Georgia Profile

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Country profile to set-up biz shop

Georgia Profile

  1. 1. FOCUS ON SETUP SHOP & DOING BUSINESS
  2. 2. FOCUS ON SETUP SHOP & DOING BUSINESS
  3. 3. TABLE OF CONTENTSU M MA R Y …… … …… …… … …… … …… … …… …… … …… … …… … …… …… … …… … ….. 5KE Y F A C TS ...... ..... ...... .. ........ ...... ...... ...... ...... ... ........ ...... ...... ...... ...... . .. ........ ...... ...... . 8SO 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 …… … … …… … …… … …… … …… …… … …… … …… … …… …… ….. 28EC ON OM YGE 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 … …… … …… … …… … …… …… … 42A 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
  4. 4. 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 … … …… … …… …… … …… … …… … …… …… ….. 49RE FE RE N CE …… … …… …… … …… … …… … …… …… … …… … …… … …… …… … …… … ….. 50TABLE INDEXTABLE 1 DEMOGRAPHICAS INDICATORS ………………………………………………………………. 12TABLE 1.2 DISTRIBUTION OF POPULATION ……………………………………………………………… 13TABLE 2 MINERAL RESOURCES ………………………………………………………………………… 16TABLE 3 COMMUNICATION MEDIUMS ………………………………………………………………... 17TABLE 4 SCHOOL ENROLMENT ………………………………………………………………………… 20TABLE 5 POLITICAL STRUCTURE ……………………………………………………………………….. 21TABLE 5.1 MAIN POLITICAL PARTIES IN GEORGIA ……………………………………………………….. 22TABLE 6 ECONOMIC STATISTICS ……………………………………………………………………….. 31TABLE 6.1 PRINCIPLE INDUSTRY …………………………………………………………………………. 32TABLE 7 FDI FLOW IN ECONOMIC SECTORS …………………………………………………………… 34TABLE 7.1 FOREIGN DIRECT INVESTMENT BY COUNTRIES ………………………………………………. 35TABLE 8 GEORGIAN TOP EXPORTS BY COUNTRIES IN 2009 …………………………………………… 36TABLE 8.1 TOP PRODUCT EXPORTED IN 2009 …………………………………………………………… 36TABLE 8.2 GEORGIAN TOP IMPORTS BY COUNTRIES IN 2009 …………………………………………… 37TABLE 8.3 TOP PRODUCT IMPORTED IN 2009 …………………………………………………………… 37TABLE 8.4 EXCHANGE RATE AGAINTS USD ………………………………………………………………. 39TABLE 9 WORLD BANK: DOING BUSINESS INDICES RANK ……………………………………………... 43CHART INDEXFIGURE 1 MIGRATION AND GROWTH RATE ……………………………………………………………. 12FIGURE 2 SEX RATION …………………………………………………………………………………… 12FIGURE 3 ETHNIC GROUP DISTRIBUTION IN TOTAL POPULATION ……………………………………… 13FIGURE 4 LANGUAGE DISTRIBUTION IN TOTAL POPULATION ………………………………………….. 13FIGURE 5 POPULATION: RELIGION ……………………………………………………………………… 14FIGURE 6 GROSS DOMESTIC PRODUCTION GROWTH ………………………………………………….. 31FIGURE 7 INCOME PER CAPITA GROWTH RATE ………………………………………………………… 31FIGURE 8 INFLATION RATE ……………………………………………………………………………… 32FIGURE 9 UNEMPLOYMENT RATE ………………………………………………………………………. 32FIGURE 10 GDP STRUCTURE BY SECTOR CONTRIBUTION ……………………………………………….. 33FIGURE 11 INDUSTRY VALUE ADDED GROWTH RATE ……………………………………………………. 33FIGURE 12 FDI NET INFLOW OF GDP ……………………………………………………………………... 34FIGURE 13 FDI BY ECONOMIC SECTORS ………………………………………………………………….. 34FIGURE 14 GEORGIAN TOP EXPORTER CONTRIES ………………………………………………………... 36FIGURE 15 TOP PRODUCT EXPORTED IN 2009 …………………………………………………………… 36FIGURE 16 GEORGIA TOP IMPORTER COUNTRIES ……………………………………………………….. 37FIGURE 17 TOP PRODUCT IMPORTED IN 2009 …………………………………………………………… 37FIGURE 18 EXTERNAL TRADE OF GEORGIA (BOP) ………………………………………………………... 38FIGURE 19 GEORGIAN LARI EXCHANGE RATE TREND AGAINST US DOLLAR ……………………………... 39
  5. 5. 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. Georgias 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, although5 SUMMARY | SOCIOECONOMIC PROFILE
  6. 6. 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
  7. 7. 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 sources8 KEY FACTS | SOCIOECONOMIC PROFILE
  8. 8. FOCUS ON SETUP SHOP & DOING BUSINESS
  9. 9. INTRODUCTIONGeorgia known officially from 1991 as the Republic of and they think of themselves as an EasternGeorgia, until 1990 it was Soviet Union state. It absorbed Mediterranean culture.into Russian Empire in the 19th century. It has beenindependent of three years (1918-1921) following the Georgia has attracted the attention of a range of otherRussian revolution, and it was forcibly incorporated into countries, with different interests and ambitions. It seeksthe USSR until the Soviet Union dissolved in 1991. to strengthen a republic and achieve greater economicGeorgia was an ancient kingdom of Colchis and stability. It has a potential to come to be an importantKartlilberia. In the first century A.D., it came under an and developed economy of the black sea & Eurasiainfluence of Roman, and Christianity became the country region. Coming years appears very prosperous in businessthe state religion in