The document summarizes a study on the economic transformation of Georgia from a post-Soviet economy to one experiencing major growth. It identifies three primary causes of Georgia's economic success: bureaucratic reform that made it easier to do business; a rise in foreign direct investment due to a more liberal investment environment; and a decrease in corruption through reforms to the legal system and tax code. The reforms implemented after Mikheil Saakashvili was elected in 2004, such as reducing red tape and firing corrupt police officers, played a key role in driving these changes. However, ongoing security and political stability issues pose risks to Georgia's continued economic progress.
Registering for Growth: Tax and the Informal Sector in Developing CountriesDr Lendy Spires
Roughly half of all non-agricultural workers in developing countries work in very small enterprises with fewer than five employees. Indeed, between one-quarter and one-third of the non-agricultural workforce in most low- and lower-middle-income countries is self-employed (Gollin 2002).
Most of these micro-enterprises operate without registering as legal entities and, as a result, are a part of what is commonly referred to as the informal sector. Informal activity is estimated to comprise a much larger share of the economies of low-income countries – on average around 42% of GDP in a sample of 31 low-and lower-middle-income countries – than a comparable sample of 32 higher-income countries (22% of GDP) in the Organisation for Economic Co-operation and Development (OECD).1 Why is such a high proportion of the labour force in lower-income countries employed in the informal sector? De Soto (1989) famously proposed that governments – and Peru’s specifically – push firms into the informal sector by raising the barriers and costs of formalization.
By excluding firms from the formal sector, these barriers stifle entrepreneurship and reduce the dynamism of the private sector. Others (Levy 2008) have claimed that the high levels of informality represent an escape by small firms. This ‘exit’ view leads to a vicious cycle: firms escape because the state does not make formal status appealing. For example, financial markets and courts may be dysfunctional, and public procurement processes may be corrupt.
But by being in the informal sector, firms avoid paying taxes that would provide resources the state might use to improve the provision of these goods, or to force firms to become formal. In this view, informality may still stifle entrepreneurship, as firms sometimes remain small deliberately to avoid attracting the attention of regulators and tax collectors. If high rates of taxation push economic activity out of the formal economy, one would expect to see more informal activity in countries with higher tax collections.
However, just the opposite is the case. Across countries, there is a strong negative correlation between state revenue and informal activity. Indeed, another characteristic of low-income countries is that tax collec-tion by governments is very low. Government revenue 1 Estimates from Schneider, Buehn and Montenegro (2010). Taxes as a % of GDP 0 Shadow economy as a % of GDP Australia Austria Belgium Canada Chile Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Israel Japan Korea, Republic of Netherlands New Zealand Norway Slovenia Spain Sweden Turkey United Kingdom United States Italy Figure 1: Taxes and informality, OECD countries Source: World Bank (2013)
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View the most recent commentary from The PRS Group on international macro risk.
This month’s reporting in the Americas includes a new report on Cuba, where the implementation of market-based reforms aimed at shoring up the economic foundation ahead of a planned generational transfer of power within the governing PCC has yet to generate a substantial increase...
Registering for Growth: Tax and the Informal Sector in Developing CountriesDr Lendy Spires
Roughly half of all non-agricultural workers in developing countries work in very small enterprises with fewer than five employees. Indeed, between one-quarter and one-third of the non-agricultural workforce in most low- and lower-middle-income countries is self-employed (Gollin 2002).
Most of these micro-enterprises operate without registering as legal entities and, as a result, are a part of what is commonly referred to as the informal sector. Informal activity is estimated to comprise a much larger share of the economies of low-income countries – on average around 42% of GDP in a sample of 31 low-and lower-middle-income countries – than a comparable sample of 32 higher-income countries (22% of GDP) in the Organisation for Economic Co-operation and Development (OECD).1 Why is such a high proportion of the labour force in lower-income countries employed in the informal sector? De Soto (1989) famously proposed that governments – and Peru’s specifically – push firms into the informal sector by raising the barriers and costs of formalization.
