform was reinforced by plans for 12
literacy rate is 100%, which is a remarkable figure. At the years compulsory school program, and for providing good
same time, however, there is little doubt on the Georgian quality higher education. Still there is a need of public-
education system needs serious improvement. Since the private investment to improve country education
Soviet Union dismantled the past soviet education still infrastructure.
reflex in a current situation. “In past teachers are trained
Georgia tries to distance itself from its Soviet legacy; the
to deliver one curriculum that reflected a very positivist
ministry is placing more emphasis on humanities,
view of knowledge, where there was only one truth and
specifically country history and culture, and less on math
that was contained in a single text book.
and science. Institutions have increased the number of
Recent report of BBC.com indicates that country hours spent studying foreign languages, humanities, the
education is highly corrupt, bribery is quite frequent to get history and geography of Georgia, and native language
grads and marks in an examination, which is become a and literature. The constitution requires schools to
very serious problem for entire Georgian education provide education in the Georgian, Russian, Armenian,
system. Government is trying to control bribery practice Azeri, Ossetia, and Abkhazian languages. Georgian is by far
and started Unified National Examination to get admission the main language of instruction.

19 EDUCATION | SOCIOECONOMIC PROFILE

Table 4 School Enrolment

Primary education The school days for basic, or the lower level of secondary
The Georgian government works to develop the education, are five to six hours per day; for the higher
personality of children through pre-school programs. level, it is six to seven hours per day. Most students also
There are two types of preschool programs: nursery have two or more hours of homework. History,
schools for baby age 1-2 and kindergarten for children geography, biology, physics, chemistry, and foreign
age 3-6. Student in primary grads studied about seven languages are studied at the secondary level and, at the
subjects. Primary school subjects include native language higher level; students choose an emphasis to study. The
study, math, fine arts, music, physical education, natural choices include humanities, physics and math, chemistry
studies, Russian, and literature. The school day is and biology, vocational education, or language. High
approximately three hours in the primary grades. school is the highest level of education before students
reach eligibility for entering higher education.
Secondary education
In 1997-1998, there were about 275,000 students in the Higher Education
country's two divisions of secondary education. The lower University studies typically provide highly specialized,
division is called basic, or secondary. The higher level is rigid training focusing on a single area of study. Law and
called upper secondary, or high school. The basic level medicine students do not attend regular university, but
consists of grades 7 through 9, and higher level is grades go directly to law and medical school from high school.
10 and 11. There is some hope of adding a twelfth grade Law school takes five years to complete and medical
in the future. schools seven, plus two to three years of ordinatura,
which is comparable to an internship.

20 EDUCATION | SOCIOECONOMIC PROFILE

POLITICAL SYSTEM

Georgia is still not a full-fledged democracy. The Georgian ranging from transforming the country into a
political system is a presidential republic. The Parliament parliamentary republic to re-establishing the monarchy.
consists of a unicameral Republican Council (commonly Observers note the deficit of trust in relations between
referred to as Parliament) with 235 seats. Members are the Government and the opposition. Different opinions
elected by a popular vote for a four-year term, 150 seats exist regarding the degree of political freedom in Georgia.
are determined by proportional representation and 75 President Saakashvili believes that the country is
represent single-seat constituencies. essentially free; many opposition leaders claim that
Georgia is a dictatorship, and Freedom House puts
The political system remains in the process of transition, Georgia in the group of somewhat free countries, along
with frequent adjustments to the balance of power
with countries like Turkey, Venezuela and Bosnia.
between the President and Parliament, and proposals

Table 5 Political structure
Form of state Democratic republic of nine region
Legal system Based on constitution adopted 24 August 1995
National Legislature Unicameral Parliament (also known as Supreme Council or Umaghlesi
Sabcho) (150 seats; 75 members elected by proportional
representation, 75 from single-seat constituencies; members to
serve five-year terms)
Electoral system Universal direct suffrage age 18 years
National elections President elected by popular vote for a five-year term (eligible for a
second term); election last held on 5 January 2008 (next to be held in
January 2013)
Head of state The president is the chief of state and serves as head of government
for the power ministries of internal affairs and defense
National Government The prime minister is head of government for all the ministries of
government except the power ministries of internal affairs and
defense

Observation: Georgia is an extremely politicized society. seem blocked in separate mindset ideology. All the main
There are hundreds of political parties, of which many are parties have different objective and vision, yet everyone
unregistered. There is no single party represent the is unhappy with the economic and political situation.
society through main parties’ leaders from coalition. They

21 POLITICAL SYSTEM | SOCIOECONOMIC PROFILE

Table 5.1 Main political parties in Georgia
Party Name Leader Name
United National Movement or UNM Mikheil Saakashvili
Christian Democratic Movement Giorgi Targamadze
Conservative Party Kakha Kukava
Democratic Movement United Georgia Nino Burjanadze
For Fair Georgia Zurab Nogaideli
Georgian People's Front Nodar Natadze
Georgia's Way Party Salome Zourabichvili
Greens Giorgi Gachechikadze
Industry Will Save Georgia (Industrialists) or IWSG Georgi Topadze
Labor Party Shalva Natelashvili
National Democratic Party or NDP Bachuki Kardava
National Forum Kakhaber Shartava
New Rights David Gamkrelidze
Our Georgia-Free Democrats (OGFD) or Alliance for Georgia Irakli Alasania
People's Party Koba Davitashvili
Republican Party David Usupashvili
Socialist Party or SPG Irakli Mindeli
Traditionalists Akaki Asatiani

22 POLITICAL SYSTEM | SOCIOECONOMIC PROFILE

LEGAL SYSTEM

The Georgian legal system is structured in hierarchical The Supreme Court of Georgia represents the court of the
layers. The Judiciary System of Georgia consists of three highest and final instance for justice administration in the
stages: country, which was established in 2005 as a purely the
cassation instance court. It oversees the administration of
 District (City) Court justice at common courts of Georgia, and its activities are
 Court of Appeal guided by the principles of legality, equality of parties and
 Court of Cassation (Supreme Court). competitiveness, as well as irreplaceable inviolability and
independence of justices.

Legal Structure
Supreme Court: Tbilisi
Jurisdiction: The Supreme Court is envisioned as the highest appellate court, but it also hears some capital cases and appeals
from the Central Electoral Commission.
Court of Appeal (court of the second instance)
Jurisdiction: Appeal against first-instance decision by the regional court.
District court Regional Court
Jurisdiction: District courts hear petty criminal and Jurisdiction: Regional courts of appeal have original and appellate
civil cases. jurisdiction. They try major criminal and civil cases, review cases, and
can remand cases to the lower court for retrial.

