When speaking about unemployment, arguably the sorest problem in many market economies, “better education” is one of the standard remedies proposed by economists. This recommendation is given to rich and poor countries alike. Yet since I am in Georgia, I am increasingly skeptical about this recipe. To what extent can the education and training of people, or, to use the economic term, the accumulation of human capital, foster economic development?
In Georgia, you may have studied law and you really know your trade, but there is an oversupply of lawyers, a...
ISET Economist Blog
A blog about economics in the South Caucasus.
May
10
May
08
Recently, we discussed the low ranking of Georgia when it comes to social capital (“Since When Do Georgians Trust Banks More Than Friends?”). In the 2012 Legatum Prosperity Index our country ranked #140 in the social capital subindex, out of 142 surveyed countries! This seems unbelievable and even shocking, but if we explore the topic a little bit deeper, we may find reasons for such a low ranking.
The World Bank definition of social capital is the following: “Social capital refers to the institutions, relationships, and norms that shape the quality and ...
May
07
Once considered the most dynamic sector of the Georgian economy, the banks have recently become a target for fierce criticism by Georgian policymakers and media. In early March, NBG president Giorgi Kadagidze called on commercial banks to reduce interest rates on corporate loans to help accelerate the country’s economic recovery. Bloomberg reports him saying that “interest rates on corporate loans are inappropriately high, between 24 and 30 percent, whereas they should be around 12 percent”. Legislative initiatives seeking to cap interest rates, weaken t...
Apr
29
Would you like to buy in a supermarket where the supermarket owner decides what you will get for your money after you made the payment? Such a supermarket would arguably not attract many customers. Yet although this is an odd allegory, a good deal of our consumption we all make in exactly this way – and we are even forced to buy! We pay taxes to the government, and afterwards politicians decide what we get for this money.
Sellers serving private customers have to deliver value for money. You won’t buy a second time in a grocery store if the food was spoi...
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