By excluding firms from the formal sector, these barriers stifle entrepreneurship and reduce the dynamism of the private sector. Others (Levy 2008) have claimed that the high levels of informality represent an escape by small firms. This ‘exit’ view leads to a vicious cycle: firms escape because the state does not make formal status appealing. For example, financial markets and courts may be dysfunctional, and public procurement processes may be corrupt.
But by being in the informal sector, firms avoid paying taxes that would provide resources the state might use to improve the provision of these goods, or to force firms to become formal. In this view, informality may still stifle entrepreneurship, as firms sometimes remain small deliberately to avoid attracting the attention of regulators and tax collectors. If high rates of taxation push economic activity out of the formal economy, one would expect to see more informal activity in countries with higher tax collections.
However, just the opposite is the case. Across countries, there is a strong negative correlation between state revenue and informal activity. Indeed, another characteristic of low-income countries is that tax collec-tion by governments is very low. Government revenue 1 Estimates from Schneider, Buehn and Montenegro (2010). Taxes as a % of GDP 0 Shadow economy as a % of GDP Australia Austria Belgium Canada Chile Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Israel Japan Korea, Republic of Netherlands New Zealand Norway Slovenia Spain Sweden Turkey United Kingdom United States Italy Figure 1: Taxes and informality, OECD countries Source: World Bank (2013)
Cover Story China Running out of Breath
Outlook Crude Oil
Stats India Trade Deficit FY-2014
Emerging Country Russia
In Focus Land Acquisition Bill- A Snapshot
View the most recent commentary from The PRS Group on international macro risk.
This month’s reporting in the Americas includes a new report on Cuba, where the implementation of market-based reforms aimed at shoring up the economic foundation ahead of a planned generational transfer of power within the governing PCC has yet to generate a substantial increase...
This presentation was given by Paraguayan Economist Fernando Masi at the Annual meeting of the Kansas Paraguay Partners, at the Dole Institute for Politics (University of Kansas). For more info about KPP please visit our website: http://kansasparaguaypartners.wordpress.com/
Curbing illicit trade focus on the reform of nbrM S Siddiqui
The illicit trade is a small segment among major crimes. But its nature leads to substitution of a commodity, incorrect quantity declaration, fictitious exports, mis-classification of goods, non-declaration and mis-declaration. The costs of illicit trade are not only economic but also have social implications as it undermines social stability and socioeconomic welfare of communities, preventing equitable sharing of public goods. Illegal economic activity distorts local economy and reduces legitimate business and tax revenues.
Impact of Foreign Debt on Economic Growth in Zimbabweiosrjce
The study investigates the impact of foreign debt on economic growth in Zimbabwe. Time series data
covering the period 1980 -2013 is analysed using ordinary least squares regression. Labour force, capital
investment, and trade openness are used as control variables. The results show that external debt and trade
openness impact negatively on economic growth in Zimbabwe while capital investment and labour force growth
has a positive effect. The study recommends that the country should not heavily rely on foreign borrowing to
finance economic growth but should rather create a conducive environment for alternative sources of foreign
funds such as project finance and foreign direct investment. It is further recommended that the country should
curb excessive imports of consumables and encourage value-added exports by local manufacturers.
Japan and Russia: Contemporary Political, Economic, and Military Relations
Speaker: Elena Shadrina, Associate Professor, Waseda University
Presentation: What to Expect for Russia-Japan Relations: Contemplation against a Backdrop of Social and Economic Situation in Russia
NORMAT E INTERESIT / INTEREST RATES IMPACT AND LOAN SYSTEM IN THE ECONOMIC DE...Shkumbin Gërguri
Commercial banks are intermediators of the interaction between business entities and other economic, legal and social agents. Today, banks do not have the approach towards the classic model, whose function was only to offer classic services of deposits and loans,; with evolution of global trends and technology banks have created nowadays a modern system of operating that applies techniques and methods that are the trend of globalization.
Political risk quarterly update Q3 2016Graeme Cross
Complementing the annual Political Risk Map, Aon’s political
risk newsletter is developed in partnership with Roubini Global
Economics, an independent, global research firm founded in 2004
by renowned economist Nouriel Roubini.
