The global recovery from both the COVID-19 pandemic and Russia's invasion of Ukraine is progressing slowly and unevenly. While there was initial economic resilience earlier in the year, marked by a rebound in reopening and efforts to reduce inflation, it is premature to feel reassured. Economic activity has yet to fully return to pre-pandemic levels, particularly in emerging markets and developing economies, and regional disparities are widening.

In a recent ISET Economist blog post, Luc Leruth explores the notion of a spatial fracture in Georgia. He wonders whether people will become accustomed to working remotely, with the COVID crisis having given them this fresh opportunity. If so, this could help decrease the strain on Tbilisi infrastructure by slowing down migration to the capital. Will COVID, unexpectedly, convince people to continue working remotely and settle outside Tbilisi in the countryside?

The purpose of this report is to take stock of the existing regionally disaggregated data and to identify disparities between the regions of Georgia. Few similar studies exist, with the major exceptions being the Diagnostic Report by the Task Force for Regional Development in Georgia (2009) and the Georgia Urbanization Review by the World Bank (2013).

Regional development policy, defined as aid and assistance given to economically less developed regions, is an issue for almost every country that seeks territorial unity. Putting the arguments of equity or efficiency aside, states with high regional disparities are potentially exposed to the political risk of disintegration.

While there are differences between regions, most of the systematic regional disparities can be explained by differences in urbanization rates across the regions; namely, relatively more urbanized regions tend to have a higher per capita gross value added, a more diverse and sophisticated economic structure, and a better developed infrastructure.