Civil Code
Georgian civil code created during 992-997, with Book two: Law of Things (Property Law) – regulates
collaborative efforts of Georgian and foreign experts possession, ownership, property rights, measures for
(especially- German). The code has incorporated the best securing claim (security interest, mortgage), rules of
idea developed in civil law. Therefore, expert rate acquiring and loss of ownership.
Georgian civil code along with the new Netherlands civil
Book three: Law of Obligations, given its significance and
code, as one of the most refined and modern statues.
Historically, the country law has been part of continental magnitude, is the heart of the civil law system, through
European family of law. The Civil code of Georgia consists which the freedom of contract is exercised.
of five books. Book four: It regulates family relations.
Book one: General part is a set of common rules that Book five and last book: It governs the law of
govern the entire Private Law and strengthen its inheritance. The Georgia civil code regulates all the key
underlying institutions, such as the doctrine of subjects of issues from person’s birth until its death. Therefore, the
law, doctrine of transactions, exercise of rights, periods of utmost importance of this statute is undisputable.
time, limitations (prescription).

23 LEGAL SYSTEM | SOCIOECONOMIC PROFILE

HUMAN AND THE UNIVERSE: PHILOSOPHY AND RELIGION

Religion and Belief system

Georgian people practice Orthodox Christianity. Georgia There are small groups of Yezid Kurds, Russian Molokans
was the second after Armenia to accept Christianity as and Dukhobors, and Jews.
the established religion in 326 A.D. Despite the huge
influence of Christianity in Georgia. They are very tolerant Many of the popular beliefs and rituals regarding death
and respectful of the representatives of other religions. and afterlife stem from a mixture of Christians and pagan
There are a lot of Muslims. Some Abkhazians and concepts, with many superstitions and cultural
Georgians from southern and southwest area practice borrowings. Respecting the deceased is a very important
part of social life, and much time is spent attending
Sunni Islam. Azerbaijanis, Assyrians and Kurds are
Muslims. In Georgia, there is also a small number of funerals and wakes and caring for graves. Although
Catholics. Several Protestant churches are active, with people believe in an eternal afterlife, there is no clear
the Baptists being the most successful. The most ethnic understanding of its nature; people observe rules and try
Armenians belong to the Gregorian Christian Church. to reduce their grief by ritualizing the mourning process.

Aesthetics
Georgian folk songs are often centered on feasts called
Art supra, where songs and toasts to God, fatherland, long
Literature: Literature is in a dire condition because of the life, love and other topics. Traditional feast songs include
political and economic crisis that started long before "Zamtari", which is about winter and is sung to
independence. There are only a few young talented commemorate ancestors, and "Mravalzhamier", a joyous
writers, poets, and almost none from the older hymn. Work songs are also widespread. There is
generation. The literary market is dominated by moreover a distinct and rich tradition of Georgian sacred
translations of bestsellers, detective stories, and erotica. music, both settings of hymns for the Orthodox Church,
and folk hymns and ritual songs that contain a great deal
Graphic Arts: Graphic arts are popular, and many young
of "pagans".
artists are demonstrating high levels of creativity and
skill. Many artists sell their work in the West. Folk music styles from different regions of Georgia differ
very widely, which makes it difficult to speak of
Performance Arts: The performance arts are in a crisis
characteristics of "Georgian folk music" as a monolithic
because limitations imposed by language hinder the art
whole. Table songs from Kakheti in eastern Georgia
from finding a wider audience. Several ballet dancers,
usually feature a simple, drone-like bass part with two
opera singers, and theater directors have achieved
soloists singing the top two parts. Kakhetian melodies
success in other countries. However, in Tbilisi,
sound like recitative part of the time (with great
performance art and dramatic art are alive and rich.
emphasis on the words, which are highly poetic), and
Music then break into series of ornate, cascading ornaments.
The music of Georgia has a long history. Georgian folk The two melody parts do play off each other, but there is
music possesses the oldest tradition of polyphonic music not the type of complicated back-and-forth between the
in the world, predating the introduction of Christianity. parts that one hears in Gurian trio songs. Perhaps the
Georgian folk remains vibrant across the country, while most well-known example of music in Kakhetian style is
modern rock and pop also exists. the patriotic "Chakrulo", which was chosen to accompany
the Voyager spacecraft in 1977.

24 HUMAN AND THE UNIVERSE | SOCIOECONOMIC PROFILE

In Rach'a and Ajara, male singers accompany themselves men's and women's backs always remain straight and
on a bagpipe. Dissonance is prominent in the west, in motionless. In Georgia, there is such a concept as
Mingrelia and Guria, which also features high pitches and “dancing dialect”. It means that each region of Georgia
outrageous, yodelling-like vocals called krimanchuli. has its special manner of dancing such as Kakhetian,
Svaneti's traditions are perhaps the oldest and most Kartalian, Svanetian, Mingrelian, Imeretin, Gurian,
traditional due to the region's isolation. Svan harmonies Adzharian, Mtiulian, etc.
are irregular and angular, and the middle voice leads two
supporting vocals, all with a narrow range. The 20th Georgian singing and dancing culture is rich in genres.
century has seen professional choirs achieve renown in The national performing style and the traditions, which
Georgia, especially Anzor Erkomaishvili's Rustavi Choir. were passed from generation to generation, have been in
formation for many centuries.
Georgia is home to a form of urban music with
sentimental, lovelorn lyrics, as well as a rougher and Today Georgia is proud of such temples of musical and
dancing art as the Georgian Opera and Ballet Theatre
crude urban music featuring clarinets, doli and duduks.
(founded in 1851), and the Theatre of Musical Comedy.
Traditional dance and Performance Tbilisi Conservatory has deserved the reputation of
Georgian dances are divided into solo, twosome and educational institution training great performers of
group. Women move gracefully in short steps. Men show classical music. The State Symphony Orchestra and a
the eagerness to fight, which is expressed in fast number of folk song and dance ensembles such as
movements, high jumps and courageous pirouettes. Both “Erisioni” and "Rustavi" are known all over the world.

