The recently published government strategy “GEORGIA 2020” aims “to ensure that the majority of Georgia’s population benefits from economic growth”. The natural million-dollar question, however, is how this “inclusive growth” objective could be achieved in reality. In other words, how to make sure that the economy grows while creating jobs and business opportunities for the poor. Before delving into this “how” question, let’s state the obvious trade-off: efforts to achieve inclusivity by means of aggressive income redistribution (e.g. increased social ben...

On the 14th of February, the Ministry of Economy and Sustainable Development of Georgia published the draft version of the Socio-economic Development Strategy 2020 (SDS). This comprehensive document identifies the main socio-economic challenges Georgia will be facing in the next years and presents a strategy how to cope with them. The overall goal is to achieve sustainable and inclusive growth until the end of this decade. The spirit of the document very much reflects the principles of the new government. There is no belief in the self-regulatory power o...

Over the winter holidays, I had the leisure to read the book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty” by MIT economist Daron Acemoglu and Harvard political scientist James A. Robinson (Crown Business 2012, 544 pages, Hardcover $20.00). Both authors are very eminent – one would not be surprised if Acemoglu, a Turkish-born Armenian and the most frequently cited contemporary economist, would receive the Nobel Prize in economics somewhere down the road. After reading the book, I was rather disappointed, because it appeared to me as i...

When I think about the lack of human capital in Georgian agriculture, I am reminded of the 1997 Georgian movie “The Turtle Doves of Paradise”, directed by Goderdzi Chokheli. In a Soviet village, an ex-priest decides to teach basic knowledge to old peasants. He wants them to learn to read, write, and elementary calculations skills. The movie addresses a problem that, fortunately, has been completely eradicated in the last decades. Nowadays, virtually all people living in Georgian villages are able to read and write (and probably also to multiply, subtract...

When a country engages in scientific research, the fruits are harvested by the whole of humanity. Fundamental research, generating knowledge without direct applications but needed for developing applications, is published in international scientific journals open to everybody. A society can exploit this knowledge without having to pay royalties or patent fees, and, most importantly, without investing in its own research facilities. Yet even the results of applied research can hardly be monopolized. The economic fortunes of some Asian countries, in partic...

There are many possibilities how to increase the productivity of the Georgian agricultural sector. Experts suggest upgrading knowledge and technologies, promoting the collaboration among farmers, and coping with the land fragmentation problem, to name just a few of the ideas circulating in the debate. The right policy measures may indeed be successful to lift up the productivity, yet the unwanted consequence of a productivity increase may be even higher unemployment among the rural population. In particular, people who are currently underemployed are at ...