This study, drafted by the ITO company Officience, describes and analyses recent evolutions in the Vietnam's development, then focuses on ITsector. Actually, this growing country has emerged two decades ago and since it has known a huge leap forward. Thanks to this growth, Vietnam received more and more investings from foreign companies. This study brings out some macroeconomic and social specificities, espacially regarding the education field.
Dealing with IT issues, the Officience company underlines in this study levers used by Vietnam to promote and develop that IT sector. Indeed, this sector will go on growing and Vietnam is already perceived as a future leader of worldwide outsourcing services.
Determine the Effect of Subjective Norms on Tax Compliance among Small and Me...AI Publications
This study was conducted to determine the effect of subjective norms on tax compliance among small and medium Enterprises (SMEs) in Mbugani and Igogo wards in Nyamagana district The study adopted a cross-sectional survey in the investigation with quantitative approach where primary data were collected from SMEs with 293 taxpayers’ sample size. Self-administered questionnaires were used to gather the data. Descriptive statistical methods, correlation and regression analyses were used to analyze the data. The data was then analyzed with the Statistical Package for Social Scientist software (SPSS version 25),using Regression analysis and analysis of variance (ANOVA).The research findings based on hypothesis revealed that,subjective norms are positively related (coefficient = .510, t = 4.437, p = .000) to tax compliance and significant. The researcher also conducted reliability tests that produced Cronbach’s alpha (α) coefficients around .70 and above. In running regression analysis, measures with the highest variances in each construct were considered whose analysis of variance (ANOVA) model was statistically significant (F=10.563, p=0.000). Overall, the results show if SMEs are subjected to social acceptance (subjective norms) and social interaction and awareness beliefs there is a positive effect to tax compliance. Therefore a direct Tax Education without addressing the social norms might not meet their respective objectives.
Prabhudas Lilladher reiterates overweight outlook on cement sectorIndiaNotes.com
All‐India cement production grew 1.9% YoY at 46.4 million for the Jan‐Feb period, as per the published data of Economic Advisor of India. Growth was held back due to sluggish demand from private sector and curtailment in government spending in order to meet fiscal deficit target.
This presentation was given by Paraguayan Economist Fernando Masi at the Annual meeting of the Kansas Paraguay Partners, at the Dole Institute for Politics (University of Kansas). For more info about KPP please visit our website: http://kansasparaguaypartners.wordpress.com/
Curbing illicit trade focus on the reform of nbrM S Siddiqui
The illicit trade is a small segment among major crimes. But its nature leads to substitution of a commodity, incorrect quantity declaration, fictitious exports, mis-classification of goods, non-declaration and mis-declaration. The costs of illicit trade are not only economic but also have social implications as it undermines social stability and socioeconomic welfare of communities, preventing equitable sharing of public goods. Illegal economic activity distorts local economy and reduces legitimate business and tax revenues.
Impact of Foreign Debt on Economic Growth in Zimbabweiosrjce
The study investigates the impact of foreign debt on economic growth in Zimbabwe. Time series data
covering the period 1980 -2013 is analysed using ordinary least squares regression. Labour force, capital
investment, and trade openness are used as control variables. The results show that external debt and trade
openness impact negatively on economic growth in Zimbabwe while capital investment and labour force growth
has a positive effect. The study recommends that the country should not heavily rely on foreign borrowing to
finance economic growth but should rather create a conducive environment for alternative sources of foreign
funds such as project finance and foreign direct investment. It is further recommended that the country should
curb excessive imports of consumables and encourage value-added exports by local manufacturers.
Japan and Russia: Contemporary Political, Economic, and Military Relations
Speaker: Elena Shadrina, Associate Professor, Waseda University
Presentation: What to Expect for Russia-Japan Relations: Contemplation against a Backdrop of Social and Economic Situation in Russia
NORMAT E INTERESIT / INTEREST RATES IMPACT AND LOAN SYSTEM IN THE ECONOMIC DE...Shkumbin Gërguri
Commercial banks are intermediators of the interaction between business entities and other economic, legal and social agents. Today, banks do not have the approach towards the classic model, whose function was only to offer classic services of deposits and loans,; with evolution of global trends and technology banks have created nowadays a modern system of operating that applies techniques and methods that are the trend of globalization.
