The value of a currency, measured in terms of other currencies, has consequences for the real economy. A more expensive lari, for example, makes it more profitable to import goods into Georgia. The importer has to pay the foreign goods with foreign currency, and when the lari is more valuable, fewer lari is needed to pay for them.

In our last week’s article, we examined Georgia’s economic growth in the 12 months before the 2012 parliamentary elections. In particular, we reviewed the popular argument that much of this economic growth was driven by the “political business cycle” effect of public (over)spending prior to the elections.

When economists speak about education and human capital, they usually mean formal education. It is provided in schools and universities by formally qualified teachers. These are imparting knowledge that is laid down in curricula, and the result of the learning process is testified by certificates and diplomas conferred to those students who passed exams.

Measuring economic developments is often a laborious business. Consider, for example, the Consumer Price Index (CPI). One first has to define the so-called consumption basket that contains the goods and services whose prices you want to track. These goods and services have to be represented in the basket in the right proportions, reflecting the consumption patterns of an average consumer.

One of the recurring themes of Soviet propaganda was the tractor. Think for example of the film “Zemlya” by Alexander Dovzhenko, which features the triumphant arrival of the first tractor in a village and leaves no doubt that communism is to thank.