On February 11th, ISET hosted Olivier Harlem, Ph.D. of the Erasmus School of Economics, Rotterdam. Dr. Harlem presented his job market paper, “Earmarks”. Earmarks were U.S. federal funds that are designated for local projects and were easy for local representatives to obtain for their electoral districts.

In Georgia, employment is often found not through prevailing in fair, orderly selection processes, but through personal connections. This is a well-known fact almost nobody denies. It is evident in almost every Georgian firm and institution. In a hospital, you encounter a “nurse” not capable of the most basic medical accomplishments, in one of Tbilisi’s universities you meet a “cleaning woman” who is mentally ill, known for scaring everybody through aggressive and inappropriate behavior, and in the railway station, you buy a ticket from a clerk who knows nothing about regulations, timetables, and trains.

The frenzied seasonal agricultural activities – purchases of plants, seeds, fertilizers, investment in food processing, as well as the upcoming elections, invigorated real economic activity in March 2014. According to the GeoStat primary estimates, in this month the y-o-y real economic growth reached 8.3%. As a result, the primary growth rate for the first quarter of 2014 increased to 7.4 %.

The 2012 elections can be regarded as one of the most important events in the political life of Georgia. More so than at any time during the country’s 20-year history of independence, these elections were distinguished by a high level of uncertainty regarding the final results, and fierce competition between the ruling party and its major opponents.

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.