ISET

This project identifies sectors and subsectors of the Georgian economy which have a higher potential for growth and which the Georgian Government should prioritise when designing strategies to attract foreign investors and increase EU export levels post DCFTA. This project intends to help the Georgian Government foster higher rates of investment and job creation and to support the inclusive growth of the economy.

The objective of this study was to identify all sectors in which Georgian companies were or had the potential to be internationally successful. Study was prepared by using available statistical data, supplementary published sources and field interviews. We have analyzed all sectors in the Georgian economy including services, creative industries and start-ups due to their increasing prevalence and importance in the global economy. As data on services, creative industries and start-ups were not available we analyzed these sectors based on data collected during field interviews and fragmentary published sources that enabled us to create a more comprehensive profile of these sectors.

After the collapse of the Soviet Union in 1991, the newly independent state underwent serious turmoil, including civil war, deteriorated governance, depreciation of critical infrastructure, and endemic corruption. But after the Rose Revolution in 2003, the country began to implement major political and economic reforms. Foreign capital was injected into the county which helped deliver extremely high GDP growth rates (on average of 6% per year from 2003 to 2013).

Economic growth, however, was not socially inclusive. It mainly centered on Tbilisi (the capital city) while the rest of the country was left behind. High levels of poverty and unemployment persisted, and this led to a build-up of social tensions that ultimately resulted in a dramatic political regime shift in 2012.

The objective of this study was to assess the economy wide indirect benefits of investments in the East West Highway (EWH). This study has used a computable general equilibrium (CGE) model, which simulates indirect benefits associated with the completion of the upgraded road corridor. The transmission channel modeled is the reduction in transportation costs—reduction in vehicle operating costs and time savings—resulting from the investments in the EWH. This reduction in transportation costs is normally assessed when conducting cost-benefit analysis of road projects, but without assessing the indirect impacts their reduction has on the wider economy. Explicitly excluded from the analysis are the direct impacts associated with the civil works of the EWH investment program, which would have large impacts on real GDP and employment.

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