In the first part of this article (available also on the homepage of The Financial), I described some of the adverse incentives resulting from a social welfare system. Then I argued that according to Simon Kuznet’s famous paradigm, increasing inequality is hardly evitable when a country enters a growth trajectory (as Georgia did in 2003), and I reasoned that it is at least an ambivalent (not to say questionable) policy for Georgia, at its current state of development, to fight inequality by social welfare measures. In this vein, the articl...
ISET Economist Blog
A blog about economics in the South Caucasus.
Jun
16
Jun
09
One day in my village, I saw our neighbors carrying TV sets, refrigerators, parabolic antennas, and washing machines out of their house. Soon I found out that they were hiding all that stuff from the Social Service Agency (SSA) that was about to check eligibility for social benefits. Later, when I spoke with some other villagers, it turned out that some families had even sold their cows to become eligible for social assistance. “Cows are costly and do not give income on a permanent basis”, they said. Others avoided work contracts because official em...
Apr
21
A few weeks ago, the Israeli ambassador His Excellency Yuval Fuchs delivered a speech at ISET, explaining the amazing transformation of Israel from what essentially was an agricultural state into what many economists call a knowledge economy. The ambassador reported that in his youth the foremost product Israel was known for were oranges. In the last thirty years, however, Israel created a high-tech sector that can compete (and in many aspects surpasses) the high-tech industries of the United States and Europe. Over 60 Israeli companies are listed in the...
Mar
03
On the 14th of February, the Ministry of Economy and Sustainable Development of Georgia published the draft version of the Socio-economic Development Strategy 2020 (SDS). This comprehensive document identifies the main socio-economic challenges Georgia will be facing in the next years and presents a strategy how to cope with them. The overall goal is to achieve sustainable and inclusive growth until the end of this decade.
The spirit of the document very much reflects the principles of the new government. There is no belief in the self-regulatory power o...
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