ISET Economist Blog

A blog about economics in the South Caucasus.

Georgia's Democratic Challenge

In his 1991 book “The Third Wave: Democratization in the Late Twentieth Century”, the famous American political scientist Samuel Huntington (1927-2008) identifies three global democratization waves in the history of humankind. The first wave was the creation of the classical democracies in the United Kingdom and North America and the ongoing democratization process of the 19th century in France and other European countries. The second democratization wave refers to the time after the Second World War, when some latecomers (Germany, Italy, Spain etc.), jo...
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Guest — makachitanava
Very nice post Ia, however I would like to see more discussions about Georgian case. What can be reasons for Democracy reversal i... Read More
Friday, 25 October 2013 10:10 AM
Guest — Till
It would be interesting to read a blog about how the % of Georgians describing democracy as the best political system has evolved ... Read More
Friday, 25 October 2013 11:11 AM
Guest — Jeff
Setting aside Huntington and Rustow, we may look straight to American history for a parallel. 10 years after the USA elected its ... Read More
Friday, 25 October 2013 4:04 PM
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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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Guest — Eric Livny
A valid point, Helene. The transfer of know-how, let alone seeds and implements, etc, is certainly not as smooth as Bauer is descr... Read More
Tuesday, 22 October 2013 10:10 AM
Guest — Helene Ryding
"Armed with knowledge of local, regional and export markets, traders also create new opportunities by providing outlets for farm p... Read More
Tuesday, 22 October 2013 9:09 AM
Guest — Juan Echanove
do agree that the improvements in roads (specially the rehabilitation of Tsalka road, which has totally modified the whole trade n... Read More
Tuesday, 22 October 2013 12:12 PM
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Assessing the Impact of Development Projects - Looking for a Black Cat in a Dark Room and Hoping that the Cat is There?

Do development projects reach their stated objectives, such as reducing poverty, improving skills, creating jobs, etc.? This turns out to be a complicated question about project impact that a simple before-and-after measurement would not help answering. Why? The answer is also complicated, of course, but here are two points to consider: First, when a country goes through a rapid modernization process, as is arguably the case in Georgia, most development indicators improve over time regardless of specific donor interventions. Second, even if we observe a...
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The Two Faces of Foreign Direct Investment

Recently, the Georgian media abounded with alarming reports about a slowdown of foreign direct investments (FDI) in Georgia. Indeed, economic figures seem to support the view that there may be a turn in the FDI activity. The graph shows FDI in the first two quarters of each year from 2005 to 2013. There is obviously a huge volatility in the investment activity throughout those years, reflecting economic and political events like the war and the financial crisis in 2008. Yet since 2009, FDI activity was following a slow but steady upward trend. This trend...
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Guest — RT
1. That's an interesting chart, though it may be more interesting to look at these flows in % of GDP (corresponding two quarters).... Read More
Monday, 07 October 2013 5:05 PM
Guest — Eric Livny
Quote from The Telegraph: "Steel-making giant Arcelor Mittal has suffered an extraordinary attack from a French government ministe... Read More
Monday, 07 October 2013 8:08 PM
Guest — Y
FDI can be a powerful instrument in the government's industrial policy toolkit. The idea is to 'direct' FDI in way that facilitate... Read More
Tuesday, 08 October 2013 10:10 AM
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Moratorium on Foreign Ownership of Agricultural Land. Xenophobia, Myopia or what?

On June 28, the Georgian Parliament passed a bill imposing a moratorium on land acquisition by foreigners and foreign-owned legal entities till the end of 2014. The bill effectively reversed an earlier policy that welcomed foreigners to settle and invest in Georgia’s agricultural sector, a policy culminating in the seemingly outlandish program seeking to bring to Georgia – and offer fast-track naturalization to – dozens of expert farmers from South Africa. Rattled by this policy reversal, groups representing the expat business community in Georgia are tr...
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Guest — Hans Gutbrod
thanks, Eric, for this thoughtful piece. I agree, there does need to be a strategy, not just buying time. One aspect that would be... Read More
Friday, 13 September 2013 10:10 AM
Guest — MM
Great article, although it would be interesting to read about the benefits of the moratorium.
Friday, 13 September 2013 11:11 AM
Guest — Simon Appleby
The implications are the moratorium are profound. It throws the rural financial sector into disarray as most banks and microfinanc... Read More
Friday, 13 September 2013 2:02 PM
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Georgia's National Competitiveness

In the globalized world of today, increasing national competitiveness has become an important policy target for any country. While engaging in mutually beneficial trade, technological and cultural exchanges, countries find themselves in a race for scarce mobile resources such as financial capital and talent. Winning in this race are those locations that offer the best conditions for economic activity – skilled and disciplined labor force, high quality services and urban amenities, transparent and efficient public administration, etc. These locations – no...
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Guest — llabadze
It seems Georgia is going forward in terms of "the much-coveted role of a regional hub". Just today (Sep 20, 2013) the Austrian tr... Read More
Saturday, 21 September 2013 10:10 AM
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