the 330 AD. It was the second and social growth of the country because its future on thecountry to adopt Christianity. Georgia dominated by restoration of the ancient Silk Road economies as a Eurasian transportation system corridor, using GeorgiasPersian, Arabs, Mongol and Turks. geography as a bridge for the transit of goods, includingGeorgia is strategically located at crossroads between oil and gas, between Europe and Asia. Georgians areEurope 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 hasby 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 significantportion lies in North Caucasus. Throughout the centuries, impact in country society as well as on the economy. Itit has been dominated and settled by Greeks, Romans, could become most important service hub in the regionPersians, and Turkish tribes, Arabs, Mongols and because of access in Europe and Asia, though findingRussians. Georgia was also on one of the branches of the trained talent is still a problem in country, but govt. stepSilk Road, which carried trade from China and India to toward vocational studies making shift in order to ease inEurope hence the Georgian people have been influenced find talent. As the country adopted free market economyby many cultures, both Asian and European. The model like Singapore and doing business in the countryGeorgians resembles Greeks and Turks in appearances, become easy gives to attractive invest ground for FDI. 10 INTRODUCTION | SOCIOECONOMIC PROFILE
  10. 10. HISTORY OVERVIEWGeorgia’s recorded history dates back more than 2500 Georgia was absorbed into the Russian Empire in the 19thyears 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 absorbedtogether in a unified state for only a small fraction of into USSR until Soviet Union disintegrated in 1991 andtheir existence as people. Much of Georgias 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 hasthrough the 18th century. The zenith of Georgias power been made in the year since independence but progressas an independent kingdom came in the 11th and 12th has been complicated by Russia assistance and support tocenturies, 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 incelebrated for all Georgian rulers. In 1783 the king of summer 2008, Russian troops pulled back from mostKartli (in eastern Georgia) signed the Treaty of Georgievsk occupied the breakaway areas, but large portions ofwith the Russians, by which Russia agreed to take the Georgia proper as well. Russian unilaterally recognizedkingdom as its protectorate. In 1801, the Russian empire the independence of Abkhazia and South Ossetia. Thisbegan the piecemeal process of unifying and acquiring action was strongly condiment by most of the worldGeorgian 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
  11. 11. DEMOGRAPHICSTable 1 Demographic indicatorsTotal population 4.6 million (2010 est.)Growth Rate -1.08%Birth Rate 10.66 births/1,000 populationDeath Rate 9.65 deaths/1,000 populationMigration Rate -4.26 migrant(s)/1,000 populationUrbanization 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, 201012 DEMOGRAPHICS | SOCIOECONOMIC PROFILE
  12. 12. 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 TelaviFigure 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, 201013 DEMOGRAPHICS | SOCIOECONOMIC PROFILE
  13. 13. Observation: Georgian population growth trend is Figure 5 Population: Religionreally negative. It appears within 30 years Georgiacould face the ageing crisis. Therefore, there is a Orthodoxneed of population growth. Compare to any Indian Christiancity with the population of 5 million, Georgia has a 84%big advantage to make faster growth to implement Muslimreforms because of its literacy rate. In the ratio of 10%Area and population, there are very goodopportunities to build expatriate society, which Armenian- Georgiancould 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 andcreate more opportunities for everyone.Language is another advantage of the country.Georgian is a primary language of 4.2 million peoplein country but still Russian is most spoken secondarylanguage in Georgia. Russian language is thelanguage for 180 million people, which give an ideafor expansion of business activity in other CISregions. Recently, the government adopted Englishto become a mandatory language to be taught inschool from one grade, which is also a goodindication to produce a future internationalworkforce. 14 DEMOGRAPHICS | SOCIOECONOMIC PROFILE