25 HUMAN AND THE UNIVERSE | SOCIOECONOMIC PROFILE

LIVING CONDITIONS

Georgia is going through rapid economy and social A typical festive table ( supra) might consist of puréed
reform. When Georgia was part of the U.S.S.R. (from beets, and spinach sprinkled with pomegranate seeds,
1921 to 1991), people lived well, although their incomes khachapuri (a baked cheese bread), satsivi (chicken in
were small. Services such as health care and education walnut sauce), chanakhi (a lamb and vegetable stew),
were free. Most people in cities paid very little for rent tolma (minced meat wrapped in vine leaves), and
and utilities, and food was cheap. The switch to a market- badrizhani nivrit (eggplant with garlic). Wine is an
based economy, which began in 1991, Georgians become essential part of any meal. Georgians make a wide variety
much more self-reliant. of red wines (such as Mukuzani ) and white wines (such
as Tsinandali ). Regional differences in cuisine are
In recent years, living condition in a country has been pronounced. In the west, one is more likely to eat mchadi
changing dramatically. The cost of living in Georgia is (cornbread) and cheese bread such as Acharuli, which has
moderate. Alcohol & Tobacco, Clothing, education,
an egg baked in the middle of the cheese and dough.
transport is expensive and Communication, furniture &
appliance, grocery, healthcare relative less expensive in Recreational Activity
comparison to any other country based on 13 services
Georgians love going to the theater and classical
and goods basket. The switch to a free market based
concerts. A favorite Georgian pastime is sitting around a
economy; Georgia is now much more self-reliant. table with friends and singing. Some of the popular songs
are Suliko, Mravalzamier (Be long living), and Shen khar
Clothing
venakhi (You are the vine). Most young people are fans of
Georgians have always had a reputation for being stylish Western rock bands. Many have their own rock bands as
dressers. Today they wear casual clothes and follow the
well.
latest fashions. However, on special occasions they wear
traditional costumes. The chokha is the man's tunic. It is Language and Minority Groups
usually magenta or white, is belted at the waist, and has
There are mainly four ethnic groups in Georgia. Azeri and
decorative cartridge pouches on the chest. The kartuli
Armenia people from the largest, numbering and making
kaba is the traditional female costume. It consists of a silk
up 12% percent of the country's population. Other
veil and a long, embroidered dress having wide sleeves
minorities contribute only 4% percent in Georgian
and gathered at the waist.
population. The Azeri people live all over the country but
There are also costumes associated with various regions their compact communities are in the eastern region in
and professions. The women in Khevsureti are well the country. Armenian minority was once dominating
known for their tsinda-pachich , Thick knee-length socks country economic and the political conditions. The
colored with natural dyes. In the mountains, shepherds minority nationalities constitute 16% of the country's
still wear the nabadi. This is a black felt cloak with stiff total population, and they live mainly in the border
wide shoulders that can be used for shelter in winter regions.
weather. Georgian is considered a single national language.
Georgian government policies encourage the
Food
development and learning other languages with the
Georgian food combines Turkish, Greek, Arabic, and even native language to understand and create a better
Indian influences. It is often spicy, flavored, especially qualified workforce in the region; recently the
with coriander, tarragon, and khmeli suneli (a mixture of government has introduced English as important
spices). Hot and cold dishes are served with side dishes of language to learn in school to college for adopting
tomatoes, cucumber, spring onions, sulguni (a cheese),
internationalized standards of country workforce.
and puri (unleavened bread baked in an open brick oven).

26 LIVING CONDITION | SOCIOECONOMIC PROFILE

BUSINESS CUSTOMS AND PRACTICES
• Similarly, Georgians can be emotive speakers. When
Meeting and Greeting discussing a topic, voices may become raised and
• Georgian business culture is noticeably less formal hand gestures increased.
than in other countries. • Direct eye contact conveys trust. Estonians will
• Shake hands with everyone upon arriving and leaving. generally maintain eye contact throughout a
• Maintain eye contact during the greeting. discussion. Looking away or making intermittent eye
• The person of the higher status should initiate the contact may be misinterpreted as a sign that you are
handshake. not telling the truth.
• It is polite to wait for a woman to extend her hand. • Although Georgia has a relationship orientated
• Academic and professional titles are commonly used culture, they can also be very direct.
with the surname.
• Always wait until invited before moving to a first- Business Meetings
name basis. • At the beginning of meetings, introductions are the
norm. These are generally made in order of seniority
Business Card Etiquette although women are often introduced first. Be
prepared to give an overview of your background,
• Business cards are exchanged without any formal
experience and general purpose for your visit.
ritual.
• It can also prove fruitful to send a full biography of
• It is a nice touch to have one side of your business
everyone who will attend the meeting beforehand to
card translated into Georgian or Russian.
save time and also offer a more thorough
Communication Style introduction.
• Georgians are very relationship orientated in their • A first meeting is often more about seeing if doing
outlook. business together is possible. Do not expect any
• This means that people's feelings take precedence contracts to be signed on a first meeting. Time and
over facts. It is important to appreciate that you may patience are needed.
not the whole truth if there is bad news. Similarly, • Meetings may continue over a lunch or dinner. The
you should be sensitive when communicating difficult topic of conversation will shift away from business
information. but this should be used as the time to let the
• Similarly, in an eagerness to establish a business Georgian hosts get to know you on a personal level.
relationship, Georgians may offer an affirmative • In most cases, decisions are made at the top of a
response, even if they know it is far from the truth. company. Unless you are meeting with the boss or
• One way in which this cultural influence manifests is owner bear in mind that all your meeting will achieve
in asking questions in a negative fashion so that the is getting across the key points that will then be
person responding may give a positive response for a passed upwards to the decision maker. Meetings can
negative answer. be frequently interrupted. Do not interpret this as a
• Georgians are not afraid to express their emotions no sign of disinterest but Georgians will not see any
matter how bad. Do not be surprised if people do issues with dealing with more than one issue at a
display anger or extreme disappointment during time.
business.

27 BUSINESS CUSTOM AND PRACTICES | SOCIOECONOMIC PROFILE

CONCLUSION
The world is becoming increasingly internationalized. However, cultures have not converged to one way of thinking.
Rather, markets remain to be characterized by idiosyncrasies. Before considering doing business and setup shop in the
country, the conscientious manager must conquer a comprehensive understanding of the cultural facets of a country.

Following on, and economic profile is the next stage in checking a country to determine its viability for future ventures
and doing business in Georgia.

28 CONCLUSION | SOCIOECONOMIC PROFILE

GEORGIA PERFORMANCE

Georgia has improved ranks on a number of international institution indices. The most important rank's
improvement achieved was on the World Bank’s doing a business index, moving from 112th place in 2006 to
12th place in 2011. Georgia has also improved ranks in other international organization indices. An
improvement in international indices put Georgia in same tier as countries such as Australia, Japan, Norway
and Switzerland.

Georgia’s ranking by the different international institution indices
INDICES INSTITUTION COMPETITIVE RAKING
Ease of Doing Business The World Bank 12th (2011)
Global Integrity Index Global Integrity 5th
Economic Freedom Index Heritage Foundation 26th
Open Budget Index International Budget Partnership 34th
Global Enabling Trade World Economic Forum 37th
Management Index (Political Bertelsmann Stiftung 42nd
Leadership Towards Democracy and a
market Economy)
Status Index (Political and Economic Bertelsmann Stiftung 52nd
Transformation)
Tax Misery & Reform Index Forbes 62nd
Corruption Perception Index Transparency International 68th
Global competitiveness Index World Economic Forum 93rd
Networked Readiness Index World Economic Forum 93rd
International Logistics Performance The World Bank 96th
Index(LPI)
Inward FDI Potential Index United Nation Conference 102nd

