Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
The Eurasia Center 2947 Massachusetts Ave NW Washington, DC 20016 www.eurasiacenter.org Email: [email protected] 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 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