Georgia is a strategically located country in the Caucasus region bordering Russia, Turkey, Armenia, and Azerbaijan. It has a long history of being dominated by various empires but gained independence in 1991. Recent economic and social reforms in Georgia have improved the country's business environment and economic growth, positioning it to become an important regional hub between Europe and Asia.

1. FOCUS ON SETUP SHOP & DOING BUSINESS

2. FOCUS ON SETUP SHOP & DOING BUSINESS

3. TABLE OF CONTENT
SU M MA R Y …… … …… …… … …… … …… … …… …… … …… … …… … …… …… … …… … ….. 5
KE Y F A C TS ...... ..... ...... .. ........ ...... ...... ...... ...... ... ........ ...... ...... ...... ...... . .. ........ ...... ...... . 8
SO CI A L
INT R OD U C TIO N … … … …… … …… … …… … …… …… … …… … …… … …… …… ….. 10
HIS T OR Y O VE R VIE W … …… … …… … …… … …… …… … …… … …… … …… …… ….. 11
DE M O GR APH I CS … …… …… … …… … …… … …… …… … …… … …… … …… …… …. 12
GE O G R APHI C AL SE T TIN G … …… … …… … …… … …… … …… … …… … …… …… …. 15
MIN RA L RE SO U R CE S … …… … …… … …… … …… …… … …… … …… … …… …… …. 16
CO MM UN IC A TI ON S YS TE M … … …… … …… … … …… … …… … …… … …… …… …. 17
SO CI AL IN S T I TU T ION … …… … …… … …… … …… …… … …… … …… … …… …… … 18
E DU C A TI ON …… … …… …… … …… … …… … …… …… … …… … …… … …… …… … 19
POL T IC AL S Y S TE M … … …… … …… … …… … …… …… … …… … …… … …… …… …. 21
LE G AL S Y S TE M … …… … …… … …… … …… … …… …… … …… … …… … …… …… … 23
HU MAN AN D THE UN IVE RSE … …… … …… … …… …… … …… … …… … …… …… … 24
LIV IN G CON DI T ION S … …… … …… … …… … …… …… … …… … …… … …… …… …. 26
BU SI N E S S C US T OM S AN D P RA C TI CE S …… … …… …… … …… … …… … …… …… … 27
CON C LU SI ON …… … … …… … …… … …… … …… …… … …… … …… … …… …… ….. 28
EC ON OM Y
GE O R GI A PE R FO RM AN CE … …… … …… … …… … …… … …… … …… … …… …… … …… … ….. 30
E CON O MI C A C TI VI T Y … …… … …… … …… … …… …… … …… … …… … …… …… …. 31
FO RE I GN DI RE C T IN VE S T ME N T …… … …… … …… …… … …… … …… … …… …… … 34
T RD AE IN DI C A TIO R S … …… … …… … …… … …… …… … …… … …… … …… …… …. 36
T RD AE R E S T RI CA T ION S …… … …… … …… … …… …… … …… … …… … …… …… …. 40
E X TE N T O F E CO N O MI C A C TI VI T Y N O T IN CL U DE I N C ASH TR ANS A C TI ON … …… … 41
DE VE LO PME N T IN SC IE N CE AND TE CH NOL O G Y … …… … …… … …… … …… …… … 42
A PP EN D IC E S
APPE N DI X -1 D OIN G B US I N E SS IN GE OR G IA … … …… … …… … …… … …… …… …. . 43