30 GEORGIA PERFORMANCE | SOCIOECONOMIC PROFILE

ECONOMIC ACTIVITY

Table 6 ECONOMIC STATISTICS
GDP (US$) $11.9 billion (2009 est.)
GDP rate of growth -4.0% (2009 est.)
Income per capita $2,447.35 (2009 est.)
Family Income – Gini index 40.8 Lowest 10%: 1.9%, Highest 10%: 30.6%
(2005)
Population below poverty line 31% (2006)
Unemployment rate 16.4%
Labor force 1.918 million (2007)
Labor force – by occupation Agriculture 56.6%
Industry 8.9%
Services: 35.5%
Inflation rate 1.7%

Figure 6 Gross domestic production growth
14.00% $14,000,000,000.00
12.00% 12.34%
9.59% $12,000,000,000.00
10.00% 9.38%
8.00% $10,000,000,000.00
6.00% $8,000,000,000.00
5.86%
4.00%
2.00% 2.31% $6,000,000,000.00
0.00% $4,000,000,000.00
-2.00%
$2,000,000,000.00
-4.00% -4.00%
-6.00% $-
2004 2005 2006 2007 2008 2009
Source: World Bank, 2010

Figure 7 Income per capita growth rate
$3,500.00 12.58% 14.00%
$2,917.93 12.00%
$3,000.00
8.51% 8.47% $2,447.35 10.00%
$2,500.00 $2,318.12
6.11% 8.00%
$2,000.00 $1,761.11 6.00%
$1,469.97 4.00%
$1,500.00 $1,186.97 2.42% 2.00%
$1,000.00 0.00%
-2.00%
$500.00
-4.07% -4.00%
$0.00 -6.00%
2004 2005 2006 2007 2008 2009

31 ECONOMIC ACTIVITY | SOCIOECONOMIC PROFILE

Observation: Georgian GDP growth during 2006-2007 condition for the creditor, because they were paid back
was 9-10%, which is a good sign for investment and with the more value for the same money. Somehow, it is
setting business in the country, although Aug 2008 related with increased unemployment rate in the
Russian aggression on Georgian territory and global country, because of few available qualified workforces.
financial crisis slowed the country growth, and economy
contracted by 4% but GDP growth for 2010 in Figure 8 Inflation rate (annual %)
conservatively estimated at up to range from 5%. As the 12.00%
response of conflict with the Russia, 38 countries and 15 9.16% 9.24%
10.00% 9.99%
international organization pledge to provide US$ 4.5bln
8.00%
to Georgia for maintain economic condition and societal 8.27%
sovereignty. There are positive impressions for stead 6.00%
4.00% 5.70%
growth of economy as Government commitment to the
free market based economy. Therefore, privatization in 2.00%
public sector seems excellent opportunities for 0.00% 1.72%
investment. GDP structure by industry sectors showed, 2004 2005 2006 2007 2008 2009
Georgia, became primarily service based economy.
Unemployment rate: Unemployment rate increasing
progressively because of demand of qualified workforce.
As a country adopted, free economy based model.
Figure 9 Unemployment rate
Therefore, demand for qualified worker increases and
20.00%
lack of qualification to get work done is a serious problem 16.40%
in Georgia though people are educated but not qualified 13.80%
15.00%
to do the specific task related to job. Which could an
13.60% 13.30% 13.80%
opportunity for investment in the education sector, 10.00% 12.60%
opening private schools, college and starting a new
course that concentrates on providing technical 5.00%
knowledge?
0.00%
Inflation: Inflation decreased, which shows that it is a 2004 2005 2006 2007 2008 2009
disinflation situation in Georgia, considerable rise in Source: World Bank, 2010
income while a low rise in cost of goods. It is a good

Table 6.1 PRINCIPLE INDUSTRY
Principle Industry Steel, Aircraft, machine tools, electrical appliances, mining
(manganese and copper), chemicals, wood products and wine.
Industry value added growth rate -2.0%
GDP contribution by each industry Agriculture 12.2% Products: Citrus, Grapes, Tea, Hazelnuts,
Vegetables and Livestock
Industry 26% Types: Steel, machine tools, mining, chemicals,
wine, construction and wood products
Service 61.8% Types: Trade, Hotels, Social services, Education
and professional services.


Figure 10 GDP Structure by sector contribution

34%
Agriculture, forestry and fishing
11%
10% Industry
Trade
13%
Transport and communication
16%
Public administration
16%
Other sectors

Source: Geostat, 2010

Figure 11 Industry value added growth rate
Ratio of publicly owned industries
15.00% 12.34% 13.39%
After 2003 Rose revolution, privatizations become
10.00% 12.84% 13.47%
necessary for a country to be established as a free
market economy, investment is the main engine 5.00%
for Georgian economy therefore selling of the
0.00% -2.00%
majority of all companies demanded, today more
2004 2005 2006 2007 2008 2009
of the companies are privately owned or -5.00%
government supported with main service -5.48%
-10.00%
regulated by the government.


FOREIGN DIRECT INVESTMENT

Table 7 FDI INFLOW IN ECONOMIC SECTORS
FDI to Georgia in 2009 $759.1 million
Sectors (1000 USD) Agriculture, Fishing 8,833.1
Industry 204,145.7
Energy -1,138.9
Construction 79,701.3
Transport and Communication 153,571.2
Real estate 132,043.5
Financial Sector 45,290.2
Other Services 124,632.3
As a result of privatization Not Stated** 12,000.1

Figure 12 FDI net inflow of GDP (US$ )
20.00% $2,000,000,000.00
17.20%
15.00% 15.10% $1,500,000,000.00
12.22%
10.00% 9.60% $1,000,000,000.00

7.06% 7.11%
5.00% $500,000,000.00

0.00% $-
2004 2005 2006 2007 2008 2009

Source: World Bank, 2010 Investment in US$ Net inflows (% of GDP)

Figure 13 FDI by Economic Sectors Observation: Foreign direct investment is most
important source of capital for Georgian, Georgia has a
Financial
Not stated**
sector
2%
diverse sector for investment. Last five-year statistic data
6% Other
services Agriculture, demonstrate increase inflow of FDI in the country.
16% fishing
1% Telecommunication, transport, real estate and hydro
Real estate
17% power sector attracted most of the FDI inflow in the
Industry
27% country during 2005-07. Following the Russian aggression
on Georgia FDI fell to US$ 759.1 million, down from US$
1.56 billion in 2007.
Transports
and
communicati Construction Energy sector
ons 11% 0%
20% Source: Geostat, 2010

