ISET

ISET Economist Blog

A blog about economics in the South Caucasus.
Nov
11

Armenia Generates Windfall Profits for Georgia

When Armenia entered the Russia-dominated customs union in 2013, fear spread among the Georgian public and policy makers. It looked as if Georgia would be economically squeezed in between Russia and Armenia, the latter being one of Russia’s staunchest allies in the region and, given its geopolitical dependency on Russia, sometimes seen as a little more than a Russian agent. Being wary about Russia’s economic influence in the region, it was straightforward for Georgia to respond to this development by upgrading economic ties with our Western allies. There...
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Guest — Eric Livny
Armenia becoming a major gas exporter? Who would have thought of this...
Tuesday, 11 November 2014 11:11 AM
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Apr
01

Georgia, Armenia and Azerbaijan Agree to Form Transcaucasian Confederation by 2019

1 April, 2014, ISET Economist's special correspondent in Geneva. The ISET Economist was invited to attend the signing ceremony concluding the last round of trilateral negotiations held in Geneva under the joint sponsorship of the Swiss Confederation, the US, Russia and Turkey. The three countries, represented by heads of states, agreed to join the newly created Transcaucasian Confederation and thus bring peace and a promise of prosperity to a deeply divided region that has provided the setting for yet another round in the Great Game – the battle between ...
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Guest — Zak
no jokes?
Friday, 04 April 2014 12:12 PM
Guest — Narek
History repeats itself. No one takes lessons from it. When the same confederation was created in 1917-1918 it had life of less tha... Read More
Friday, 04 April 2014 3:03 PM
Guest — Eric
Dear Narek, if/when TC is formed (and then dissolved), we shall all become citizens of the world, Insha'Allah!!! On a more serious... Read More
Friday, 04 April 2014 4:04 PM
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Dec
20

Looking Over the Border: The Pension Reform in Armenia

On the first of January, Armenia will adopt an entirely new pension system. This radical reform addresses two problems: widespread poverty among the elderly and a lack of capital in the economy. The very same problems also exist in Georgia, where the standard governmental pension currently is 150 lari, and where the economy is suffering from high capital costs due to notoriously low saving rates. So, it is worthwhile to have a look at what is going on in our neighboring country Armenia. Georgian decision makers may learn important lessons from their expe...
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Guest — Vardan
If it is true that 80% of funds are going to be invested in Armenia, I wonder how is the riskiness scale measured. At the same tim... Read More
Friday, 20 December 2013 10:10 AM
Guest — Lasha
I wonder what does government guarantee mean and how losses are capped, or what is "government" money. It is very difficult refor... Read More
Tuesday, 14 January 2014 10:10 AM
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Nov
25

Rural Unemployment Through Productivity Gains

There are many possibilities how to increase the productivity of the Georgian agricultural sector. Experts suggest upgrading knowledge and technologies, promoting the collaboration among farmers, and coping with the land fragmentation problem, to name just a few of the ideas circulating in the debate. The right policy measures may indeed be successful to lift up the productivity, yet the unwanted consequence of a productivity increase may be even higher unemployment among the rural population. In particular, people who are currently underemployed are at ...
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Guest — Eric Livny
I have many questions related to this article. The first one that comes to mind is about the sources of productivity gains. You se... Read More
Monday, 25 November 2013 8:08 AM
Guest — Florian
It is difficult to directly estimate the number of people who will be laid off due to the productivity gains. If in future we will... Read More
Monday, 25 November 2013 8:08 AM
Guest — Daan
Most farmers in Georgian are subsistence farmers, which means that if total output stays constant, but output per worker goes up, ... Read More
Monday, 25 November 2013 9:09 AM
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Feb
15

Is Some Degree of Corruption Good for Growth? – It Could Be.

It is a commonly accepted view that corruption is bad for economic growth. It leads to an inefficient allocation of resources by contradicting the rules of fair competition and by setting wrong incentives. Patronage and bribery are two components that define the notion of corruption and which cause the inefficiencies associated with it. Patronage often leads to the unfair delegation of the power of decision making to economic agents who do not posess the relevant skills to make good decisions. In the absence of patronage, ceteris paribus, the power of de...
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Guest — Nino
The last part about the region reminds me of the prisoners' dilemma __ if everybody else is corrupt, maybe it is better to be corr... Read More
Friday, 15 February 2013 10:10 AM
Guest — Florian
Is it prohibited for Georgian entrepreneurs to pay bribes abroad? Georgia should reconsider that rule. Until a few years ago, Germ... Read More
Friday, 15 February 2013 2:02 PM
Guest — Eric
Giorgi,I agree with the discussion in your blog up to the point where you make the link to Georgia. The thumb rule provided by Hec... Read More
Friday, 15 February 2013 4:04 PM
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Jan
17

A Comparison of Unit Labor Costs in Georgia, Armenia and Azerbaijan

Wages and productivity levels differ across countries. For instance, in 2011 the average yearly income in the US was about $53 000, whilst the same indicator was $250 in Madagascar.  Clearly then, Madagascar has a competitive advantage in labor cost over the US. But the issue is not so simple because workers in the US operate in a completely different environment (with better capital facilities, more educated colleagues, higher level of technologies, etc.) that determine a much higher productivity level. Higher wages can positively affect productivi...
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Guest — NP
Some of these statements and figures would need a deeper explanation (even just to answer to the questions you are raising). For e... Read More
Thursday, 17 January 2013 10:10 AM
Guest — Giorgi Balakhashvili
While Turkey is our main trade partner, it would be very interesting to assess the ULCs compared to Turkey as well.
Thursday, 17 January 2013 11:11 AM
Guest — Giorgi Machavariani
There are different methodologies for calculating ULCs. In this investigation, they are computed as a ratio of hourly compensation... Read More
Thursday, 17 January 2013 12:12 PM
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