4. APPE N DI X -2 HI S TO R Y TI ME LINE : GE OR G IA … … …… … …… … …… … …… …… … .. 45
APPE N DI X -3 M AP OF C O UN TR Y … … …… … …… …… … …… … …… … …… …… ….. 49
RE FE RE N CE …… … …… …… … …… … …… … …… …… … …… … …… … …… …… … …… … ….. 50
TABLE INDEX
TABLE 1 DEMOGRAPHICAS INDICATORS ………………………………………………………………. 12
TABLE 1.2 DISTRIBUTION OF POPULATION ……………………………………………………………… 13
TABLE 2 MINERAL RESOURCES ………………………………………………………………………… 16
TABLE 3 COMMUNICATION MEDIUMS ………………………………………………………………... 17
TABLE 4 SCHOOL ENROLMENT ………………………………………………………………………… 20
TABLE 5 POLITICAL STRUCTURE ……………………………………………………………………….. 21
TABLE 5.1 MAIN POLITICAL PARTIES IN GEORGIA ……………………………………………………….. 22
TABLE 6 ECONOMIC STATISTICS ……………………………………………………………………….. 31
TABLE 6.1 PRINCIPLE INDUSTRY …………………………………………………………………………. 32
TABLE 7 FDI FLOW IN ECONOMIC SECTORS …………………………………………………………… 34
TABLE 7.1 FOREIGN DIRECT INVESTMENT BY COUNTRIES ………………………………………………. 35
TABLE 8 GEORGIAN TOP EXPORTS BY COUNTRIES IN 2009 …………………………………………… 36
TABLE 8.1 TOP PRODUCT EXPORTED IN 2009 …………………………………………………………… 36
TABLE 8.2 GEORGIAN TOP IMPORTS BY COUNTRIES IN 2009 …………………………………………… 37
TABLE 8.3 TOP PRODUCT IMPORTED IN 2009 …………………………………………………………… 37
TABLE 8.4 EXCHANGE RATE AGAINTS USD ………………………………………………………………. 39
TABLE 9 WORLD BANK: DOING BUSINESS INDICES RANK ……………………………………………... 43
CHART INDEX
FIGURE 1 MIGRATION AND GROWTH RATE ……………………………………………………………. 12
FIGURE 2 SEX RATION …………………………………………………………………………………… 12
FIGURE 3 ETHNIC GROUP DISTRIBUTION IN TOTAL POPULATION ……………………………………… 13
FIGURE 4 LANGUAGE DISTRIBUTION IN TOTAL POPULATION ………………………………………….. 13
FIGURE 5 POPULATION: RELIGION ……………………………………………………………………… 14
FIGURE 6 GROSS DOMESTIC PRODUCTION GROWTH ………………………………………………….. 31
FIGURE 7 INCOME PER CAPITA GROWTH RATE ………………………………………………………… 31
FIGURE 8 INFLATION RATE ……………………………………………………………………………… 32
FIGURE 9 UNEMPLOYMENT RATE ………………………………………………………………………. 32
FIGURE 10 GDP STRUCTURE BY SECTOR CONTRIBUTION ……………………………………………….. 33
FIGURE 11 INDUSTRY VALUE ADDED GROWTH RATE ……………………………………………………. 33
FIGURE 12 FDI NET INFLOW OF GDP ……………………………………………………………………... 34
FIGURE 13 FDI BY ECONOMIC SECTORS ………………………………………………………………….. 34
FIGURE 14 GEORGIAN TOP EXPORTER CONTRIES ………………………………………………………... 36
FIGURE 15 TOP PRODUCT EXPORTED IN 2009 …………………………………………………………… 36
FIGURE 16 GEORGIA TOP IMPORTER COUNTRIES ……………………………………………………….. 37
FIGURE 17 TOP PRODUCT IMPORTED IN 2009 …………………………………………………………… 37
FIGURE 18 EXTERNAL TRADE OF GEORGIA (BOP) ………………………………………………………... 38
FIGURE 19 GEORGIAN LARI EXCHANGE RATE TREND AGAINST US DOLLAR ……………………………... 39