  14. 14. GEOGRAPHICAL SETTINGLocation Caucasus range. The Lesser Caucasus range, which runs parallel to the Turkish and Armenian borders, and theGeorgia is situated on the Black Sea at the junction of Surami and Imereti ranges, which connect the CaucasusEastern Europe and Asia. Georgia is a mountainous Mountains, create natural barriers that are partiallycountry. The northern geographical boundaries run along responsible for cultural and linguistic differences amongthe Great Caucasian Range, which include the Main regions. Because of their elevation and a poorlyCaucasian Range, and its other chains stretch to the developed transportation infrastructure, many mountainsouth. The southern boundary coincides with the villages are virtually isolated from the outside worldmountainous system of the Minor Caucasus, including the during the winter. Earthquakes and landslides inMeskheti-Trialeti volcanic plateau, Southwestern Asia, mountainous areas present a significant threat to life andbordering the Black Sea, between Turkey and Russia, witha 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 forthe north, Turkey (252 km) and Armenia (164 km) south power small hydroelectric stations. Drainage is into thewest, Azerbaijan (322 km) to the south-east, and the Black Sea to the west and through Azerbaijan to theBlack 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 1,364Georgias climate is continental climate. Its climate kilometers from the northeast Turkey across the plains ofaffected by subtropical influences from the west and eastern Georgia, through the capital, Tbilisi, and into theMediterranean influences from the east. The Greater Caspian Sea. The Rioni River, second largest river inCaucasus range moderates the local climate by serving as western Georgia, rises in the Greater Caucasus anda barrier against cold air from the north. Warm, moist air empties into the Black Sea at the port of Poti. Sovietfrom the Black Sea moves easily into the coastal lowlands engineers turned the river lowlands along the Black Seafrom 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, andGeorgia are shielded from the influence of the Black Sea built an extensive system of canals. Deep mountainby mountains that provide a more continental climate. gorges forms topographical belts within the Greater Caucasus.TopographyIn spite of its small area, Georgia has one of the most Temperaturevaried topographies of the former Soviet republics. Country temperature recorded in summer average 20° CGeorgia lies mostly in the Caucasus Mountains, and its to 24° C and winter 2° C to 4° C. Humidity is lower andnorthern boundary is partly defined by the Greater rainfall averages 500 to 800 millimeters per year.15 GEGOGRAPHICAL SETTING | SOCIOECONOMIC PROFILE
  15. 15. MINERAL RESOURCESGeorgia is rich country in minerals, and it has significant for ferro alloys production. Categorized list of mineralsminerals resources reserve. There are many kinds of found in Georgia given below.economic mineral mined during soviet era, as fall ofUSSR, the Georgian minerals mining decline. A range of Georgia has a main role in the world minerals. Georgia ismineral 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 aarsenic, barite, bentonite, coal, copper, diatomite, lead,manganese, zeolite, and zinc, among others. The country significant country. Three large gas and oil exportedhad 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, thedepleted. 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 prospectiverequired to sustain a major mining venture. The Georgian for precious metals". Georgia has been able to attract aState Geology Committee announced that, based on limited number of international investors, and the futureSoviet records, the country had reserves of 8 million troy prospects for mineral development will depend on theounces (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
  16. 16. COMMUNICATION SYSTEMSRecently, telecommunication industry, especially mobile information technology operation in Georgia. Increasedcommunication 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. Manycompanies already tapped market but there is still space The mobile communication has become important for Georgia because of its geographical settings. Fixed-lineavailable for new entrants in telecommunication industry.Domestic and International services are increasingly networks in many places out dated and a mobile phoneaccessible for private use. Country has extensive fiber represents the only means of communication, specificallyoptic network, 3. 5G system has been introduced in the as mobile coverage has been provided for virtually in thecountry, 17% mobile user using a 3G technology, which whole Georgia. A telecommunication has become one ofappeared 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
