At ISET we teach graduate economics, which uses the mathematical language to analyze economic behavior (“microeconomics”) and macroeconomic systems. Being based in Tbilisi, we heavily depend on “upstream” Georgian educational institutions, such as schools and undergraduate departments at TSU and elsewhere. Unfortunately, the level of quantitative literacy among the Georgian youth leaves much to be desired, which says something about the quality of educational programs they go through before arriving to ISET. The vast majority of our future students come ...

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. Unfortunately, consumption habits change over time, and product characteristics change even more. A personal computer 10 years ago is obviously a very different object ...

Ukraine’s agriculture started progressing after the land reforms of 2001, which established an effective land rental market. While the titles to land still belong to former kolkhoz and sovkhoz members, agricultural land can now be easily aggregated and leased to interested businesses. Given the ease of entering and exiting the industry (and of extending farm size), this reform has unleashed a fast process of land consolidation (particularly until 2008) and productivity growth. Some of Ukraine’s largest farms currently span close to 150,000ha.  For c...

On Monday evening I am taking the express train from Tbilisi to Samtredia with my wife and two kids (business class, 120GEL). We plan to stay overnight in a little family hotel (40GEL), and at 6.30am we’ll board the Wizz Air flight to Katowice, Poland, at the cost €40 a person and €35 per suitcase (one way). Seat reservations, luggage, train and guesthouse included, the roundtrip to Poland will cost my family around €700 compared to €1,500-2,000 using any other, conventional option. A real bargain! (even if we ignore the fact that my wife’s family is act...

In the globalized world of today, increasing national competitiveness has become an important policy target for any country. While engaging in mutually beneficial trade, technological and cultural exchanges, countries find themselves in a race for scarce mobile resources such as financial capital and talent. Winning in this race are those locations that offer the best conditions for economic activity – skilled and disciplined labor force, high quality services and urban amenities, transparent and efficient public administration, etc. These locations – no...

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. It seems that these people a priori assume that current account deficits are bad. But are CA deficits always bad? The answer will depend on a country’s specific circumstances and the reasons that give rise to them. Let us ...