5. SUMMARY
The objective of this study is to make country there are many political parties. Country is still in
profile, in order to draw some conclusions shift phase to develop a better democratic
regarding doing business. While observing this country, recent amendment in Georgian law, shift
information, caution must be taken to interpret the power from President to Prime minister. It is
the meaning of this information, and understand a good sign for become a full-fledged democratic
the target country reaction. That is, the exercise republic country.
centers on the search as to whether the market
will be suitable for doing business. Georgia has made significant progress since the
2003 "Rose Revolution" in the quality of
Georgia is a small country of 4.6 million people, governance and business environment. On the
located on the southern flanks of the Caucasus different international organization rank indices,
Mountains with a land area of 69,700 square Georgia scored really very well such as doing
kilometers. It shares borders with Russia in the business 12th out of 180 nations in 2011
north, Turkey and Armenia in the south, comparisons to other region countries. Rapid
Azerbaijan in the east and has a coastline on the reforms and new legislation have liberalized the
Black Sea in the west. Georgia's location between economy and created favorable conditions for
the Black Sea, Russia, Armenia, Azerbaijan, and industry development and investment. Low Tax,
Turkey gives it strategic importance as a transit liberal trade regimes, simplified licensing and
corridor. It is developing as the gateway from the permitting procedure, and developing
Black Sea to the Caucasus and the Caspian basin. infrastructure made the Georgia best possible
Population of Georgia is the very good indication country for doing business and investment.
to develop international expatriate business
society in compare to land area and existing Economic growth in Georgia is on track to reach
business opportunity. Lower birth rate is a 4.5 percent next year, and it could be double that
serious issue for the country as a country can face by 2012-2013 as tourism, the banking sector and
the ageing problems within 30 years. Georgia’s exports advance and foreign direct investment
recorded history date back more than 2500 years grow. Georgia had become a regional investment
old, which consist of many facts about the hub during 2005-2007. Private investors are
country and impacted on Georgian present day seeking to expand from Georgia into the
Caucasus, central Asia, Ukraine, Turkey but
society.
foreign direct investment decreased over the
Georgian people have a relationship oriented past two years because of the worldwide
approach. Country has rich resources of mineral, financial crisis and conflict with Russia. The falls
which could also be another opportunity for were being compensated by investment coming
investment in a mining sector. Agricultural land in through international institutions. This helped
and weather make its added gain to produce keep the country’s currency stable. Lari is the
organic food, which is quite demandable in a most stable currency in the region from last five
western market as well as in Asian market. years instead of global financial crisis effect on it.
Political situation is now more stable, although
5 SUMMARY | SOCIOECONOMIC PROFILE

6. Foreign direct investment decreased because of which plans to buy natural gas from Azerbaijan
the worldwide financial crisis and Russian and transport it across Georgia to the Black Sea.
conflict, but there is a serious increase in the Georgia is no more relied on an aggressive
inflows,” International financial institutions such neighbor country for it energy need. There is gas
as the World Bank, the European Bank for flowing from north to south, crossing Georgia
Reconstruction and Development and the Asian from east to west 1.5 percent of the world’s total
Development Bank, which are investing in oil consumption crosses Georgia, and Georgia
projects such as hydro power plants and electricity exporters to all neighboring countries,
highways, were important drivers of this including Russia.
increase.
Country has a strong presence in an international
Relations between Georgia and neighboring organization as Georgia is a member of the UN,
Russia reached a low in 2008, when the two OSCE, World Bank, IMF, EBRD, World Trade
countries fought a five-day war over the Georgian Organization (WTO), Council of Europe, and
region of South Ossetia. However, Georgia is now Organization for Democracy and Economic
politically stable, and a recent deal with Bulgaria, Development-GUAM.
6 SUMMARY | SOCIOECONOMIC PROFILE

