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Georgia: Country Report
Moving Toward Democracy and Free Markets:
Having suffered severe political and economic
turbulence following its independence in 1991,
economic growth accelerated starting in 2000, and
that year Georgia became the second former Soviet
country to join the World Trade Organization.
Beginning in 2004 the country began to heavily
invest in critical national infrastructure. GDP growth,
which had been sustained at a rate of over 10% in
GDP Growth (Annual %)
2006-07, slowed due to economic uncertainty after
Red: Georgia | Grey: World
Source: The World Bank,
the 2008 conflict with Russia over the separatist
http://data.worldbank.org/indicator/NY.GDP.M
KTP.KD.ZG/countries/1W-GE?display=graph
region of South Ossetia.1 Growth became negative as
the global financial crisis took hold, but has now
resumed, with corruption on the decline and tax enforcement becoming more efficient.2
Attracting foreign direct investment is especially critical for Georgia, both because FDI has
traditionally been a catalyst for economic growth (even more so than trade), and because
Georgia needs backing for its ambitious energy infrastructure projects. These projects will
add to Georgia's prosperity in addition to giving its Eastern European neighbors an
alternative to Russian fuel. Despite ongoing tensions, Georgia gave its approval for the
Russian Federation to accede to the WTO; it did so in December of 2012, in exchange for
Russia's allowing international observers to monitor trade along the shared borders of
breakaway regions Abkhazia and South Ossetia.3
1 “Georgia,” CIA World Factbook, January 26, 2016, https://www.cia.gov/library/publications/the-worldfactbook/geos/gg.html
2 Ibid.
3 “Russia becomes WTO member after 18 years of talks,” BBC, December 16, 2011,
http://www.bbc.co.uk/news/business-16212643
Economic Indicators:
 Georgia's GDP (PPP) is $36.8 billion (est. 2016) and its GDP per capita (PPP) is $9,891
in 2015 US dollars.4
 The economy grew by roughly 2.8% in 2015.5
 The unemployment rate is roughly 12.4%6
 Important opportunities for investors in the energy sector and related infrastructure
include: the Baku-Supsa Pipeline, inaugurated in 1999; the Baku-T'bilisi-Ceyha
Pipeline, inaugurated in 2005; the South Caucasus Pipeline, operational since the end of
2006; the Kars-Akhalkalaki Railway, which is scheduled for completion in 2012; and
the proposed White Stream Pipeline, an alternative to Russia's South Stream project,
which is slated to begin commercial operation by 2016.7
 Georgia has signed dozens of agreements to develop hydropower projects, which
contributed to a rise in foreign direct investment from $658.4 million in 2009 to 814.5
million in 2010. 8 Foreign investment in Georgia continues to grow as much as $1758.4
million in 2014.9
“Georgia,” CIA World Factbook.
Ibid.
6 Ibid.
7 Ibid., and Giorgi Vashakmadze, "The White Stream gas transportation project,” GUEU,
http://www.emportal.rs/data/File/Ekonference/2009/Energetika/Giorgi%20Vashakmadze%20GUEU%20White%20Stream.PDF
8 “Background Notes: Georgia,” US Department of State, http://www.state.gov/r/pa/ei/bgn/5253.htm, and Helena
Bedwell, “Georgia Expects $1 Billion in Foreign Direct Investment in 2011,” Bloomberg,
http://www.bloomberg.com/news/2011-06-13/georgia-expects-1-billion-of-foreign-direct-investment-in-2011.html
9
“Foreign Direct Investments,” The Ministry of Economy and Sustainable Development of Georgia, 1/26/2016.
http://www.economy.ge/uploads/ek_mimokhilva/fdi_investiciebi/investments_2015.09_eng.pdf
4
5
Economic Structure:
 GDP per sector: 10% agriculture, 29.4% industry, and 60.6% services. Investment
comprises 16.3% of the country’s GDP.10
 Key sectors of economic activity in Georgia include energy, agriculture, trade, tourism,
and transport, as well as significant projects in the food processing and
telecommunications industries. This includes the cultivation of agricultural products
such as grapes, citrus fruits, and hazelnuts; mining of manganese and copper; and
output of a small industrial sector producing alcoholic and nonalcoholic beverages,
metals, machinery, and chemicals.11
 Georgia’s main export partners are Turkey (14.1%), Azerbaijan (11.2%), Bulgaria
(10%), the US (9.8%), and the UK (9%). Its main import partners are Turkey (15%),
Ukraine (9.2%), Azerbaijan (8.5%), and Russia (6.5%). Of note, the US's role as an
export partner has diminished considerably in the last several years.12
 The country uses the Georgian Lari (GEL), a free floating and freely convertible
currency.
Political Considerations:
 Georgia is a republic, with executive, legislative, and judicial branches. There is a
unicameral Parliament of 150, with half the members elected by party list and half by
single-member districts.
 Georgia's government has been carrying out extensive democratic reforms since the
2003 'Rose Revolution.'
