Structural transformation of the economy is one of the most important determinants of economic development. Almost invariably, nations that have managed to pull themselves out of poverty were able to diversify their economies away from low productivity sectors. In advanced countries, productivity differences between sectors are generally small, and growth mostly happens because of productivity improvements within sectors.

Using the panel data on the German and Ukrainian labor markets, Prof. Pignatti and his co-authors Thomas Dohmen (University of Bonn, Maastricht University, IZA and DIW, Berlin) and Hartmut Lehmann (University of Bologna, IZA and DIW, Berlin) show that risk attitudes have permanent (exogenous) determinants that are valid at different stages of economic development and in different structural contexts.

Although the mining sector of Georgia only accounts for a small share of GDP, around one quarter of Georgia’s total exports are related to mining activities. Increased use of Georgia’s natural resources thus has the potential to benefit the economic development of the country as well as to contribute to public finances.

For resilient economic development in Georgia, the country should encourage exports of higher-value added goods. In this report, ISET-PI and GET have found that Georgia might be able to develop a comparative advantage when it comes to exporting higher-value energy-intensive products. According to projections of its electricity network operator, Georgia will develop excess capacities of low-cost electricity in the next decade.

Starting from 2005, Georgia saw a rapid decline in tertiary gross enrollment. In a country where poverty reduction is a key priority and where labor market outcomes have not been particularly strong during the last decade, the decline in higher education enrollment might appear as an additional obstacle to human and economic development.