8. KEY FACTS
Name of the country Georgia
Capital Tbilisi
Area 69,700 km2
Border countries Russia, Azerbaijan, Armenia ,and Turkey
Population 4.6 mln
Ethnic group Georgian 83.8%, Armenian 5.7%, Azeri 6.5%, others 2.5%, Russian 1.5%
Languages Georgian 71%(official), Russian 7%, Armenian 7%, Azeri 7%, others 7%
Religion Orthodox Christian 83.9%, Muslim 9.9%, Armenian-Georgian 3.9%, Catholic
0.8%, Other 0.8%, none 0.7%
Currency Lari (GEL)
Gross domestic product (GDP) US$ 11.9 bln
GDP Per Capita US$ 2,447.35
Inflation 1.7%
Unemployment 16.4%
International dialing code +995
Internet domain .ge
Main exports Scrap metal. Machines. Chemicals, oil transport, citrus fruits, tea, wine
Main import Fuel, machines and parts, grains and other food, medicine
*Source of facts citied in the reference list of secondary sources
8 KEY FACTS | SOCIOECONOMIC PROFILE

9. FOCUS ON SETUP SHOP & DOING BUSINESS

10. INTRODUCTION
Georgia known officially from 1991 as the Republic of and they think of themselves as an Eastern
Georgia, until 1990 it was Soviet Union state. It absorbed Mediterranean culture.
into Russian Empire in the 19th century. It has been
independent of three years (1918-1921) following the Georgia has attracted the attention of a range of other
Russian revolution, and it was forcibly incorporated into countries, with different interests and ambitions. It seeks
the USSR until the Soviet Union dissolved in 1991. to strengthen a republic and achieve greater economic
Georgia was an ancient kingdom of Colchis and stability. It has a potential to come to be an important
Kartlilberia. In the first century A.D., it came under an and developed economy of the black sea & Eurasia
influence of Roman, and Christianity became the country region. Coming years appears very prosperous in business
the state religion in the 330 AD. It was the second and social growth of the country because its future on the
country to adopt Christianity. Georgia dominated by restoration of the ancient Silk Road economies as a
Eurasian transportation system corridor, using Georgia's
Persian, Arabs, Mongol and Turks.
geography as a bridge for the transit of goods, including
Georgia is strategically located at crossroads between oil and gas, between Europe and Asia. Georgians are
Europe and Asia (Eurasia). Georgia is bordered to the renowned for their hospitality and artistry in dance,
west by the black sea, to the north by Russia, to the south theater, music, and design. Georgian Government has
by Turkey and Armenia, and the east by Azerbaijan. Most been taken affirmative action after 2003 Rose revolution,
of Georgia is located in the South Caucasus, while a toward economic and social reforms, making significant
portion lies in North Caucasus. Throughout the centuries, impact in country society as well as on the economy. It
it has been dominated and settled by Greeks, Romans, could become most important service hub in the region
Persians, and Turkish tribes, Arabs, Mongols and because of access in Europe and Asia, though finding
Russians. Georgia was also on one of the branches of the trained talent is still a problem in country, but govt. step
Silk Road, which carried trade from China and India to toward vocational studies making shift in order to ease in
Europe hence the Georgian people have been influenced find talent. As the country adopted free market economy
by many cultures, both Asian and European. The model like Singapore and doing business in the country
Georgians resembles Greeks and Turks in appearances, become easy gives to attractive invest ground for FDI.
10 INTRODUCTION | SOCIOECONOMIC PROFILE

