Georgia is located at the crossroads of Western Asia and Eastern Europe. Georgia has made sweeping economic reforms since 1991 that have produced a relatively well-functioning market economy. Through dramatic police and institutional reforms, the government has mostly eradicated low-level corruption. Georgia ranks 6th in the 2019 World Bank’s Ease of Doing Business index, 16th in the Heritage Foundations’ 2019 Economic Freedom Index, and 66th in the World Economic Forum’s Global Competitiveness Report. Fiscal and monetary policy are focused on low deficits, low inflation, and a floating real exchange rate, although the latter has been affected by regional developments, including sanctions on Russia and other external factors such as a stronger dollar and weaker regional economies. Public debt and budget deficits remain under control.
The Georgian government’s “Georgia 2020” economic strategy, initially published in 2014, outlines economic policy priorities. It stresses the government’s commitment to business-friendly policies such as low taxes, but also pledges to invest in human capital and to strive for inclusive growth across the country, not just in Tbilisi. The strategy also emphasizes Georgia’s geographic potential as a trade and logistics hub along the New Silk Road linking Asia and Europe via the Caucasus.
Overall, business and investment conditions are sound. However, some companies have expressed an increasing lack of confidence in the judicial sector’s ability to adjudicate commercial cases independently or in a timely, competent manner, with business dispute cases languishing in the court system for years. Other companies complain of inefficient decision-making processes at the municipal level, occasional shortcomings in the enforcement of intellectual property rights, lack of effective anti-trust policies, selective enforcement of economic laws, and difficulties resolving disputes over property rights. Georgia’s government continues to work to address these issues and, despite these remaining challenges, Georgia stands far ahead of its post-Soviet peers as a good place to do business.
The United States and Georgia work to increase bilateral trade and investment through a High-Level Dialogue on Trade and Investment and through the Strategic Partnership Commission’s Economic Working Group. Both countries signed a Bilateral Investment Treaty in 1994, and Georgia is eligible to export many products duty-free to the United States under the Generalized System of Preferences (GSP) program.
Georgia suffered considerable instability in the immediate post-Soviet period. After independence in 1991, civil war and separatist conflicts flared up along the Russian border in the areas of Abkhazia and South Ossetia. The status of each region remains contested, and the central government in Tbilisi does not have control over these areas. The United States supports the territorial integrity of Georgia within its internationally-recognized borders. In August 2008, tensions in the region of South Ossetia culminated in a brief war between Georgia and Russia. Russia invaded undisputed Georgian territory and continues to occupy South Ossetia and Abkhazia. Tensions still exist both inside the occupied regions and near the administrative boundary lines, but other parts of Georgia, including Tbilisi, are not directly affected.
Transit and logistics are a priority sector as Georgia seeks to benefit from increased East/West trade through the country. Georgia’s transit prospects have been boosted by the Baku-Tbilisi-Kars railroad. The Anaklia Deep Sea Port project, involving two U.S. companies, the Conti Group and SSA Marine, faced multiple delays and extensions, but the lead investor is still working towards meeting the 2020 completion date. The port would add additional shipping and berthing options for larger vessels, such as Panamax sized vessels. Agriculture and tourism are also attractive areas for investment to respond to the increased inflow of international visitors and demands of local food processing industry.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index||2018||41of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2019||6 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2018||59 of 126||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, stock positions)||2018||$22||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita||2017||$3,780||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
* Source for Host Country Data: GeoStat (Georgia National Statistics Office)
Table 3: Sources and Destination of FDI
|Direct Investment From/in Counterpart Economy Data|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment N/A|
|Total Inward||17,266||100%||Total Outward||N/A||100%|
|“0” reflects amounts rounded to +/- USD 500,000.|
Source: IMF Coordinated Direct Investment Survey
Table 4: Sources of Portfolio Investment
IMF Coordinated Portfolio Investment Survey data is not available for Georgia.
14. Contact for More Information
Economic Unit Chief
U.S. Embassy Tbilisi, Georgia