34 FOREIGN DIRECT INVESTMENT | SOCIOECONOMIC PROFILE

Table 7.1 Foreign direct investment by countries
1000 USD
S.No. Major Countries 2008 2009* 2010* Q1
1 Austria $ 51,463.37 $ 14,451.30 $ 1,863.00
2 Belgium $ 61.97 $ 132.96 $ 8.31
3 Bulgaria $ 12.66 $ (317.46) $ 5.72
4 Cyprus $ 26,165.77 $ (3,372.60) $ (1,396.33)
5 Czech Republic $ 34,857.63 $ 15,057.25 $ 19,777.90
6 Denmark $ 256.28 $ 139.79 $ 53.68
7 France $ 8,179.67 $ 11,944.75 $ (1,245.29)
8 Germany $ 40,590.62 $ 3,658.04 $ 1,715.19
9 Greece $ (1,850.42) $ 2,515.32 $ 921.07
10 Ireland $ 223.55 $ 50.82 $ 39.46
11 Italy $ 6,047.79 $ 1,172.54 $ (946.23)
12 Lithuania $ (113.93) $ 3,430.05 $ 228.53
13 Luxembourg $ 5,731.05 $ 6,206.34 $ 3,330.15
14 Netherlands $ 135,870.21 $ 105,679.72 $ 8,622.38
15 Sweden $ 7,634.83 $ (4,324.43) $ 506.30
16 United Kingdom $ 148,907.60 $ 63,549.17 $ (1,377.45)
17 Azerbaijan $ 23,942.70 $ 24,596.00 $ 6,492.35
18 Armenia $ (15,061.44) $ (8,602.94) $ (1,107.29)
19 Kazakhstan $ 65,941.73 $ (6,431.78) $ (14,020.36)
20 Russia $ 26,212.18 $ 2,049.53 $ 5,312.00
21 Ukraine $ (6,441.96) $ (1,805.58) $ 14.21
22 Belize $ 37,822.53 $ 1,035.90 $ 345.35
23 Virgin Islands, British $ 156,847.32 $ 5,691.78 $ (9,114.83)
24 China $ (2,271.40) $ (1,309.46) $ (1,366.39)
25 Gibraltar $ 5,307.02 $ 909.06 $ 847.04
26 Iran $ 1,448.50 $ 814.75 $ 209.31
27 Israel $ (2,047.66) $ 3,062.03 $ 1,298.62
28 Japan $ 11,655.35 $ (30,127.23) $ 15,651.01
29 Jordan - $ 1,845.05 $ (375.92)
30 Liechtenstein $ 5,015.96 $ 1,907.54 $ (189.60)
31 Norway $ 2,693.35 $ 1,877.29 $ (262.56)
32 Marshall Islands $ 1,501.16 $ 4,121.10 $ 1,262.11
33 United Arab Emirates $ 306,576.32 $ 169,783.99 $ (320.82)
34 Turkey $ 164,525.59 $ 89,506.34 $ 20,303.63
35 International organizations
$ 23,650.95 $ 30,141.09 $ 2,360.31
36 Others $ 292,606.07 $ 250,040.60 $ 16,361.55
Total $ 1,563,962.92 $ 759,078.61 $ 75,806.13

35 FOREIGN DIRECT INVESTMENT | SOCIOECONOMIC PROFILE

TRADE INDICATORS

Georgian Export
Table 8 Georgian top Exports by Countries in 2009 (Thsd. USD) Figure 14 Georgian top Exporter countries
Country Trade Value Share (%) CAGR (% 5yr)
Turkey 225,768.66 19.97% 16.67%
Azerbaijan 165,633.84 14.65% 18.70%
Canada 117,224.11 10.37% 34.67% Azerbaijan
Armenia 88,941.67 7.87% 22.34% Canada
Ukraine 83,955.02 7.43% 22.78% Turkey
Bulgaria 82,290.64 7.28% 17.72% Armenia
United States 36,933.89 3.27% 8.40%
Italy 23,282.15 2.06% -8.73% Ukraine
Germany 23,025.39 2.04% -5.13% Bulgaria
Kazakhstan 20,455.31 1.81% 20.20% Kazakhstan
Total annual exports 1130555.351 Germany
Italy
United States Source: Geostat, 2010
Table 8.1 Top product exported in 2009 (Thsd. USD) Figure 15 Top producted exported in 2009
Name of products Trade value Share (%) Pearls, precious or
Edible fruit and nuts;
semi-precious
Iron and steel 197,049.9 17.43% stones, and articles
Peel of melons or
citrus
Beverages, spirits and vinegar 123,776.4 10.95% thereof
Beverages, spirits Vehicles other than
Pearls, precious or semi-precious stones, 117,792.2 10.42% and vinegar railway or tramway
and articles thereof rolling-stock, and
Edible fruit and nuts; Peel of melons or 90,087.8 7.97% parts thereof
citrus
Ores, slag and ash
Vehicles other than railway or tramway 84,354.0 7.46%
rolling-stock, and parts thereof Iron and steel Fertilizers
Ores, slag and ash 67,518.2 5.97%
Fertilizers 60,213.9 5.33%
Mineral fuels and products of their 41,451.7 3.67%
distillation; Bituminous substances; Waxes
Mineral fuels and
Live animals 33,984.8 3.01% products of their
Pharmaceutical products 25,385.7 2.25% Pharmaceutical Live animals distillation;
products Bituminous
substances; Waxes

36 TRADE INDICATORS | SOCIOECONOMIC PROFILE

Georgian Import
Table 8.2 Georgian top Imports by Countries in 2009 (Thsd. USD) Figure 16 Georgian top Importer countries
Country 2009 Share (%) CAGR (% 5yr)
Turkey 787,616.73 18.03% 29.16%
Ukraine
Ukraine 418,313.83 9.57% 17.51%
Azerbaijan 376,432.90 8.62% 12.69% Azerbaijan
Turkey
Germany 301,382.46 6.90% 9.88% Germany
Russia 288,944.67 6.61% -6.83%
United States 223,725.17 5.12% 11.10%
China Russia
174,669.07 4.00% 39.06%
Bulgaria 152,840.03 3.50% 20.59%
Italy China
127,686.36 2.92% 18.65% United Arab
Romania 113,864.51 2.61% 29.33% Emirates
United Arab Emirates 110,344.77 2.53% 10.89% Romania Italy
Total Imports 4369496.477 United States
Bulgaria

Figure 17 Top producted exported in 2009 Mineral fuels
Table 8.3 Top products imported in 2009 Articles of iron or
and
Plastics and articles Paper and products of
Name of products Trade value Share (%) thereof
steel
Pharmaceutical paperboard; Articles their
Mineral fuels and products of their 772,396.1 17.68% Cereals
products thereof distillation;
distillation; Bituminous substances; Bituminous
Waxes substances;
Electrical
Nuclear reactors, boilers, machinery and 372,984.3 8.54% Waxes
machinery
mechanical appliances; Parts thereof and
Vehicles other than railway or tramway 340,106.2 7.78% equipment
rolling-stock, and parts thereof and parts
Other products thereof Other products
303,431.8 6.94%
Electrical machinery and equipment and 297,579.8 6.81%
parts thereof
Pharmaceutical products 194,298.5 4.45%
Plastics and articles thereof 131,335.0 3.01%
Cereals 116,992.8 2.68% Nuclear reactors,
Articles of iron or steel 94,433.6 2.16% Vehicles other than boilers, machinery
railway or tramway and mechanical
Paper and paperboard; Articles thereof 86,740.9 1.99% rolling-stock, and appliances; Parts
parts thereof Source: Geostat, 2010 thereof


BALANCE OF PAYMENT
Surplus of deficit $-3,238.9 million (2009, Geostat)
Trend: Georgia’s balance of payment shows a permanent deficit and widen progressively. Georgia's export
success leads to noticeable improvement but Aug 2008 Russian aggression on Georgia and global financial crisis
made a negative impact on economy and trade.