11. HISTORY OVERVIEW
Georgia’s recorded history dates back more than 2500 Georgia was absorbed into the Russian Empire in the 19th
years old. Georgia has historically found itself on the century, Independent for three years (1918-1921)
edges of great empires, and Georgians have lived following the Russian revolution. It was forcibly absorbed
together in a unified state for only a small fraction of into USSR until Soviet Union disintegrated in 1991 and
their existence as people. Much of Georgia's territory was Georgia restored independence from Russia same year.
fought over by Persian, Roman, Byzantine, Arab, Mongol, Present-day Georgia is rapidly growing economy.
and Turkish armies from at least the 1st century B.C. Progress on market reforms and democratization has
through the 18th century. The zenith of Georgia's power been made in the year since independence but progress
as an independent kingdom came in the 11th and 12th has been complicated by Russia assistance and support to
centuries, during the reigns of King David the Builder and the breakaway regions of Abkhazia and South Ossetia.
Queen Tamara, who still ranks among the most After a series of Russian and separatist provocations in
celebrated for all Georgian rulers. In 1783 the king of summer 2008, Russian troops pulled back from most
Kartli (in eastern Georgia) signed the Treaty of Georgievsk occupied the breakaway areas, but large portions of
with the Russians, by which Russia agreed to take the Georgia proper as well. Russian unilaterally recognized
kingdom as its protectorate. In 1801, the Russian empire the independence of Abkhazia and South Ossetia. This
began the piecemeal process of unifying and acquiring action was strongly condiment by most of the world
Georgian territory, and for most of the next two centuries nations and international organizations.
(1801-1991), Georgia found itself ruled from St.
Petersburg and Moscow.
Note: Appendix -2 History timeline of Georgia
11 HISTORY OVERVIEW | SOCIOECONOMIC PROFILE

12. DEMOGRAPHICS
Table 1 Demographic indicators
Total population 4.6 million (2010 est.)
Growth Rate -1.08%
Birth Rate 10.66 births/1,000 population
Death Rate 9.65 deaths/1,000 population
Migration Rate -4.26 migrant(s)/1,000 population
Urbanization 53% of total population (2008 est.)
Rate of urbanization -0.6% annual rate of change (2005-10 est.)
Literacy rate 100%
Figure 1 Migration and growth rate
-4 -1
-4.1 2004 2005 2006 2007 2008 2009
-1.05
-4.2
-4.3 -1.1
-4.4
-4.5 -1.15
-4.6
-1.2
-4.7
-4.8 -1.25
Migration rate(%) Growth rate(%)
Figure 2 Sex ratio
1616234
2000000 1503360
1500000
Population
1000000
395929 453110
345071 302103
500000
0
0-14 15-64 65 years and over
Male Female
Source: CIA - The World Facts, 2010
12 DEMOGRAPHICS | SOCIOECONOMIC PROFILE

13. Table 1.2 Distribution of population
Age 0-14 years: 16.1% (Male 395,929/Female 345,071)
15-64 years: 67.6% (Male 1,503,360/Female 1,616,234)
65 years and over: 16.4% (Male 302,103/Female 453,110) (2010 est.)
Sex at birth: 1.127 male(s)/female
under 15 years: 1.15 male(s)/female
15-64 years: 0.93 male(s)/female
65 years and over: 0.66 male(s)/female
Total population: 0.91 male(s)/female (2010 est.)
Ethnic Group Georgian 83.8%
Azeri 6.5%
Armenian 5.7%
Russian 1.5%
other 2.5% (2002 census)
Language Georgian 71% (official)
Russian 9%
Armenian 7%
Azeri 6%
other 7%
Religions Orthodox Christian 83.9%,
Muslim 9.9%,
Armenian-Gregorian 3.9%
Catholic 0.8%
other 0.8%
none 0.7% (2002 census)
Geographical areas Regions Main City
Guria Tbilisi (Metro city)
Imereti Kutaisi
Kakheti Batumi
Kvemo-Kartli Rustavi
Mtskheta-Mtianeti Zugdidi
Racha-Lechkhumi and Kvemo Svaneti Gori
Samegrelo-Zemo Svaneti Poti
Samtskhe-Javakheti Akhaltsikhe
Shida Kartli Sukhumi
Samtredia
Khashuri
Senaki
Telavi
Figure 3 Ethnic group distribution in total population Figure 4 Language distribution in total population
Georgian
84% Azeri Russian
6% Georgian 9%
71%
Armenian
6% Armenian
7%
Russian
Azeri
Other 1%
3% Other 6%
7%
Source: CIA - The World Facts, 2010
13 DEMOGRAPHICS | SOCIOECONOMIC PROFILE