Political risk quarterly update Q3 2016Graeme Cross
Complementing the annual Political Risk Map, Aon’s political
risk newsletter is developed in partnership with Roubini Global
Economics, an independent, global research firm founded in 2004
by renowned economist Nouriel Roubini.
This study, drafted by the ITO company Officience, describes and analyses recent evolutions in the Vietnam's development, then focuses on ITsector. Actually, this growing country has emerged two decades ago and since it has known a huge leap forward. Thanks to this growth, Vietnam received more and more investings from foreign companies. This study brings out some macroeconomic and social specificities, espacially regarding the education field.
Dealing with IT issues, the Officience company underlines in this study levers used by Vietnam to promote and develop that IT sector. Indeed, this sector will go on growing and Vietnam is already perceived as a future leader of worldwide outsourcing services.
Determine the Effect of Subjective Norms on Tax Compliance among Small and Me...AI Publications
This study was conducted to determine the effect of subjective norms on tax compliance among small and medium Enterprises (SMEs) in Mbugani and Igogo wards in Nyamagana district The study adopted a cross-sectional survey in the investigation with quantitative approach where primary data were collected from SMEs with 293 taxpayers’ sample size. Self-administered questionnaires were used to gather the data. Descriptive statistical methods, correlation and regression analyses were used to analyze the data. The data was then analyzed with the Statistical Package for Social Scientist software (SPSS version 25),using Regression analysis and analysis of variance (ANOVA).The research findings based on hypothesis revealed that,subjective norms are positively related (coefficient = .510, t = 4.437, p = .000) to tax compliance and significant. The researcher also conducted reliability tests that produced Cronbach’s alpha (α) coefficients around .70 and above. In running regression analysis, measures with the highest variances in each construct were considered whose analysis of variance (ANOVA) model was statistically significant (F=10.563, p=0.000). Overall, the results show if SMEs are subjected to social acceptance (subjective norms) and social interaction and awareness beliefs there is a positive effect to tax compliance. Therefore a direct Tax Education without addressing the social norms might not meet their respective objectives.
Prabhudas Lilladher reiterates overweight outlook on cement sectorIndiaNotes.com
All‐India cement production grew 1.9% YoY at 46.4 million for the Jan‐Feb period, as per the published data of Economic Advisor of India. Growth was held back due to sluggish demand from private sector and curtailment in government spending in order to meet fiscal deficit target.
Виртуальная выставка подготовлена на основе комплекта открыток : Мѐртвые души. Гоголевские типы по рисункам художника
П. М. Боклевского [Изоматериал]: комплект открыток /реставрация изображений и версия в цвете А. Орлеанского. Рыбинск : [б. и.], 2009.
Wil jij ook een eigen radio programma op werken.fm ? Of wil jij jouw event op een bijzondere manier onder de aandacht brengen ? Bij werken.fm zijn er talloze mogelijkheden. Wil je meer weten, neem dan contact op met ons salesteam sales@werken.fm
THE IMPACT OF TRADE LIBERALIZATION ON ECONOMIC GROWTH; THE CASE OF SUB-SAHARA...AkashSharma618775
The main aim of this research is to explore the effect of trade liberalization on economic growth in subSaharan Africa by analyzing certain macro-economic indicators using Ordinary Least Squares approach to
estimate regression equations. Many developing countries have substantially liberalized their trade regime over the
past three decades, either unilaterally or as part of multilateral initiatives. Nevertheless, trade barriers remain
high in many developing countries. One of the concerns that attributes to the reluctance of many of these countries
to liberalize their trade regime is the possible worsening of the trade balance.