Figure 18 External Trade of Georgia (BOP)

$8,000.00

$6,000.00

$4,000.00

$2,000.00

$-
2005 2006 2007 2008 2009
$(2,000.00)

$(4,000.00)

$(6,000.00)
Export (FOB)Mil. US$ Import (CIF) Mil US$ Balance


Observation: Trade is most important activity in technology in Georgian though it is more expensive than
Georgia's economy, as the country depends upon many Asian countries, so there are good opportunity lies for
things from other nations. A lot of products Georgia buys technological firms to export and import technology. Asian
from other nations, Georgian trade with other nations and countries could become a better import export partner for
its trading practice have changed greatly over the years in raw materials to produce technology within the country as
order the function the best, and to benefit the Georgia to it would be cheaper than Europe and any other country as
the greatest degree. Instead of strong inflow of FDI, the the Asian raw product is much lower cost than any other
Georgian trade deficit widened progressively. continent same product. This could also help Georgia to
decrease trade deficit and increase industry production.
Georgia has a sizeable trade relation with several different Asian countries have the biggest consumer base in the
countries with the majority being within the CIS and world. Therefore, Government must look at Asia to
European countries. US became in important partner in strength Georgian trade activity.
Georgian trade. This could well be because of the limited


Table 8.4 EXCHANGE RATE AGAINTS USD
Current rate of exchange: 1 US$ = 1.75 GEL (Nov/30/2010)

Figure 19 Georgian Lari exchange rate trend against US dollar

GEL 1.90 GEL 2.00
GEL 1.85 GEL 1.80
GEL 1.60
GEL 1.80
GEL 1.40
GEL 1.75 GEL 1.20
GEL 1.70 GEL 1.00 Year 2008
GEL 1.65 GEL 0.80
Year 2009
GEL 0.60
GEL 1.60 Year 2010
GEL 0.40
GEL 1.55 GEL 0.20
GEL 1.50 GEL -

Source : www.oanda.com, 2010


TRADE RESTRICTIONS
Preferential Tariffs with the USA, Canada,
Embargoes Switzerland and Japan
There is no such country which Austria restricted for trade MFN tariffs with other WTO members, Georgia also
but there are few commodities like medical products, benefits from a Generalized System of Preferences (GSP)
firearms, explosives, radioactive substances, industrial when trading with the USA, Canada, Switzerland and
waste and few types of agricultural chemical products are Japan. Accordingly, lower tariffs are applied on goods
subject to import/export licensing. exported from Georgia to those countries.
Quotas One of Only Two Countries in the CIS enjoying
Georgia has no quantitative quotas on trade. GSP Plus with the EU and Turkey
In July 2005, Georgia became one of the only two
Import taxes
beneficiaries (besides Moldova and Turkey) of the new EU
Rates of duty on imported goods fall into three bands, 0%,
GSP Plus scheme in the entire CIS and one of the 15
5% and 12%. Nearly 90 percent of goods benefited from a
beneficiaries in the world. This is an important factor in
zero rate of duty. An 18% Value Added Tax (VAT) applies
terms of facilitating export from Georgia. After being
to import goods. Fixed excise tax rates apply to be certain
granted the GSP Plus beneficiary status, Georgia can
goods such as alcoholic drinks, ethyl alcohol, ethyl petrol
import 7200 products to the EU market duty free.
for cars, cigarettes, etc.
Licensing
Import of goods for personal use of total value of up to
GEL 300 by land (at the border) and up to USD 1500 by air Only medical products, firearms, explosives, radioactive
substances, industrial waste and a few types of
(at the airport) of total 50 kilograms is free from customs
agricultural chemical products are subject to
duty.
import/export licensing.
Tariffs
Custom duties
MFN Tariffs with WTO Members The rates of customs duty are 5% or 12% of customs,
Most of Georgia’s trade partners are the members of the value of goods depends to the type of goods and specific
World Trade Organization (WTO). Trade relations with rates of customs duty apply to alcoholic drinks.
them are based on the Most Favored Nation (MFN) trade
status, which provides lower tariffs for WTO members.

40 TRADE RESTRICTIONS | SOCIOECONOMIC PROFILE

EXTENT OF ECONOMIC ACTIVITY NOT INCLUDE IN CASH TRANSACTIONS

Foreign aid received
Counter Trade
There is no reliable and specific data available on
Georgia countertrade mainly happened with Turkey, secondary sources, which shows how much foreign aid
Armenia, Ukraine and Germany. Georgia has been received from 1991 until 2010. In
response to Aug 2008 Russian aggression on Georgian
Product usually offered for countertrading
territory damage suffered, 38 countries and 15
There is countertrade offered in Natural gas, Electricity international organizations pledged to provide U.S. $4.55
and many other goods come in category of counter billion to Georgia at the Brussels donors’ conference.
trading. Many developed countries and international
organizations have been providing humanitarian and
Types of countertrade request
development aid to Georgia since 1991.
The possible counter trades that could be negotiated are
electricity and other natural resources, which are
available, in particular, country.

41 TRADE RESTRICTIONS | SOCIOECONOMIC PROFILE

DEVELOPMENT IN SCIENCE AND TECHNOLOGY

The Ministry of Education and Science of Georgia (MES) Technological skills of the labor
aims at establishing modern and innovative educational
and scientific environment in close cooperation with civil
force and general population
society and introduces best practices of developing General population is lacking in skills set in relation to the
countries. With the help of European Union fund, MES is skill requirement of the current technology and market.
making framework for science administration and There is a great deficit appropriately qualified and skilled
intellectual property for patent technology in the workforce in Georgia. The most the lowest quality of
country. The S&T sector of Georgian universities is in the officially qualified workforce is working in every sector of
process of reorganization and actually. The budget for industry. Even if there are a number of people with
research activities is shaped by the national as well as certificates in the relevant field of activity, they turn out
international competitive grants. to be unskilled to perform specific duties associated with
the given field activity. Therefore, finding skilled worker
MES and GNSF endeavor to create friendly environments still a big challenge in the country, govt. has been started
for research and industry cooperation. Implement diverse the vocational study programme for general population
targeted programmes and actions to offer an incentive to produce skilled workers but the process of instruction
for research commercialization (e.g. cooperative calls in still conventional, which makes doubt on skills of workers
the frame of business partnership programme STEP in the context to perform specific tasks related to the
organizes jointly by US Civil Research and Development technological field.
Foundation – CRDF and GNSF in 2007 and 2008), launch
discussion with local stakeholders and invited experts on Observation: Current Technology available in Georgia
expediency of establishment technology incubators and but new product development is low within Georgia
science parks in Georgia. Georgian government supports instead of 100% literacy. Investment on new
cooperation of local scientists and engineers with development in science and technology is very low,
international S&T community and thus improves a state- mostly Georgia relies on foreign partner to produce and
of-art of Georgian science. implement technological development. Training of
people is to use technology very rare within Georgia
Available current technology because of lack in well qualified technological workforce
Georgia is far behind in technology advancement and and trainer. Therefore, people/students move out of the
innovation. New product development is zero in the country to further their education and then don’t
country, though its literacy rate is 100%, new technology returning due to better opportunities outside the
development still in the way to go ahead. country.

