ISET

ISET Economist Blog

A blog about economics in the South Caucasus.
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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Feb
27

Don’t Talk about Georgia’s Future!

According to Micklewright (Macroeconomics and Data on Children, UNICEF 2000), a share of 7% of the Georgian gross domestic product of the year 1991 accounted for education. In 1994, this number had fallen to 1%. As Micklewright comments, such a dramatic decrease of educational expenditures was never seen before nor afterwards in the history of any country. Recovery after the crisis was a long process. Until 1998, spending on education had only increased to 2.1% (World Bank Development Indicators), and in 2002, wages in the educational sector were still r...
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Recent Comments
Ruediger Heining
Why claiming to double the salary of teachers? To avoid corruption in education or the rank growth of parallel teaching system, wh... Read More
Monday, 07 March 2016 9:09 AM
Florian Biermann
I agree with most of your remarks, though I am wondering why you question the importance of salaries. As you write: (quote) The mo... Read More
Sunday, 01 May 2016 11:11 AM
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Nov
14

Tax Inspection With A Human Face?

Apostle Matthew was a tax collector in Galilee -- perhaps the most hated occupation in the ancient world.By quitting his job and deciding to follow Jesus, Mathew accomplished one the greatest transformations possible in a person’s life. Modern tax inspectors are certainly not expected to follow Jesus. However, by following insights from behavioral economics, they may gain in respect and social status while also improving tax collection, in Georgia and elsewhere around the world. As discussed in our previous article, Georgia’s tax administr...
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May
29

Georgia’s Underground Economy

Economic activities which are not registered (and therefore not taxed) are commonly called Shadow Economy or Underground Economy. Are there shadowy corners in Georgia’s economy? Not just corners! According to Schneider, Buehn, and Montenegro (“Shadow Economies All over the World – New Estimates for 162 Countries from 1999 to 2007”, Policy Research Working Paper 5356, The World Bank 2010), based on estimates for 2007, Georgia has by far the largest shadow economy (as a share of GDP) among all surveyed 21 transition countries. 62.1% of all economic activit...
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May
23

Georgian Shadow Economy - its Past and its Legacy

The existence of a sizeable shadow (or second, informal) economy in the USSR was and is well-known. The Soviet era was characterized by a very rigid formal system with a high level of bureaucratization and inefficient planning. This resulted in many problems, both in terms of production and consumption. Soviet consumers experienced constant frustration and dissatisfaction caused by endlessly searching for goods and services they demanded, the need to queue for them without any guarantee of getting what they wanted, and the risk of having instead to accep...
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Guest — Eric Livny
A very interesting aspect of the Georgian legacy! I am fascinated by the contrast between the extremely positive role of honor-bas... Read More
Friday, 23 May 2014 10:10 AM
Guest — Adam
Great piece!
Friday, 23 May 2014 11:11 AM
Guest — NP
This contrast is indeed remarkable. We just need to see whether Saakashvili's "revolution" has been sufficient to alter permanentl... Read More
Saturday, 24 May 2014 12:12 AM
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