ISET

ISET Economist Blog

A blog about economics in the South Caucasus.

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Sep
13

Adjara Fact of the Day

  The history of Georgian tea began in 1897 when Lao Cheng Zhao came from China to the imperial estate in the village of Chakvi. Lao, whose house still stands on the seashore, brought high-quality tea seeds to the country; and the first tea was harvested in 1902. The product is now so bad that local tea growers call poor-quality tea “Lao-class”. However, in 1903, Chakvi tea began to win prizes at international exhibitions. Georgian tea was the best of all teas produced in the USSR and competed successfully with Ceylon and Indian teas. However, as a...
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Aug
28

Georgia‘s Partnership Fund

With the recent changes in the Georgian government the Partnership Fund has received renewed attention. The fund is now head by two political heavy weights, the former Prime Minister, Nika Gilauri, and the former Minister of Finance, Dima Gvindadze. As the Messenger reports: The foundation aims to facilitate cooperation between the public and private sector, creating investment projects, jobs, attract foreign investment and generally contribute to the development of the country’s economy. The four priority sectors include energy, agriculture, industry an...
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Jun
21

Growth and Even More Growth

A new study by the ISET Policy Institute has interesting insights into Georgia’s growth performance:   This study applies the Growth Diagnostics framework and attempts to identify the binding constraints to economic growth in Georgia. While many policies potentially promote economic growth in practice only policies that relax the binding constraint do so. In contrast, policies that relax non-binding constraints will by definition do little or nothing to promote economic growth. This study builds on an existing growth diagnostics exercise b...
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May
23

Regional Integration or Transit Corridor?

This research paper by Tony Venables has some interesting implications for the South Caucasus:  Better integration with a resource-rich economy is extremely valuable for the resource-poor. Remote and land-locked developing countries have very limited export potential with the external world … Regional integration enables them to earn foreign exchange via their exports to the resource-rich partner. The benefits arise as the prices of these regionally traded goods are bid up, raising wages and creating a terms of trade gain for the resource poor ...
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May
17

What Georgia Can Teach the World

A new discussion paper by Jeffrey Frankel,  via Economic Logic:  The large economies have each, in sequence, offered "models" that once seemed attractive to others but that eventually gave way to disillusionment. Small countries may have some answers. They are often better able to experiment with innovative policies and institutions and some of the results are worthy of emulation. This article gives an array of examples. Some of them come from small advanced countries: New Zealand's Inflation Targeting, Estonia's flat tax, Switze...
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May
03

The Catching-up Game

A recent paper by Dani Rodrik has an interesting observation about Georgia. The paper itself estimates the productivity growth rates of manufacturing firms, based on a UNIDO dataset covering 72 countries. What would we expect? We could believe that it is hard to innovate, but easy to copy and emulate the productivity leaders in the industry. In this case the most unproductive firms are the ones with the highest productivity growth, and the most productive firms the ones with the lowest productivity growth. Or we believe that productivity growth is d...
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