 Georgia has been a democratic republic since the presidential elections and
constitutional referendum of October 1995. The President is elected for a term of 5
years, limited to 2 terms. The next presidential election will be in 2013.13
 In May 2005, the Georgian Parliament passed legislation to decentralize power to local
municipalities, though this set of reforms has yet
to be fully implemented. The country spends
about 1.9% of its GDP on defense.14
 The World Bank has praised Georgia's recent
anti-corruption efforts, which have included a
shakedown of the police force and the
implementation of a fair examination system for
entering the university system.15
 Giorgi Margvelashvili took office in November
2013, bringing to an end the decade-long
The Parliament of Georgia in Tbilisi
presidency of charismatic reformer Mikhail
Source: Wikipedia
Saakashvili. Mr. Margvelashvili, a former
philosophy lecturer, assumed a weakened role because constitutional changes that
“Georgia,” CIA World Factbook.
Ibid.
12 Ibid.
13 “Background Notes: Georgia,” US Department of State.
14 Ibid.
15 Ibid.
10
11
come into force with his inauguration transferred a raft of key powers from the
president to the prime minister. Giorgi Kvirikashvili took over as prime minister
following the sudden resignation of his predecessor Irakli Garibashvili in December
2015. Both men belong to the Georgian Dream coalition, which was founded by
billionaire Bidzina Ivanishvili and drove the party of then President Mikheil Saakashvili
from power in parliamentary elections in 2012. Many observers suspect Mr. Ivanishvili
continues to run the show from the sidelines - an accusation he denies. (BBC)
Attractions:
 Tourism potential: The country’s warm climate and position on the eastern shore of the
Black Sea make the country suitable for additional tourism development; Georgia
straddles the best transportation routes across the Caucasus Mountains. During the
Soviet era the Georgian coast was a favorite vacation area for residents of the Soviet
bloc. The 2008 war damaged the tourist industry both in the abstract and with regard
to national parks and transport infrastructure, and the effect of a continued Russian
military presence in the northern separatist regions on tourism remains to be seen.
Despite these complications, overall tourist numbers have continued to increase
yearly.16
 Strong agricultural sector: The country has one of the richest and most diverse climates
of any of the former Soviet republics. In the subtropical west, a wide variety of crops
are supported, including citrus and tea. To the east, viticulture and fruit growth are
prevalent, while livestock is raised across the country. Agriculture remains a critical
component of Georgia's economy, one which will benefit from competitive
development. In 2010, the government identified agriculture as a development priority,
and the Ministry of Agriculture was allocated GEL 69 million in the 2011 budget, a 72%
increase from the previous year.17
 Hydropower potential: Over 26,000 rivers provide water for crop irrigation and
hydroelectric production. Georgia has a great amount of untapped hydropower
potential. Currently, it primarily relies upon Russian pipelines for energy and its
capacity remains underdeveloped. In the mid-2000s, the US began to express interest
in finding ways to break Georgia’s dependency on Russian energy and become more
self-sufficient. From 2005 to 2006 alone, hydroelectricity output increased by almost
27%, and the country is no longer plagued by the nationwide blackouts of the early
2000s.18
Demographics:
 Georgia boasts a largely homogenous population of about 4,931,226. 83.8% of the
people are Georgian, 6.5% are Azeri, 5.7% are Armenian, and 1.5% are Russian. The
population is decreasing at a yearly rate of about 0.08%.19
16 M. Metreveli and D.J. Timothy, “Effects of the August 2008 War in Georgia on Tourism and its Resources,” in
Tourism, Progress, and Peace, ed. O. Mouffakir and I. Kelly, (Oxfordshire: CABI, 2010), 142,
http://www.cabi.org/leisuretourism/FullTextPDF/2010/20103161243.pdf
17 “Georgia Agricultural Sector Bulletin,” Food and Agricultural Organization of the United Nations, Winter 2011,
http://www.fao.org/fileadmin/templates/tc/tce/pdf/Georgia_Ag_Sector_Bulletin_Winter_2011.pdf
18 “Background Notes: Georgia,” US Department of State.
19 “Georgia,” CIA World Factbook.
 In terms of religion, the population is predominantly Orthodox Christian, the official

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

Georgian faith (83.9%), with a small group of Muslims (9.9%).20
Approximately 53.6% of the population lives in urban areas.21
Life expectancy at birth is 71.85 years for males and 80.36 for females.22
The age composition of the population is as follows: 0-14 years: 17.73%, 15-64 years:
66.73%, and 65 years and over: 15.53%.23
In 2014, Georgia spent 7.4% of its GDP on health expenditures.24
Education:
 The Georgian education system is composed of both public and private schools. Total
governmental spending on education amounted to 2.0% of GDP in 2012.25
 There are 9 years of compulsory education for Georgian children. Literacy is estimated at
100%. 26
 The gross enrollment ratio for tertiary level education increased from 28% in 2012 to
33% in 2013. This number has remained relatively consistent in recent years.27
Geography/Natural Resources:
 Located on the Black Sea’s eastern coast at
the crossroads of Western Asia and Eastern
Europe, Georgia borders Armenia,
Azerbaijan, Russia, and Turkey.