Technological skills are low in the general public due to
Percentage of investment in
an amateur trainer to provide skills. This could well be an
research and development area for investment so that the general public could be
By the international grant and funding institutions, such well-versed with the technology and development of
as EU, FPS, NATO STS, ISTC, CRDF, etc. make in average science and technology could improve.
15-25% whole science and technology budget of Georgia.

42 DEVELOPMENT IN SCIENCE AND TECHNOLOGY | SOCIOECONOMIC PROFILE

APPENDIX-1: DOING BUSINESS IN GEORGIA

The ease of doing business in Georgia is one of the key Georgia ranks 12th on the list of countries on the ease of
factors. There are lots of business opportunities in Eurasia doing business parameter of the World Bank’s Doing
and Middle East markets and Georgia is one of the good Business Report 2011. Georgia developing infrastructure,
locations to use as a base to seek these potential 100% literacy rate and supportive government policies
opportunities because of the connected location of the make it good destination to do business.
Georgia in Eurasia. I mean cost-effective location because
if you look at rental, cost of work force, etc. it is
affordable in comparison to Europe.

Table 9 WORLD BANK: DOING BUSINESS INDICES RANK

Rank indices 2011
Ease of Doing Business 12
Starting a Business 8
Dealing with Construction Permits 7
Employing Workers 9
Registering Property 2
Getting Credit 15
Protecting Investors 20
Paying Taxes 61
Trading Across Borders 35
Enforcing Contracts 41
Closing a Business 105

It is small developing economy, starting a business from because of its strategic location in the region. There are
scratch is easy but getting office space and quality people over 3000 firms in the country and has big space for
still a problem in Georgia. However, lacking area could be opening newer firm, scattered across diverse sectors such
an area for the opportunity in the country, such as as IT services, education, logistics and manufacturing.
infrastructure and providing skills to workforce make Entrepreneurs from other nations could look for more
opportunities for doing business in the country. For opportunities in the country. Its strategic location,
registering a business, you would need a resident director developing infrastructure, revival of Silk Road and a
to register company in Georgia. The resident does not double lingual workforce makes the country an attractive
have to be a Georgian. Once that information is ready, destination to do business. The reason why should
most companies would be able to register the company companies come out to be based in Georgia? Because it
fairly within seven days, sometime companies take more could be a stepping stone of the Eurasia region, even in
days to get it done. The registration fee is around 120- Eurasia countries, with the population of 1252 million
360 GEL depend upon nature of the business firm. people and trillion dollar economy, if I put that
collectively, it is a very attractive market.
Georgia has been potential to become a service hub in
the region to serve Eurasia and Middle East markets

43 DOING BUSINESS IN GEORGIA | SOCIOECONOMIC PROFILE

The key interest could be for the foreign companies the entrepreneur ideas and renovated management practices
use of Georgia as a base to tap the region. There are to produce a solution and product that could be
many new areas where companies can explore eventually marketed to the world. Therefore,
opportunities such as Infrastructure, Information Government is more open to test new innovation
technology, telecommunication, education and solutions that companies might bring forward, which
Manpower development, urban solutions and health and could eventually use Georgia as a reference point to
wellness. Looking for some of the Georgian statistics and target other markets in the world. A supportive
macro trends, half of the Georgian population is going to government policy and an access to Eurasia and Middle
be moving into cities, it needed solutions for mobility or East markets make Georgia an excellent destination for
transport, security and environment. I am positioning doing business.
Georgia as a ground of innovation to develop the

44 DOING BUSINESS IN GEORGIA | SOCIOECONOMIC PROFILE

APPENDIX-2: HISTORY TIMELINE: GEORGIA

YEAR KEY EVENTS
1.7Million BC Hominid fossils and crude stone tools of this time were found in the former Soviet republic of
Georgia in 1991 beneath the ruins of a medieval castle at Dmanisi. A 3rd smaller skull was
found in 2002. All 3 were tentatively classified as Homo erectus. One skull of a man indicated
that he had been almost toothless for at least 2 years before death.
8000BC Wine was produced in the region known as Colchis (later Georgia) as early as this time.
500-600 The monastic complex of David Gareja was founded in the 6th century by David (St. David
Garejeli), one of the thirteen Assyrian monks who arrived in Georgia at the same time. His
disciples Dodo and Luciane expanded the original lavra and founded two other monasteries
known as Dodo's Rka (literally, "the horn of Dodo") and Natlismtsemeli ("the Baptist"). Part of
the complex is also located in the Agstafa rayon of Azerbaijan and thus became subject to a
border dispute between Georgian and Azerbaijani authorities.
683-685 Khazars invaded Transcaucasia and inflicted much damage and stole much booty. The Khazar
invaders killed the rulers of Armenia and Georgia.
1014 May 7, Bagrat III (b~960) of the Georgian Bagrationi dynasty, died. He was King of the
Abkhazians from 978 on (as Bagrat II) and King of Kings of the Georgians from 1008 on. He is
known to have constructed a magnificent cathedral, the Bagrati Cathedral, at Kutaisi, western
Georgia.
1089-1125 David the Builder, a king who increased Georgia's wealth and prestige after, at age 16, taking
the reins of a country beset by attackers.
1172-1216 Shota Rustaveli, a Georgian poet, lived about this time. He is considered by many to be one of
the greatest representatives of the literature of the medieval world. His literary work in-cluded
“The Knight in the Panther's Skin” ("Vepkhistkaosani" in Georgian), the Georgian na-tional epic
poem.
1178 The wise King Giorgi III of Georgia had his daughter, Tamara (19), crowned as his co-ruler to
provide an orderly succession.
1204-1205 Georgia’s Queen Tamara marched with her men to the rousing victory over the Turks at the
Battle of Basiani where she is hailed with the cry, "Our King Tamara."
1212 Jan 18, Queen Tamara of Georgia in Transcaucasia died after a 24-year reign during which her
soldiers proclaim her "our King."
1236 Queen Rusudani (41), the daughter of Queen Tamara, fled Georgia as the unstoppable Mongol
hordes ravished the area. She had been proclaimed "King" at the death of her brother.
1258 Feb 10, Huegu (Hulega Khan), a Mongol leader and grandson of Genghis Khan, seized Baghdad
following a 4-day assault. Mongol invaders from Central Asia took over Baghdad and ended the
Abbasid-Seljuk Empire. They included Uzbeks, Kazaks, Georgians and other groups. Some 200
to 800 thousand people were killed and looting lasted 17 days.
1265 Mongols sacked the monastic complex of David Gareja in Georgia.
1395 Tamerlane, a Turkic conqueror, swept into Southern Russia and Georgia driving locals into the
hills.
1615 The Persians sacked the monastic complex of David Gareja in Georgia.
1783 Jul 24, Georgia became a protectorate of tsarist Russia.
1801 South Ossetia was absorbed into the Russian Empire along with Georgia.