This research paper is meant to give a recommendation on which macro-economic indicators sub-Saharan African
countries should pay particular attention to, implementing the necessary policies to ensure its effectiveness thereby
ensuring a step-up in those aspects of the economy in order to promote development. It considers 46 different
countries with different economic policies in sub-Saharan Africa for a 14-year period. Most papers considering
sub-Saharan African region consider a selected few countries based on certain economic reasons of their choice,
and those who consider most countries in the region have different macroeconomic indicators they employ for their
modeling. This paper considers if not all, almost all sub-Saharan African countries regardless of their economic
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Digital economy for Somalia how it can help the nationAli Mohammed
Somali Government should take the leadership and courage to recognize and reap in the unexplored benefits of digital economy and ICT so that Somalia can reach new heights as far as development is concerned. Somalia Needs a visionary who has the courage to take the first leap.
This presentation contains the general information regarding black economy of Pakistan and its causes with solutions. I have also given the report statistics of IMF about the black economy participation in Pakistan's total output.
Hope everyone will find this helpful.
Few empirical studies have looked specifically at the contribution of financial sector development to transition economies' growth, although developed financial markets have been generally assumed to be crucial to supporting growth performance. An empirical exercise that relates GDP growth to a range of variables finds some support for the proposition that financial sector development—in particular the role of foreign-owned banks—had a significant positive impact on transition economies' growth during the past decade.
The results of elections held in eastern Europe this year do not indicate any clear shifts in regional trends or direction. Bulgaria and Romania are set to join the EU on January 1st 2007 (at most there could have been a one-year delay until January 2008), but this will be under the strictest conditions ever applied to new members. Acrimonious negotiations on the final status of Kosovo appear to be grinding towards an impasse and possible crisis. It is difficult to predict the effects on developments in the wider region—not only in restive and resentful Serbia, but also in Bosnia and Hercegovina (BiH), Macedonia and possibly further afield. This is occurring when the EU's most effective instrument for influencing developments in the region—the offer of EU membership—has been seriously weakened by the anti-enlargement mood sweeping western Europe.
Deloitte 2014: Global Powers of Luxury GroupsDigitaluxe
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1. Mentor: Mark McNeil
Supervisor: Kay Ryals
ABSTRACT
The Republic of Georgia is located in the Lower Caucasus and has existed as a logistical hub between Europe
and Asia for over 14 centuries. It has had a tumultuous history, but recently took significant steps to
modernize and rebuild its economy. During the past decade, Georgia has experienced major economic
growth, which peaked at 12% GDP growth in the spring of 2008 (World Bank). In 2013, it was ranked as the
8th-easiest country in which to do business, just above Norway and the United Kingdom (GCB). The Republic
of Georgia’s economic success is due to major reforms that have allowed this Post-Soviet country to emerge
into the competitive global market. In the coming decades, Georgia will need to
revisit some of the economic policies to insure its continued success for long-
term sustainability. Through this research I was able to answer
two main questions:
1) What were the primary causes that allowed Georgia to transform its economy?
2) Is it possible to apply this model to other Post-Soviet countries?
BACKGROUND
The Republic of Georgia is a small country located south of Russia. It has had a rough history, which involved
invasions by the Persians, Turks, and Russians. Georgia experienced three glorious years of freedom after
the collapse of the Tsarist regime, but was promptly annexed by the Soviets in 1922.
Since achieving independence in 1992, following the collapse of the USSR, the Republic of Georgia has taken
drastic steps to break from its past and become a leader among the struggling post-Soviet countries.
However, when the Soviet Union collapsed, Georgia’s economic structure disintegrated. The major
processing factories that were set up during the Soviet Union emptied within days. In response, Georgia
began a wave of land-privatization. Entrepreneurs bought up large agricultural and metallurgical processing
plants, selling much of the Soviet infrastructure for a quick profit, only to leave behind the looming concrete
shells of the factories and desolate orchards.
This small fertile country, which was once referred to as the “fruit basket of the Soviet Union”, has now
witnessed two miraculous decades of independence and economic growth. With this project I undertook the
challenge to explain the “WHY?” behind this story.