  17. 17. SOCIAL INSTITUTIONGeorgians share many social attitudes with neighboring In the event of divorce, the law stipulates that mothersMediterranean cultures. Tradition, loyalty to friends and given custody of children. Recent trend show in urbanfamily, and generosity toward guests are viewed as areas in nuclear families, people prefer hire nanny forimportant 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 havehonorable. Important relationships might help a child been more responsible for brought up their child or ifenter a university, gain a promotion for a family member, there are elder people in family then they help in takingor give a close friend a new business opportunity. caring of children.According to a Georgian proverb, "A guest is sent byGod." Guests are always treated generously in a Georgian Marriage and Courtshiphome, even if the host cannot really afford it. Guests Georgian constitution requires the free consent of bothusually bring a symbolic gift, such as flowers or spouses for marriage, the minimum age for marriage atchocolates, when they visit. Even if an enemy crosses a 18 years for both men and women. In exceptionalGeorgian threshold, he or she must be treated well and circumstances, marriage may be authorized from age ofnot harmed. The best way to show respect for guests is to 16 years. According to United Nation, report estimatedhonor them with a keipi , or feast. The keipi is a central 16% of Georgian girls between 15 and 19 years of agepart of Georgian social life. were married, divorced or widowed. There are cases of arranged marriages in rural areas, which usually found inFamily Muslim community in country and practice in oldIn urban area, Georgian family structure follows nuclear conventional family.family structure. Increasing unemployment in a past two Female/Male rolesdecade had also compelled people to move in cities, and The constitution of Georgia supports the principle ofadopting smaller ways of life. From last two decades, equal right for men and women. However, the currentthere has been significant changing in a traditional way of situation in the country creates many challenges forlife. Despite this fact, only half of Georgian families women. Women’s lives have changed dramatically afteradhere to the nuclear structure, and 50% families are still collapsed of Soviet Union in 1991. Georgia faced into afollowing complex or joint family structures. period of internal politics conflict, until 1994 GeorgianDynamics of family GDP contracted by 72%. Nevertheless, from 1995 the economy began to recover. Until 2006, 51% GeorgianParental roles were living below the official poverty line. FollowingGeorgian constitution gives guarantees an equal right for economic changes affected social atmosphere, povertyboth men and women in parental authority. Traditionally, and unemployment have been a persistent problem inwomen do domestic chores and men exert authority Georgia. As most emigrants were men, increasingwithin the family, but attitudes are changing. In urban numbers of women are now the sole provider for theirareas, 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 aswithin the family is increasingly shared by both spouses. men. 18 SOCIAL INSTITUTION | SOCIOECONOMIC PROFILE
  18. 18. EDUCATION"Knowledge is all about the learning of our past in university level after 12 grades. However, students aregeneration. The transmission of knowledge from one passive toward recent amendment in education; newgeneration 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 examGeorgia has attained world-class levels of a combined system, in which practice of bribery was very common toprimary, secondary and tertiary education system. get admission. With starting of Unified NationalGeorgian education system divided into elementary (six Examination, Government officials are claiming “We haveyears; age level 6-12), basic (three years; age level 12-15), finally come up with a system that almost surely excludesand secondary (three years; age level 15-18), alternatively any possibility of bribe-taking.” New reform in thevocational studies (two years). Students with a secondary education system in Georgia shook everyone in theschool certificate have access to higher education. Only country. This is a radical change going on in