14. Observation: Georgian population growth trend is Figure 5 Population: Religion
really negative. It appears within 30 years Georgia
could face the ageing crisis. Therefore, there is a Orthodox
need of population growth. Compare to any Indian Christian
city with the population of 5 million, Georgia has a 84%
big advantage to make faster growth to implement Muslim
reforms because of its literacy rate. In the ratio of 10%
Area and population, there are very good
opportunities to build expatriate society, which Armenian-
Georgian
could make pressure on international politics to
None 4%
secure country independence and from any future Catholic
0% Other 1%
aggression from neighbor countries. This could be
Source: CIA - The World Facts, 1%
the best possible way to secure country future and
create more opportunities for everyone.
Language is another advantage of the country.
Georgian is a primary language of 4.2 million people
in country but still Russian is most spoken secondary
language in Georgia. Russian language is the
language for 180 million people, which give an idea
for expansion of business activity in other CIS
regions. Recently, the government adopted English
to become a mandatory language to be taught in
school from one grade, which is also a good
indication to produce a future international
workforce.
14 DEMOGRAPHICS | SOCIOECONOMIC PROFILE

15. GEOGRAPHICAL SETTING
Location Caucasus range. The Lesser Caucasus range, which runs
parallel to the Turkish and Armenian borders, and the
Georgia is situated on the Black Sea at the junction of
Surami and Imereti ranges, which connect the Caucasus
Eastern Europe and Asia. Georgia is a mountainous
Mountains, create natural barriers that are partially
country. The northern geographical boundaries run along
responsible for cultural and linguistic differences among
the Great Caucasian Range, which include the Main
regions. Because of their elevation and a poorly
Caucasian Range, and its other chains stretch to the
developed transportation infrastructure, many mountain
south. The southern boundary coincides with the
villages are virtually isolated from the outside world
mountainous system of the Minor Caucasus, including the
during the winter. Earthquakes and landslides in
Meskheti-Trialeti volcanic plateau, Southwestern Asia,
mountainous areas present a significant threat to life and
bordering the Black Sea, between Turkey and Russia, with
a sliver of land north of the Caucasus extending into property.
Europe. Georgia share borders with Russia (723 km) to Georgia has about several rivers, many of which use for
the north, Turkey (252 km) and Armenia (164 km) south power small hydroelectric stations. Drainage is into the
west, Azerbaijan (322 km) to the south-east, and the Black Sea to the west and through Azerbaijan to the
Black Sea to the west coast line (315 km). Caspian Sea to the east. Country longest river is the
Mtkvari (formerly known by its Azerbaijani name, Kura,
Climate which is still used in Azerbaijan), which flows 1,364
Georgia's climate is continental climate. Its climate kilometers from the northeast Turkey across the plains of
affected by subtropical influences from the west and eastern Georgia, through the capital, Tbilisi, and into the
Mediterranean influences from the east. The Greater Caspian Sea. The Rioni River, second largest river in
Caucasus range moderates the local climate by serving as western Georgia, rises in the Greater Caucasus and
a barrier against cold air from the north. Warm, moist air empties into the Black Sea at the port of Poti. Soviet
from the Black Sea moves easily into the coastal lowlands engineers turned the river lowlands along the Black Sea
from the west. Climatic zones are determined by distance coast into a prime subtropical agricultural land,
from the Black Sea and by altitude. The plains of eastern embanked and straightened many stretches of river, and
Georgia are shielded from the influence of the Black Sea built an extensive system of canals. Deep mountain
by mountains that provide a more continental climate. gorges forms topographical belts within the Greater
Caucasus.
Topography
In spite of its small area, Georgia has one of the most Temperature
varied topographies of the former Soviet republics. Country temperature recorded in summer average 20° C
Georgia lies mostly in the Caucasus Mountains, and its to 24° C and winter 2° C to 4° C. Humidity is lower and
northern boundary is partly defined by the Greater rainfall averages 500 to 800 millimeters per year.
15 GEGOGRAPHICAL SETTING | SOCIOECONOMIC PROFILE