45 APPENDIX-1 | SOCIOECONOMIC PROFILE

1801-04 Most of present-day Georgia becomes part of the Russian Empire.
1918 Independent Georgian state declared.
1921 Red Army invades. Georgia declared a Soviet Socialist Republic.
1922 Georgia, as part of the Transcaucasian Soviet Federative Republic, becomes a founder member
of the Soviet Union.
1936 Transcaucasian Soviet Federative Republic dissolved and Georgia becomes a full republic of the
Soviet Union.
1972 Eduard Shevardnadze appointed head of the Georgian Communist Party.
1989 April - Soviet troops kill 19 pro-independence demonstrators in Tbilisi.
Demands for more autonomy in the South Ossetia region lead to violent clashes between
Georgians and Ossetians. Russian peacekeepers are deployed.
1990 Nationalist coalition wins multi-party parliamentary elections; former dissident Zviad
Gamsakhurdia becomes chairman of parliament.
1990-1991 Growing South Ossetian independence aspirations bring further violence between separatist
and Georgian forces. Hundreds die and tens of thousands flee their homes.
Independence
1991 Georgian parliament declares secession from the Soviet Union after independence is
overwhelmingly supported in a referendum. Gamsakhurdia is elected president by more than
85% of the votes cast.
1992 January - Gamsakhurdia is deposed after fighting in central Tbilisi between government troops
and opposition militias.South Ossetians vote in favour of independence in an unrecognized
referendum.
March - Shevardnadze is appointed head of the newly formed State Council.
Abkhazia crisis
August - Fighting breaks out in Abkhazia between Georgian government troops and separatist
forces.
1993 September - Georgian troops driven out of Abkhazia by separatist forces.
October - Insurrection by Gamsakhurdia supporters in western Georgia is suppressed after
Georgia agrees to join the CIS and receives help from Russian troops.
1994 Georgian government and Abkhaz separatists sign a ceasefire agreement, paving the way for
the deployment of a Russian peacekeeping force in the region. New constitution adopted
which provides for a strong executive presidency. New currency, the lari, introduced.
1995 November - Shevardnadze wins elections to the restored post of president.
1997 Death penalty abolished.
2000 April - Shevardnadze re-elected president.
2001 March - Georgia and the separatist region of Abkhazia sign an accord pledging not to use force
against each other.
June/July - Russia hands over Vaziani military base to Georgia.
Tension with Russia
2001 October - Clashes in Abkhazia between Abkhaz troops and Georgian paramilitaries backed by
fighters from the North Caucasus. The tension is heightened as Russia accuses Georgia of
harbouring Chechen rebels, a charge dismissed by Georgia.
November - Raid by security forces on privately-owned Rustavi-2 TV station, known for its
criticism of Mr Shevardnadze and corruption, sparks protests. Mr Shevardnadze responds by
sacking cabinet.


2002 April/May - US special forces arrive to train and equip Georgian forces for counterterrorist
operations
September - Russian President Putin warns of military action if Georgia fails to deal with
Chechen militants which, Moscow says, Georgia is harbouring in Pankisi Gorge.

2003 May - Work begins on laying Georgian section of oil pipeline to run from Baku in Azerbaijan
through Georgia to Ceyhan in Turkey.
Shevardnadze ousted
November - Shevardnadze is toppled in a bloodless "Rose Revolution" triggered by opposition
allegations of irregularities in parliamentary elections.
2004 January - Mikhail Saakashvili wins presidential election.
March - Amid rising tension with the leadership of the autonomous region of Ajaria, Tbilisi
briefly imposes sanctions and closes the border. Mr Saakashvili's National Movement-
Democratic Front wins overwhelming majority of seats in parliament in re-run of
parliamentary elections.
South Ossetia, Abkhazia troubles
May - South Ossetia holds parliamentary elections, which are not recognised by Tbilisi.

August - Several deaths are reported in clashes between Georgian and South Ossetian forces.
October - Sergei Bagapsh declared winner of Abkhaz presidential elections, which are not
recognised by Tbilisi. Abkhaz court orders rerun after protestes by opposition supporters.
2005 January - Sergei Bagapsh wins rerun of Abkhaz presidential elections after doing a deal with his
main rival, Raul Khadzhimba, who becomes vice president.
President Saakashvili unveils proposals on autonomy within Georgia for South Ossetia, whose
leadership rejects them, repeating demand for full independence.
February - Prime Minister Zurab Zhvania is found dead in a Tbilisi flat, apparently from gas
poisoning. Zurab Noghaideli, hitherto finance minister, becomes premier.
July - Russia starts to withdraw its troops from two Soviet-era bases under the terms of a deal
reached in May. The pull-out is due to be completed by late 2008.
2006 Pipeline blasts
January - Explosions on Russian side of border cut gas supplies and disrupt electricity supplies
from Russia. Russia says it suspects North Caucasus insurgents but President Saakashvili
accuses Moscow of sabotage.
Georgia receives gas from Iran via recently-repaired pipeline running through Azerbaijan.

July - Baku-Tbilisi-Ceyhan pipeline formally opened after Caspian oil starts flowing along it.
Georgia announces plan to establish Abkhazia government-in-exile in gorge.

November - South Ossetians vote in favour of independence in an unrecognised referendum.

2007 Anti-Saakashvili protests
September - Former defence minister Irakli Okruashvili accuses Mr Saakashvili of corruption
and plotting a murder, sparking a wave of protests.
2008 January - Saakashvili re-elected in snap election.
March - Separatist government in Abkhazia asks United Nations to recognise independence.


Russian intervention
August - Tensions between Georgia and Russia escalate into a full-blown military conflict after
Georgia tries to retake South Ossetia by force after a series of lower-level clashes with Russian-
backed rebels.
2009 Saakashvili under pressure
April - Opposition launches "national disobedience campaign" in effort to persuade President
Saakashvili to resign.
2010 October - Parliament approves constitutional changes aimed at curbing the powers of the
president and expanding the role of the prime minister and parliament.
Source : Timeline Georgia and BBC News, Timeline: Georgia


APPENDIX-3: MAP OF COUNTRY

Source: Invest in Georgia


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