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ISET Economist Blog

A blog about economics in the South Caucasus.
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Oct
15

The New Silk Road Chain is Only as Strong as Its Weakest Link

Speaking at the opening of the Tbilisi Silk Road Forum, Georgia’s new Minister of Foreign Affairs Giorgi Kvirikashvili evoked electric circuitry as a metaphor to describe the future of rail and road connections between Europe and Asia. A graduate of the prestigious math and physics Komarov School, Kvirikashvili explained that a sequential circuit – a simple chain – crucially depends on each and every one of its links. A parallel circuit, on the other hand, allows to redirect electricity flows (or cargo and passengers) through alternative routes.  Th...
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Oct
28

Crime and Punishment in Georgia

According to CRRC Barometer surveys and other opinion polls, police has been until quite recently one the most respected institutions in the Georgian society. With 88% of the population holding a favorable view of its performance, police came second after church (93%) in the 2011 survey conducted by the International Republican Institute. In 2013, as little as 9% of Georgian citizens said they do not trust the police (an improvement of 2 percentage points over 2012). There are, indeed, good reasons for Georgian citizens to be happy with the quality of la...
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Oct
21

Georgia on the Development Frontier: From Subsistence Agriculture to Exchange

While written in 1991, “The Development Frontier” by Peter Bauer has lost none of its relevance for Georgia and other predominantly agrarian economies of the 21st century. Economic development, suggests Bauer, “begins with the replacement of subsistence activities by production for sale. Producers will move out of subsistence production only if they see the advantages of doing so and if it is made possible for them to do so. They need the incentive, the opportunity, and the resources.” And this, according to Bauer, is where the traders come in. Traders m...
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Jul
29

Exporting Education

Recently, the Georgian authorities cracked down on Nigerian students who allegedly did not really study but used their student visas for getting access to the Georgian labor market. Yet their residence permits were withdrawn without proper verification that this suspicion was actually true. We know of a young Nigerian woman who, according to her university instructors, was studying at UG fully seriously. After three years of studies, shortly before acquiring her degree, her visa extension was denied and she had not alternative but to return to Nigeria. T...
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Mar
27

Different Capitalisms

Those among our readers who happened to spend a good deal of their lifetimes in the Soviet Union may remember that there was not just one kind of socialism, but there were many different versions. For example, socialist countries favored different ways to achieve industrialization and economic progress. In China, Mao pushed for what one could call “grassroots industrialization” – villages, small towns, and urban collectives were supposed to independently set up industrial endeavors. Rice farmers started to build up manufacturing plants, factories, and ev...
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Mar
19

The Economics of Happiness

The Kingdom of Bhutan is a very special country. When in 2004 King Wangchuck announced that there would be free elections and the kingdom would be gradually transformed into a democracy, people demonstrated in the streets against these reforms. They were so satisfied with their monarchy and their ruler that they tried to urge him not to give away any of his absolute powers to an elected parliament. Also economically, Bhutan is special. It is the only country in the world that does not try to maximize the gross domestic product (GDP). Instead, King Wangch...
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