a Georgianthe students who have passed the Unified National education system.Examinations may enroll in a state-accredited highereducational institution, based on ranking of scores he/she Role of educationreceived at the exams. Most of these institutions offer Education in Georgia is mandatory for all children agedthree level studies: a Bachelors Programme (3–4 years); a from 6-14. During Rose Revolution, the condition ofMasters Programme (two years), and Doctoral education suffered terribly. In particular, higher educationProgramme (three years). was deeply affected. This meant an unbalanced ratio ofThe high human development countries index shows, untrained workers to the demand of society. ThisGeorgia education index 0.90 is comparable to other deficiency was identified, and the governmentcountries like Singapore (0.86), which signifies. Georgias commitment to reform was reinforced by plans for 12literacy rate is 100%, which is a remarkable figure. At the years compulsory school program, and for providing goodsame 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 educationSoviet 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; theto 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 maththat was contained in a single text book. and science. Institutions have increased the number ofRecent report of BBC.com indicates that country hours spent studying foreign languages, humanities, theeducation is highly corrupt, bribery is quite frequent to get history and geography of Georgia, and native languagegrads and marks in an examination, which is become a and literature. The constitution requires schools tovery 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 farand started Unified National Examination to get admission the main language of instruction. 19 EDUCATION | SOCIOECONOMIC PROFILE
  19. 19. Table 4 School EnrolmentPrimary education The school days for basic, or the lower level of secondaryThe Georgian government works to develop the education, are five to six hours per day; for the higherpersonality of children through pre-school programs. level, it is six to seven hours per day. Most students alsoThere 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 foreignage 3-6. Student in primary grads studied about seven languages are studied at the secondary level and, at thesubjects. Primary school subjects include native language higher level; students choose an emphasis to study. Thestudy, math, fine arts, music, physical education, natural choices include humanities, physics and math, chemistrystudies, Russian, and literature. The school day is and biology, vocational education, or language. Highapproximately three hours in the primary grades. school is the highest level of education before students reach eligibility for entering higher education.Secondary educationIn 1997-1998, there were about 275,000 students in the Higher Educationcountrys 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 andcalled upper secondary, or high school. The basic level medicine students do not attend regular university, butconsists 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 medicalin the future. schools seven, plus two to three years of ordinatura, which is comparable to an internship. 20 EDUCATION | SOCIOECONOMIC PROFILE
  20. 20. POLITICAL SYSTEMGeorgia is still not a full-fledged democracy. The Georgian ranging from transforming the country into apolitical 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 betweenreferred to as Parliament) with 235 seats. Members are the Government and the opposition. Different opinionselected 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 isrepresent single-seat constituencies. essentially free; many opposition leaders claim that Georgia is a dictatorship, and Freedom House putsThe political system remains in the process of transition, Georgia in the group of somewhat free countries, alongwith 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 defenseObservation: Georgia is an extremely politicized society. seem blocked in separate mindset ideology. All the mainThere are hundreds of political parties, of which many are parties have different objective and vision, yet everyoneunregistered. 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
