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A blog about economics in the South Caucasus.

Georgia: The Hub Issue

The new issue of Investor.GE is out, this time focusing on Georgia as the hub for the South Caucasus and Central Asia. This quote from the lead article caught my attention:
I am amazed at how many requests I am getting from major multinationals from all industry sectors to speak with them about doing business in Georgia. I am also increasingly seeing multinational companies who are already in the region, looking to change their business model to move many of their activities through Georgia," he said, noting that so far most interest comes from fast moving consumer goods companies that are attracted by the ease of doing business in Georgia.

Regardless of what one thinks of the reforms and the Doing Business Ranking, at worst they serve as a useful marketing device, helping to catch the attention of potential foreign investors. Make sure to check out the other articles, the issue is interesting throughout.

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Guest - Leqso on Friday, 26 October 2012 15:19

Hi,

Nice article and post, for me as an economist some more statistics could have added more flavor to the article though. Despite many talks on Georgia as a regional hub and increasing interest of foreign investors if we look at the figures we will see that share of Transportation and Communication sector in GDP stands still over last three years at about 11%.
And more stats: In 2008 transportation sector generated 1 162,5 mln gel, in 2009 same figure declined to 1 138 mln GEL, according to the GEOSTAT from 2010 transportation sector started peaking and in 2011 it reached 1580,7 (we should bear in mind that these figures are in current prices). From 2010 to 2011 transportation sector experienced nominal growth of around 11.5%, not bad, but there is clearly more potential for growth.

Biggest player on the transportation market, Georgian Railway(here is the Standard&Poor's analysis of GR's business profile-http://railway.ge/files/Proeqtebi/2011/jsc2012.pdf)implements several new projects, among them: Tbilisi bypass, modernization of the railway and Baku-Tbilisi-Kars railway. These last one grabs most of my attention as it will directly links railways of Azerbaijan and Turkey through Georgia. Expected due date of the project is 2015, according to the estimates of the Georgian Railway after the project is completed company will be able to create alternative more cost-efficient way for the transportation of about 2 mln tons-per-year cargo that is nowadays being transported by trucks. If done successfully this will spur the growth of the sector and this is where I see the potential of the Georgia as a transportation hub in the nearest future.

Newly appointed Prime minister made an interesting comment on Lazika project, that was meant to become the transportation hub. according to Ivanishvili building the city in the swamp sounds like a fairy tale but constructing new port seems more realistic and they will think about the future of this project. Georgia is definitely in need of the modern port that will be able to serve bigger volumes of cargo than we can do it nowadays, Lazika Port project will be another great infrastructural improvement that Mr. Eric was talking about in the article.

If all these projects are implemented, transportation sector has the potential to grow faster than the rest of the economy and increase its currently modest share in Georgian GDP.

Hi, Nice article and post, for me as an economist some more statistics could have added more flavor to the article though. Despite many talks on Georgia as a regional hub and increasing interest of foreign investors if we look at the figures we will see that share of Transportation and Communication sector in GDP stands still over last three years at about 11%. And more stats: In 2008 transportation sector generated 1 162,5 mln gel, in 2009 same figure declined to 1 138 mln GEL, according to the GEOSTAT from 2010 transportation sector started peaking and in 2011 it reached 1580,7 (we should bear in mind that these figures are in current prices). From 2010 to 2011 transportation sector experienced nominal growth of around 11.5%, not bad, but there is clearly more potential for growth. Biggest player on the transportation market, Georgian Railway(here is the Standard&Poor's analysis of GR's business profile-http://railway.ge/files/Proeqtebi/2011/jsc2012.pdf)implements several new projects, among them: Tbilisi bypass, modernization of the railway and Baku-Tbilisi-Kars railway. These last one grabs most of my attention as it will directly links railways of Azerbaijan and Turkey through Georgia. Expected due date of the project is 2015, according to the estimates of the Georgian Railway after the project is completed company will be able to create alternative more cost-efficient way for the transportation of about 2 mln tons-per-year cargo that is nowadays being transported by trucks. If done successfully this will spur the growth of the sector and this is where I see the potential of the Georgia as a transportation hub in the nearest future. Newly appointed Prime minister made an interesting comment on Lazika project, that was meant to become the transportation hub. according to Ivanishvili building the city in the swamp sounds like a fairy tale but constructing new port seems more realistic and they will think about the future of this project. Georgia is definitely in need of the modern port that will be able to serve bigger volumes of cargo than we can do it nowadays, Lazika Port project will be another great infrastructural improvement that Mr. Eric was talking about in the article. If all these projects are implemented, transportation sector has the potential to grow faster than the rest of the economy and increase its currently modest share in Georgian GDP.
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