Georgian agriculture was more developed in Soviet times as it is today. Despite great overall technological progress almost everywhere in the last 20 years, Georgia moved backward when it comes to agriculture. In the year 1990, at the end of the Soviet Union, the number of cattle exceeded 4 million, while today it is just a little more than 1 million. In the Soviet Union, Georgia was a main producer of tea, citrus fruits, deciduous trees, and vine. According to the Rural Poverty Portal, after the collapse of the Soviet Union the output of some of these g...

Last year, Prime Minister Bidzina Ivanishvili announced his plans to set up a so-called co-investment fund. It took a year for this idea to mature, but finally a group of financially potent investors endowed the fund with 6 billion dollar. 15 % of the capital is provided by Bidzina Ivanishvili himself, the remaining 85% are held by the Abu Dhabi Group, the Ras Al Khaimah Investment Authority (both United Arab Emirates), Milestone International Holding from China, Mr. Alexander Moshkevich from Kazakhstan, capital of the late Badri Patarkatsishvili, Batumi...

In his 1991 book “The Third Wave: Democratization in the Late Twentieth Century”, the famous American political scientist Samuel Huntington (1927-2008) identifies three global democratization waves in the history of humankind. The first wave was the creation of the classical democracies in the United Kingdom and North America and the ongoing democratization process of the 19th century in France and other European countries. The second democratization wave refers to the time after the Second World War, when some latecomers (Germany, Italy, Spain etc.), jo...

While written in 1991, “The Development Frontier” by Peter Bauer has lost none of its relevance for Georgia and other predominantly agrarian economies of the 21st century. Economic development, suggests Bauer, “begins with the replacement of subsistence activities by production for sale. Producers will move out of subsistence production only if they see the advantages of doing so and if it is made possible for them to do so. They need the incentive, the opportunity, and the resources.” And this, according to Bauer, is where the traders come in. Traders m...

Do development projects reach their stated objectives, such as reducing poverty, improving skills, creating jobs, etc.? This turns out to be a complicated question about project impact that a simple before-and-after measurement would not help answering. Why? The answer is also complicated, of course, but here are two points to consider: First, when a country goes through a rapid modernization process, as is arguably the case in Georgia, most development indicators improve over time regardless of specific donor interventions. Second, even if we observe a...

Recently, the Georgian media abounded with alarming reports about a slowdown of foreign direct investments (FDI) in Georgia. Indeed, economic figures seem to support the view that there may be a turn in the FDI activity. The graph shows FDI in the first two quarters of each year from 2005 to 2013. There is obviously a huge volatility in the investment activity throughout those years, reflecting economic and political events like the war and the financial crisis in 2008. Yet since 2009, FDI activity was following a slow but steady upward trend. This trend...