Any observer of the Georgian economy would probably agree that the country has too many people employed (or, rather, under-employed) in agriculture. Historically, many countries have experienced a secular decline in the share of employment (and GDP) related to the agricultural sector. Yet, Georgia has seen limited structural change out of agriculture (other than, perhaps, into seasonal or permanent labor migration).

ISET Policy Institute was contracted by the OECD to assess selected policy dimensions of the EU Small Business Act for Georgia. In order to complete this task, ISET-PI conducted desk research of the existing literature and conducted interviews with government officials, private sector representatives and members of the SME community, including civil society.

Agriculture makes an important contribution to economic development in Georgia. Value added in agriculture accounted for 9.3% of Georgian GDP in 2013 and 53.4% of employment (World Bank, 2014a). Agriculture also provides an essential basis for the food, beverages and tobacco processing industries, which together accounted for just over one-third of value added in manufacturing in Georgia in 2010.

One of the most puzzling aspects of the Georgian labor market is what is known as the “qualification mismatch”. While unemployment is high, many positions remain vacant due to a lack of qualified applicants.

Over the last weekend, I was invited by an international development bank to run a workshop in the nice Hotel Eden in Kvareli, Kakheti. The topic of the workshop was “Georgia’s economic future”.