 Georgia maintains a land area of 69,700
square kilometers, making it slightly smaller
than South Carolina. It is ranked 129th in the
world in terms of total area.28
 Georgia has plentiful natural resources
including iron ore, timber, manganese
deposits, and copper.29
 Georgia doesn’t produce significant
The Caucasus Mountains in Svaneti, Georgia
quantities of natural gas and is dependent on
Source: Wikipedia
Russia for much of its energy needs, though
this dependency has diminished in recent
years as Georgia increasingly looks to Azerbaijan for its natural gas imports.30
 Hydropower accounts for 85% of electricity generation in Georgia, with the remainder
being supplied by thermal power plants which rely on imported natural gas. The
20
Ibid.
Ibid.
22 Ibid.
23 Ibid.
24 “Georgia,” CIA World Factbook.
25 “School enrollment, tertiary (gross),” The World Bank, http://data.worldbank.org/indicator/SE.TER.ENRR
26 Ibid.
27 Ibid.
28 “Georgia,” CIA World Factbook. Revised: 2014 data 1/26/16
29 Ibid.
30 Ibid
21
installed capacity of Georgian electricity production facilities is about 4.4 GW, but these
plants generally operate at about 40 percent of capacity due to aging equipment and a
shortage of fuel supplies.31
Agriculture:
 Agriculture employs 55.6% of the workforce, and accounts for 9.2% of Georgian GDP.32
 Permanent crops compose 3.79% of the land, and arable land accounts for 11.51%.
There were about 4,330 square km in irrigated land as of 2008.33
 Key crops include: citrus, grapes, tea, hazelnuts, vegetables, and livestock.34
 While Georgia has increased its exportation of minerals, vehicles, alloys, and petroleum.
Agricultural exports still make up a large portion of the Georgian economy totaling at
over $753 million. This includes the very profitable wine production Georgia is becoming
more known for due to proper growing climates. .35
Relevant Environmental Laws and Regulations:
 Party to: Air Pollution; Biodiversity; Climate Change; Climate Change – Kyoto
Protocol; Desertification; Endangered Species; Hazardous Wastes; Law of the
Sea; Ozone Layer Protection; Ship Pollution; Wetlands. 36
Currently Funded Projects:
Second Secondary and Local Roads Project (SLRP II)
 The government of Georgia in attempts to improve
local infrastructure have set aside $70 million dollars
in an effort to rebuild local roads and increase the
capacity of the Roads Department (RD) to better
manage road infrastructure. 37
 There are two parts to the infrastructure revamping
plan. First being to rehabilitate old road sections in
many agricultural and residential areas to improve
transit quality. The second part details increased
training, and strengthening of the Roads Department
for better maintenance of these new road sections as
well as increased maintenance of all roadways.
Workers in Georgia working on a new road project
part of the SLRP II project.
Source: World Bank,
http://www.worldbank.org/projects/P122204/secon
dary-local-roads-project-ii?lang=en
“Georgia: Country Profile,” European Bank for Reconstruction and Development, 2010, http://ws223.myloadspring.com/sites/renew/countries/georgia/profile.aspx
32 “Economy of Georgia,” Invest In Georgia, 2014. http://www.investingeorgia.org/en/georgia/economy
33 “Georgia,” CIA World Factbook.
34 Ibid.
35 “OEC Georgia,” Observatory of Economic Complexity, 2013
http://atlas.media.mit.edu/en/profile/country/geo/#Exports
36 “Georgia,” CIA World Factbook.
37 “The World Bank Projects and Operations,” The World Bank, January 26, 2016.
http://www.worldbank.org/projects/P122204/secondary-local-roads-projectii?lang=en&tab=documents&subTab=projectDocuments
31
 The project, started in 2012, and is currently progressing with and end date in sight by
mid-2019.38
Georgia Transmission Grid Strengthening Project
 The program is designed to provide more reliable levels of power to the southwestern
part of Georgia. The program is being complete in four components with an expected
completion date of March 31, 2019.39
 The project of strengthening Georgia’s power supply also brings with it clean energy.
One of the goals of the World Bank in collaboration with the government is to use clean
hydroelectric power as a means to power Georgia. This combined with fewer power
outages, and more power supply to businesses and residential communities make the
Georgian Transmission Grid Strengthening Project one of the most important projects
for a modern Georgia.40
Acknowledgements:
Research and Data Development Provided by: Gabriella Morrone, Research Assistant,
under the supervision & coordination of Dr. Gerard Janco, President Eurasia
Center/Eurasian Business Coalition. Updated September 2016.
“The World Bank Implementation Status and Results Report” The World Bank, January 26, 2016.
http://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/ECA/2015/08/18/090224b08307d807/1_0/
Rendered/PDF/Georgia000Seco0Report000Sequence006.pdf
39
“The World Bank Projects and Operations,” The World Bank, January 26, 2016,
http://www.worldbank.org/projects/P147348?lang=en&tab=overview
40
“World Bank supports Secure and Reliable Supply of Power in Georgia,” The World Bank, January 26, 2016.
http://www.worldbank.org/en/news/press-release/2014/05/13/world-bank-supports-secure-reliable-supply-powergeorgia
38