  21. 21. Table 5.1 Main political parties in GeorgiaParty Name Leader NameUnited National Movement or UNM Mikheil SaakashviliChristian Democratic Movement Giorgi TargamadzeConservative Party Kakha KukavaDemocratic Movement United Georgia Nino BurjanadzeFor Fair Georgia Zurab NogaideliGeorgian Peoples Front Nodar NatadzeGeorgias Way Party Salome ZourabichviliGreens Giorgi GachechikadzeIndustry Will Save Georgia (Industrialists) or IWSG Georgi TopadzeLabor Party Shalva NatelashviliNational Democratic Party or NDP Bachuki KardavaNational Forum Kakhaber ShartavaNew Rights David GamkrelidzeOur Georgia-Free Democrats (OGFD) or Alliance for Georgia Irakli AlasaniaPeoples Party Koba DavitashviliRepublican Party David UsupashviliSocialist Party or SPG Irakli MindeliTraditionalists Akaki Asatiani22 POLITICAL SYSTEM | SOCIOECONOMIC PROFILE
  22. 22. LEGAL SYSTEMThe Georgian legal system is structured in hierarchical The Supreme Court of Georgia represents the court of thelayers. The Judiciary System of Georgia consists of three highest and final instance for justice administration in thestages: 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 CodeGeorgian civil code created during 992-997, with Book two: Law of Things (Property Law) – regulatescollaborative 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 ofidea 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 andcode, 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, throughEuropean 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 ofgovern the entire Private Law and strengthen its inheritance. The Georgia civil code regulates all the keyunderlying institutions, such as the doctrine of subjects of issues from person’s birth until its death. Therefore, thelaw, doctrine of transactions, exercise of rights, periods of utmost importance of this statute is undisputable.time, limitations (prescription).23 LEGAL SYSTEM | SOCIOECONOMIC PROFILE
  23. 23. HUMAN AND THE UNIVERSE: PHILOSOPHY AND RELIGION Religion and Belief systemGeorgian people practice Orthodox Christianity. Georgia There are small groups of Yezid Kurds, Russian Molokanswas the second after Armenia to accept Christianity as and Dukhobors, and Jews.the established religion in 326 A.D. Despite the hugeinfluence of Christianity in Georgia. They are very tolerant Many of the popular beliefs and rituals regarding deathand respectful of the representatives of other religions. and afterlife stem from a mixture of Christians and paganThere are a lot of Muslims. Some Abkhazians and concepts, with many superstitions and culturalGeorgians from southern and southwest area practice borrowings. Respecting the deceased is a very important part of social life, and much time is spent attendingSunni Islam. Azerbaijanis, Assyrians and Kurds areMuslims. In Georgia, there is also a small number of funerals and wakes and caring for graves. AlthoughCatholics. Several Protestant churches are active, with people believe in an eternal afterlife, there is no clearthe Baptists being the most successful. The most ethnic understanding of its nature; people observe rules and tryArmenians belong to the Gregorian Christian Church. to reduce their grief by ritualizing the mourning process.Aesthetics Georgian folk songs are often centered on feasts calledArt supra, where songs and toasts to God, fatherland, longLiterature: Literature is in a dire condition because of the life, love and other topics. Traditional feast songs includepolitical and economic crisis that started long before "Zamtari", which is about winter and is sung toindependence. There are only a few young talented commemorate ancestors, and "Mravalzhamier", a joyouswriters, poets, and almost none from the older hymn. Work songs are also widespread. There isgeneration. The literary market is dominated by moreover a distinct and rich tradition of Georgian sacredtranslations 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 dealGraphic Arts: Graphic arts are popular, and many young of "pagans".artists are demonstrating high levels of creativity andskill. 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 ofPerformance Arts: The performance arts are in a crisis characteristics of "Georgian folk music" as a monolithicbecause limitations imposed by language hinder the art whole. Table songs from Kakheti in eastern Georgiafrom finding a wider audience. Several ballet dancers, usually feature a simple, drone-like bass part with twoopera singers, and theater directors have achieved soloists singing the top two parts. Kakhetian melodiessuccess in other countries. However, in Tbilisi, sound like recitative part of the time (with greatperformance art and dramatic art are alive and rich. emphasis on the words, which are highly poetic), andMusic 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 ismusic possesses the oldest tradition of polyphonic music not the type of complicated back-and-forth between thein the world, predating the introduction of Christianity. parts that one hears in Gurian trio songs. Perhaps theGeorgian folk remains vibrant across the country, while most well-known example of music in Kakhetian style ismodern 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
