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For resilient economic development in Georgia, the country should encourage exports of higher-value added goods. In this report, ISET-PI and GET have found that Georgia might be able to develop a comparative advantage when it comes to exporting higher-value energy-intensive products. According to projections of its electricity network operator, Georgia will develop excess capacities of low-cost electricity in the next decade. The policy challenge is twofold. Attracting investments requires high prices and a stable regulatory environment. Both conditions can be achieved by increasing market integration with Turkey. Conversely, integration leads to high electricity prices in Georgia, making the country less attractive to electricity intensive industries.
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The Policy Brief predicted potential for Georgia to specialise in the international provision of business services (PP/01/2015).
Potential was predicted in the service trade category of “other business services”, encompassing mainly:
– Operational leasing services: International leasing of equipment
– Legal and accounting services, Management consulting and public relations
– Advertising, market research
– R&D, architectural and technical services
We proceed in two stages:
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ISET-PI and GET have predicted the potential for Georgia to specialize in the production of energy-intensive goods such as: Aluminum (unwrought, bars and rods, foil), Zinc (Unwrought) and Fertilizer mixtures.
Primarily, the analysis of Georgia’s current situation showed that there is no significant production in energy-intensive goods, except nitrogenous fertilizers. Georgia has no proven reserves of bauxite and zinc ore. However, the country does has access to large export market in Europe, CIS and Asia.
For the analysis of Georgia’s competitive potential, the team concentrated on three main factors: An analysis of Electricity prices that showed very competitive conditions and the potential for a cost-effective energy supply. Additionally, research regarding the domestic availability of natural resources showed a minimal utilization level of Georgia’s hydro-power potential – around 18% of potential output. Finally, with regard to transport prices for imports and exports: Port infrastructure is insufficient and the status of Georgia’s ongoing deep-sea port project is not yet fully ascertainable.
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