OUTLINE OF RESULTS
The Republic of Georgia’s economic success can be attributed primarily to three overarching elements:
• Bureaucratic Reform
• Rise in Foreign Direct Investment
• Decrease in Corruption
1) Law Enforcement
2) Tax System
BUREAUCRATIC REFORM
ACKNOWLEDGEMENTS
Along with Armenia and Azerbaijan, Georgia became part
of the Transcaucasian Soviet Republic where it was prized
as a resort destination and an agricultural hotspot.
CORRUPTION
FOREIGN DIRECT INVESTMENT
The ability to open a business and start a career in Georgia appealed to many people, and attracted billions
of dollars of foreign investment as well as human capital. The shift towards a more liberal investment
environment led to a spike in FDI growth which surpassed $2 Billion in 2007.
After a decade of stagnant growth, Mikhael Saakashvili was elected in January 2004. He began his term with
the goal of “westernizing” Georgia by beginning with the government. His main focus in the government was
taking away all the “red tape” and bureaucratic drag left over from the Soviet Union. One of the results was a
sharp increase in new businesses. Opening a new business became cheaper and required less red tape.
0
10
20
30
40
50
60
70
80
90
100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Business Freedom Index Score from
2005-2014
Georgia Ukraine Estonia
Ease Of Doing Business Index from The World Bank
In 2004 the police force characterized by its Soviet-Era hierarchical structure and rampant corruption. For many
other NIS and Post-Soviet countries, corruption is the main reason for economic failure. Corruption is a disease
to the economy, and Saakasvhili realized this when he was instated. He revamped the legal police code, and a
few months later 16,000 policemen were fired and many of the branches were merged together. Only 15% of
the previous police force was left in office. These actions were met with high levels of controversy and city
wide protests. However, despite the drastic measures, over three quarters of a 2010 poll by Transparency
International said that low-level corruption has decreased in the past years, and that this is due to key
governmental action.
0
500
1000
1500
2000
2500
2005 2006 2007 2008 2009 2010 2011 2012
MillionsofUSD
One of the most prominent effects is that
FDI increases the tax base, which is always
an issue for new governments. The influx of
capital also provides jobs that were
otherwise outsourced, and as a result the
increase of exports and production from
these new industries give the country
credibility on a global scale.
Wyeth Binder, Irvine Valley College
From Amidst the Soviet Ruins:
The Republic of Georgia's Economic Revival
Wyeth Binder, Irvine Valley College
Mentor: Professor Mark McNeil
Intourist posters by Aleksandr Zhitomirsky, 1939
LAW ENFORCEMENT
TAX SYSTEM
Corruption is not merely limited to low level bribery. One of the most damaging faces of corruption was tax
evasion. Georgia has had a long history of being unable to collect taxes, as is the case with most post-Soviet
countries. When Saakashvili came to power, he completely reorganized the financial system. He brought the tax
agency and the customs agency under the supervision of the Ministry of Finance. This improved transparency
and allowed for better monitoring.
Recently the Revenue Service was completely digitalized
with new software. This technology drastically reduced the
level of personal interaction with authorities, which led to a
decrease in personal bribes (Granickas).
61%
22%
17%
Distribution of crimes committed by
acting policemen before the
reorganization.
Bribery
Drugs
Other
Chart :(Siradze)
15%
35%
50%
28%
20%
52%
78%
13%
9%
Decreased Stayed the Same Increased
Armenia Azerbaijan Georgia
In the past three years how has the level of
corruption changed in your country?
Poll by: Transparency International June 2010
This extract from a study on tax policy in developing
countries sums up the current situation in Georgia. The
system has numerous constraints ranging from its relatively
young bureaucracy to a lack of infrastructure. However, it is
making steps in the right direction.
0%
5%
10%
15%
20%
25%
30%
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2003 2008
Tax Revenue in Billions of USD Tax Revenue as Percent of GDP
Rise in Tax Revenue from 2003 to 2008
Transparency International May 2010
CONCLUSION
The Republic of Georgia is now at a pivotal point in its history. It has experienced almost two decades of
significant change, and has gained publicity worldwide. As a competitor in the global market, Georgia has to
plan strategically for the long run. It has come a long way economically, but still has many hurdles to
overcome, such as rebuilding trust in the justice department and encouraging its citizens to play their part in
the politics of the country. Two significant events that have greatly impacted Georgia are the recent trade
agreements with the EU and the imminent economic threat from Moscow.