  24. 24. In Racha and Ajara, male singers accompany themselves mens and womens backs always remain straight andon a bagpipe. Dissonance is prominent in the west, in motionless. In Georgia, there is such a concept asMingrelia and Guria, which also features high pitches and “dancing dialect”. It means that each region of Georgiaoutrageous, yodelling-like vocals called krimanchuli. has its special manner of dancing such as Kakhetian,Svanetis traditions are perhaps the oldest and most Kartalian, Svanetian, Mingrelian, Imeretin, Gurian,traditional due to the regions isolation. Svan harmonies Adzharian, Mtiulian, etc.are irregular and angular, and the middle voice leads twosupporting 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, whichGeorgia, especially Anzor Erkomaishvilis Rustavi Choir. were passed from generation to generation, have been in formation for many centuries.Georgia is home to a form of urban music withsentimental, 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 Theatrecrude 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 ofGeorgian dances are divided into solo, twosome and educational institution training great performers ofgroup. Women move gracefully in short steps. Men show classical music. The State Symphony Orchestra and athe eagerness to fight, which is expressed in fast number of folk song and dance ensembles such asmovements, high jumps and courageous pirouettes. Both “Erisioni” and "Rustavi" are known all over the world. 25 HUMAN AND THE UNIVERSE | SOCIOECONOMIC PROFILE
  25. 25. LIVING CONDITIONSGeorgia is going through rapid economy and social A typical festive table ( supra) might consist of puréedreform. 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 inwere 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), andand utilities, and food was cheap. The switch to a market- badrizhani nivrit (eggplant with garlic). Wine is anbased economy, which began in 1991, Georgians become essential part of any meal. Georgians make a wide varietymuch more self-reliant. of red wines (such as Mukuzani ) and white wines (such as Tsinandali ). Regional differences in cuisine areIn recent years, living condition in a country has been pronounced. In the west, one is more likely to eat mchadichanging dramatically. The cost of living in Georgia is (cornbread) and cheese bread such as Acharuli, which hasmoderate. 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 Activitycomparison to any other country based on 13 services Georgians love going to the theater and classicaland goods basket. The switch to a free market based concerts. A favorite Georgian pastime is sitting around aeconomy; 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 kharClothing venakhi (You are the vine). Most young people are fans ofGeorgians have always had a reputation for being stylish Western rock bands. Many have their own rock bands asdressers. Today they wear casual clothes and follow the well.latest fashions. However, on special occasions they weartraditional costumes. The chokha is the mans tunic. It is Language and Minority Groupsusually magenta or white, is belted at the waist, and has There are mainly four ethnic groups in Georgia. Azeri anddecorative cartridge pouches on the chest. The kartuli Armenia people from the largest, numbering and makingkaba is the traditional female costume. It consists of a silk up 12% percent of the countrys population. Otherveil and a long, embroidered dress having wide sleeves minorities contribute only 4% percent in Georgianand gathered at the waist. population. The Azeri people live all over the country butThere are also costumes associated with various regions their compact communities are in the eastern region inand professions. The women in Khevsureti are well the country. Armenian minority was once dominatingknown for their tsinda-pachich , Thick knee-length socks country economic and the political conditions. Thecolored with natural dyes. In the mountains, shepherds minority nationalities constitute 16% of the countrysstill wear the nabadi. This is a black felt cloak with stiff total population, and