ISET

On the 25th of May, ISET was pleased to host the environmental economist and founder of the consultancy company GIST Advisory, Pavan Sukhdev, for a presentation. Starting his career as a physicist, Mr. Sukhdev got interested in the challenges of environment protection. This led him to investigate economics, particularly aiming at understanding the significance of businesses as a driver of the changes that we see around us as well as third party impacts, which are known as externalities in economics. Mr. Sukhdev highlighted corporate externalities as being the “biggest free lunch in human history”. Created by private companies, externalities cause huge damages. Companies earn profits at the expense of public losses, reaching from 10 to 15 trillion dollars or 15-20% of global GDP. A study by the NGO “Trucost” found that in 2010 five sectors, namely electricity, oil and gas, industrial metals and mining, food and construction are responsible for about 60% of environmental cost. Yet, as pointed out by Mr. Sukhdev, the private sector operates in the scope of legal framework and can therefore be influenced and regulated by the society.

ISET continues its student policy paper seminar series for the institute's second-year students. This time, Ketevan Bochorishvili, Natia Maisuradze, Nami Surguladze, Orkhan Suleymanli and Nijat Guliyev presented their joint paper on agricultural development.

The students opened by that the slow growth in agricultural sector of Georgia is a subject of ongoing debate. Their cross comparison of agricultural indicators showed that while agricultural development in Georgia predictably lags behind that of Germany and the United States, it also falls behind Armenia, Azerbaijan, Belarus, Ukraine, and the Kyrgyz Republic. While 50 percent of employment is in agriculture, agriculture accounts for just 10 percent of the country's GDP, which clearly shows the utter inefficiency of agriculture in Georgia.

ISET second year students continued their series of policy seminars, this time focusing on the Georgian tourism sector. Shako Gobronidze, Diana Nersisyan, Robizon Razamadze, and Revaz Surguladze presented on the topic of seasonality, which both poses various challenges and grants opportunities for the Georgian tourism sector.

Seasonality affects the development of the tourism sector in several ways. By concentrating income generation within a limited timeframe, it creates a degree of uncertainty for investors, which could deter efforts to attract investments, especially for small tourism startups. Uneven demand due to seasonality also affects other businesses and sectors in the tourism supply chain, such as taxis, hotels, distribution, and agriculture. Finally, seasonality lowers the quality of service in the tourism sector, by giving fewer incentives to employers to train their staff or search for the best talent.

On May 22, ISET hosted Francois Painchaud, the IMF Resident Representative in Georgia. Mr. Painchaud presented the 2017 May Regional Economic Outlook for the Caucasus and Central Asia, highlighting the three main areas of the global and regional environment, outlook and policy actions, and policy priorities.

At the beginning of the presentation, Mr. Painchaud overviewed the main trends in the global and regional environment. Firstly, the IMF predicts higher than expected real GDP growth in 2017, mainly at the expense of higher growth projections in the US, China, Russia, and emerging markets.

On April 10, ISET students delivered yet another policy seminar. A presentation entitled “Foreign Direct Investment (FDI) & Economic Growth. Case of Georgia” was delivered by Givi Gujaraidze, Tinatin Mumladze, Kristine Gureshidze, and Shota Bakhuashvili under the supervision of Eric Livny, President of ISET, and Yaroslava Babych, Head of Macroeconomic Policy Research Center at ISET Policy Institute. The presentation was mostly oriented towards the case of Georgia. It aimed to highlight the importance of FDI for the Georgian economy and show the impact of FDI on growth rates of different sectors of the economy. The presentation provided information about the country’s investment environment: why is Georgia an attractive country for foreign investors and why is it easy to do business in Georgia. Additionally, the last part of the presentation discussed examples of successful FDI projects in different areas.

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