The new agreement will void multiple tariffs from Georgia to all the EU countries and increase Georgia’s
exports, which is crucial to boosting the success of small medium enterprises.
Georgia is a vulnerable country. It is in a highly desirable location for both
trade and agriculture, but does not have a significantly strong military backing.
The Russian annexation of Crimea in February 2014 came as no surprise to
Georgia who witnessed a similar situation with Abkhazia in 2008. These recent
events have been detrimental to the political stability of the region and resulted in a decrease of foreign
investment. Continued conflict in the region could slow potential growth and be damaging to trade
partnerships with Georgia.
"Ninety-five per cent of Georgians regard [the agreement] as
protection from Russian aggression," says a young Georgian,
Irakli Pachulia. (BBC)
Security and stability are the two building block of a sustainable economy. For
many of the post-Soviet countries such as Ukraine and Azerbaijan, corruption
is a significant problem and these nations would definitely benefit by following
Georgia’s lead in this regard. The next step would be to increase internal
growth by relaxing regulations on investment and reducing red tape for
businesses. Transparency is necessary for the tax system, and software
technology can reduce bureaucratic drag in this area. However, the
government must ultimately strive to build trust both internally and externally.
Professor Mark McNeil, Head of Economics, Irvine Valley College
Dr. Kay Ryals, Head of Honors Program, Irvine Valley College
Works Cited
Bird, Richard M. “Tax Challenges Facing Developing Countries” National Institute of Public Finance and Policy. 12. Mar. 2008. Web. 22 Oct. 2014.
"Georgia Direct." BBC News. BBC. Web. 22 Oct. 2014.
Granickas, Karolis. "Technology and Corruption in the Post-Soviet Region." Open Knowledge Foundation. 22 Mar. 2012. Web. 17 Mar. 2014.
Gürsoy, Faruk. “Foreign Direct Investment and Growth Relationship in Georgia.” International Journal of Economics and Financial Issues. Vol. 2. pp.267-271. No. 3, 2012
Kemularia, Rusudan. "Tax Reforms in Georgia." Ministry of Finance Presentation. Ministry of Finance, 12 Apr. 2011. Web. 17 Mar. 2014.
Kramer, John M. “Political Corruption in the U. S. S. R.” The Western Political Quarterly 30.2 (1977): 213-224. 17 Mar. 2014.
Siradze, George. “Structural Reorganization and Staff Optimization in the Ministry of Internal Affairs” Ministry of Internal Affairs, Tbilisi. Web. 22 Oct. 2014.
Transparency International. Global Corruption Barometer 2010. Transparency International, International Secretariat Alt-Moabit 96-10559 Berlin, Germany. 24 Feb. 2014.
The World Bank, World Development Indicators. Georgia. The World Bank. Web. 24 Feb. 2014.
The World Factbook: Georgia. The World Factbook. Central Intelligence Agency. 06 Feb. 2014. Web. 24 Feb. 2014.
This chart is benchmarked to June 2013 and ranks the
efficiency of different business sectors. “A high ranking on
the ease of doing business index means the regulatory
environment is more conducive to the starting and operation
of a local firm” (World Bank).
Net Foreign Direct Investment In Georgia from 2005-2012
No matter what any country may
want to do with its tax system, or
what anyone might think it should
do from one perspective or another (ethical, political, or
developmental), what it does do is always constrained by
what it can do (Bird).
Rose Revolution 2003 Russo-Georgian War
2008
Financial Collapse
2008
Giorgi Margvelashvili
2013
Although an economic story is more complex than
three bullet points, these areas that I have
researched are the most critical and are common
for other post-Soviet countries. However, the way
in which Georgia has dealt with these issues is
unique compared with the surrounding nations,
and can serve as a blueprint for other newly
independent states (NIS) emerging into the global
market.
Why is FDI good for small,
emerging economies?
From statistical research causality runs
from FDI GDP and is confirmed in
the case of Georgia (Gürsoy).