they live mainly in the borderwide shoulders that can be used for shelter in winter regions.weather. Georgian is considered a single national language. Georgian government policies encourage theFood development and learning other languages with theGeorgian food combines Turkish, Greek, Arabic, and even native language to understand and create a betterIndian influences. It is often spicy, flavored, especially qualified workforce in the region; recently thewith coriander, tarragon, and khmeli suneli (a mixture of government has introduced English as importantspices). Hot and cold dishes are served with side dishes of language to learn in school to college for adoptingtomatoes, 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
  26. 26. BUSINESS CUSTOMS AND PRACTICES • Similarly, Georgians can be emotive speakers. WhenMeeting 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 seniorityBusiness 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 thoroughCommunication 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 peoples 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
  27. 27. CONCLUSIONThe 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 thecountry, 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 venturesand doing business in Georgia. 28 CONCLUSION | SOCIOECONOMIC PROFILE
  28. 28. FOCUS ON SETUP SHOP & DOING BUSINESS
  29. 29. GEORGIA PERFORMANCEGeorgia has improved ranks on a number of international institution indices. The most important ranksimprovement achieved was on the World Bank’s doing a business index, moving from 112th place in 2006 to12th place in 2011. Georgia has also improved ranks in other international organization indices. Animprovement in international indices put Georgia in same tier as countries such as Australia, Japan, Norwayand 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
  30. 30. ECONOMIC ACTIVITYTable 6 ECONOMIC STATISTICSGDP (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% $0.00 -6.00% 2004 2005 2006 2007 2008 2009 Source: World Bank, 201031 ECONOMIC ACTIVITY | SOCIOECONOMIC PROFILE
  31. 31. Observation: Georgian GDP growth during 2006-2007 condition for the creditor, because they were paid backwas 9-10%, which is a good sign for investment and with the more value for the same money. Somehow, it issetting business in the country, although Aug 2008 related with increased unemployment rate in theRussian aggression on Georgian territory and global country, because of few available qualified workforces.financial crisis slowed the country growth, and economycontracted by 4% but GDP growth for 2010 in Figure 8 Inflation rate (annual %)conservatively estimated at up to range from 5%. As the 12.00%response of conflict with the Russia, 38 countries and 15 9.16% 9.24% 10.00% 9.99%international organization pledge to provide US$ 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 thefree 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 2009Georgia, became primarily service based economy. Source: World Bank, 2010Unemployment rate: Unemployment rate increasingprogressively because of demand of qualified workforce.As a country adopted, free economy based model. Figure 9 Unemployment rateTherefore, 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 newcourse that concentrates on providing technical 5.00%knowledge? 0.00%Inflation: Inflation decreased, which shows that it is a 2004 2005 2006 2007 2008 2009disinflation situation in Georgia, considerable rise in Source: World Bank, 2010income 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. 32 ECONOMIC ACTIVITY | SOCIOECONOMIC PROFILE
  32. 32. 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. Source: World Bank, 201033 ECONOMIC ACTIVITY | SOCIOECONOMIC PROFILE
  33. 33. FOREIGN DIRECT INVESTMENT Table 7 FDI INFLOW IN ECONOMIC SECTORS FDI to Georgia in 2009 $759.1 million Sectors (1000 USD) Agriculture, Fishing 8,833.1 Industry 204,145.7 Energy -1,138.9 Construction 79,701.3 Transport and Communication 153,571.2 Real estate 132,043.5 Financial Sector 45,290.2 Other Services 124,632.3 As a result of privatization Not Stated** 12,000.1Figure 12 FDI net inflow of GDP (US$ ) 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% $- 2004 2005 2006 2007 2008 2009Source: World Bank, 2010 Investment in US$ 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 andcommunicati Construction Energy sector ons 11% 0% 20% Source: Geostat, 201034 FOREIGN DIRECT INVESTMENT | SOCIOECONOMIC PROFILE

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