ISET

ISET Economist Blog

A blog about economics in the South Caucasus.
Apr
01

The FitCoin Revolution!

  ◊ ◊ ◊ Once dubbed Georgia's Abu Ghraib, Gldani Prison #8 has gone through a substantial makeover since its darkest hours in September 2012. The entire staff was replaced or retrained during 2013, swiftly and effectively ending human right violations. The following year, the prison won a prestigious award as Georgia’s best correctional facility. In 2015, about 180ha in the prison’s backyard became home to Bitfury, an international bitcoin industry pioneer. The company invested close to $100mln in its Gldani data center, placing the prison at the ep...
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Mar
12

Does Georgia Have One of the Largest Shadow Economies in the World?

In January 2018, an IMF Working Paper published new results on the shadow economy situation for 158 countries from 1991 to 2015. According to Medina and Schneider (2018), the shadow economy in Georgia during that period constituted, on average, 64.9% of GDP - the highest indicator in the world! In 2015 (the last year available), things were slightly better for Georgia, with the share of shadow economy standing at 53%. Still, our country was “outshone” only by Zimbabwe (67%) and Haiti (56%) in the world rankings. To add insult to injury, Georgia’s results...
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Dec
04

Your Guest Is My Guest, or Why Tourism Is Not a Zero-Sum Game

The South Caucasus is divided by high mountain ranges, often impassable political borders, and ethnic conflict zones. In addition to three independent states, the region also includes three unrecognized territories. Nakhichevan is separated from Azerbaijan’s mainland by Armenia’s Syunik region. Armenia’s border with Turkey and Azerbaijan, on the other hand, is sealed for political reasons. Though trampled by politics, the economic arguments for greater regional integration in the South Caucasus are truly powerful. For one thing, thanks to its strategic l...
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Oct
30

Georgia’s Democracy: the Puzzle of a Red Country Turning Blue

On October 21, 2017, Georgia’s entire political map was painted in different shades of blue – the color of the ruling Georgian Dream (GD) party. GD won in all but one race in the country’s municipal elections – achieving solid majorities in all sakrebulo (city councils) and placing party-backed candidates as mayors in all cities and self-governing communities. Such results are quite unusual, and nearly impossible to achieve nowadays in the politically polarized atmosphere of Western Europe, UK or the U.S. Do they suggest that GD has been except...
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Sep
25

Is ISET’s New BA Program Winning the Fight for Best Brains in Georgia?

  It is no secret that global competition for the best brains is as intense as ever. Having adequate human capital can put a country on a trajectory of perpetual growth, say economists. The ‘brain wars’ typically play out in the setting of national and multinational companies competing for talent, but some of the most intense fights happen between universities struggling to recruit and retain the best young minds on the planet. Even elite institutions such as Harvard, MIT, Stanford, Oxford and Cambridge are only as good as the quality of their last ...
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Jun
10

Is Less More When Hosting International Events in Your Home Country?

In just a couple of weeks Baku is going to host the second Formula One Grand Prix in its history. Being in love with motor races and inspired by the fact that for the first time in my life I will attend such an important race (and the Land of Fire); I tried to explore the economic impact of hosting expensive international events for one’s country. In 2017, the Formula One Championship will take place in 20 countries. Nineteen of these countries are either in the top 15 by the level of GDP, or are (net) oil and gas exporters. The only exception here is Hu...
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