When economists discuss the constraints for economic development of a country like Georgia, one thing is always taken as given: That people have enough to eat. Of course there are people in this country who are suffering from hunger and malnutrition, but these are rather exceptional outgrowths of extreme poverty. By and large, Georgians have enough money in their pockets to buy bread, vegetables, meat, and dairy products at street vendors, at local food markets, or even at super markets. The fact that hunger was overcome in Georgia and many other regions...
ISET Economist Blog
A blog about economics in the South Caucasus.
Apr
02
Mar
29
I have snapped the picture above in one of Tbilisi’s main streets. To the economist’s eye, however, this picture should be disturbing. While the general observer will see clean and wide sidewalks, beautiful classical style buildings, and a single pedestrian in this early hour of the day, one also sees two adjacent currency exchange booths (Lombardi, as they are called here). The nearer sign shows that they buy $100 for 165.2 GEL, and sell $100 for 165.6 GEL—ignore the listed Euro exchange rate for the sake of this illustration. The farther sign shows res...
Mar
27
Those among our readers who happened to spend a good deal of their lifetimes in the Soviet Union may remember that there was not just one kind of socialism, but there were many different versions. For example, socialist countries favored different ways to achieve industrialization and economic progress. In China, Mao pushed for what one could call “grassroots industrialization” – villages, small towns, and urban collectives were supposed to independently set up industrial endeavors. Rice farmers started to build up manufacturing plants, factories, and ev...
Mar
22
An unprejudiced look at the Georgian economy is rather disenchanting. Starting in 1990 at a per capita income that was close to Poland’s, Georgia went into a free fall as a result of secession wars, loss of markets, an explosion of crime and corruption, and the staggering incompetency of its governments. It took Georgia 17 years, until 2007, to merely return to where it stood at the end of the Soviet Union. In these 17 years, Poland increased its output per capita by almost 700%, achieving a level of more than 25% percent of its neighbor Germany.
While G...
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