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.

There has been a lively debate on current account (CA) imbalances around the world. Georgia is not an exception with its politicians and economists often complaining about Georgia’s current account deficits (see Figure 1) and discussing potential ways of reducing or even eliminating them without actually reasoning why one should do so.

Khudoni, Georgia’s largest hydropower investment project, is again making the headlines. According to a recent statement by Georgia’s Minister of Energy and Natural Resources Kakha Kaladze, the project will be put on hold at least until March 1, 2014.

As Stephen Dowling put it in his BBC News article a few years ago, “when it comes to crossing the road, there's no such thing as an international standard. Every country does it differently.” How people drive and cross the road, according to Dowling, is a matter of a country’s cultural values. Is it really?

In Georgia, there is a clear policy trade-off between having smaller local self-government units (LSGs), which would be closer to voters and service users, and the higher overall costs of a larger number of LSGs. In November, 2012, the Georgian Ministry of Regional Development and Infrastructure (MRDI) began to design a major policy initiative to reform the existing system of sub-national government in Georgia.