16. MINERAL RESOURCES
Georgia is rich country in minerals, and it has significant for ferro alloys' production. Categorized list of minerals
minerals resources reserve. There are many kinds of found in Georgia given below.
economic mineral mined during soviet era, as fall of
USSR, the Georgian minerals mining decline. A range of Georgia has a main role in the world minerals. Georgia is
mineral commodities were mined in Georgia, including a transportation route for oil and gas shipments out of
the Caspian region to world market. Therefore, it is a
arsenic, barite, bentonite, coal, copper, diatomite, lead,
manganese, zeolite, and zinc, among others. The country significant country. Three large gas and oil exported
had been a major producer of high-grade manganese ore pipeline constructed in the region pass through Georgia.
for about a century, and ore reserves were significantly These include the Baku-Tbilisi-Ceyhan (BTC) pipeline, the
depleted. Part of the manganese was used within Georgia Baku-Tbilisi-Erzurum (BTE) pipeline for gas and oil
transport.
Table 2 Mineral resources
Energy mineral resources Oil, Coal, Dark coal and Hydropower
Metallic mineral resources Bentonite, Copper, Iron, Manganese, Zinc, Gold, Silver, Lead, Barit,
Molybdenum and Strychnine
Non-metallic mineral resources Diatomite, Arsenic, Barite, Zeolite, Chalcedony, Agate, Talc, Dolomite,
Fluxing limestone, Kaolin, Fireproof clays, Hydrargyrum, Benthonic clays,
Glauber’s salt, Cement, Quartz sand, Gypsum and anhydride, Tuff, lavas and
marbles
Water and Gas mineral resources Mineral waters, Peat and Treatment muds
Land resources Forests- and woodland- 34%, Arable land-9%, permanent crops-4%,
Permanent pastures-25% and other- 28%
Georgia seemed to have potential resources for gold market economy standards for evaluating reserves and,
mining. It had not obtained the investment backing therefore, should be considered only highly prospective
required to sustain a major mining venture. The Georgian for precious metals". Georgia has been able to attract a
State Geology Committee announced that, based on limited number of international investors, and the future
Soviet records, the country had reserves of 8 million troy prospects for mineral development will depend on the
ounces (almost 250 t) of gold, and 48 million troy ounces government prospect to allow the foreign firms for
(almost 1,500 t) of silver. independent exploration. To some extent, this could give a
country valuable promotion to attract additional FDI.
A March 2007 report by the London based Hardman & Co.
stated that "Georgia had never been explored using
16 MINERAL RESOURCES | SOCIOECONOMIC PROFILE

17. COMMUNICATION SYSTEMS
Recently, telecommunication industry, especially mobile information technology operation in Georgia. Increased
communication experienced robust growth now in usage of the internet also introduces many technological-
Georgia, more than 6 fold telecommunication related investment opportunities.
penetrations growth recorded in the country. Many
companies already tapped market but there is still space The mobile communication has become important for
Georgia because of its geographical settings. Fixed-line
available for new entrants in telecommunication industry.
Domestic and International services are increasingly networks in many places out dated and a mobile phone
accessible for private use. Country has extensive fiber represents the only means of communication, specifically
optic network, 3. 5G system has been introduced in the as mobile coverage has been provided for virtually in the
country, 17% mobile user using a 3G technology, which whole Georgia. A telecommunication has become one of
appeared good perspective for a private company to start the fastest growing sectors in the Georgian economy
Table 3 Communication mediums
Country code +995
Telephone (Land line) 650,000 (limited coverage area)
Mobile cellular 4.0 million
Broadcast media 8-Privately owned TV stations
2- State-run public broadcaster
Several major commercial TV stations
2- state-owned public radio broadcaster operator networks
Several dozen private stations broadcast
Internet country code .ge
Internet hosts 110,680
Internet users 1.024 million
17 COMMUNICATION SYSTEM | SOCIOECONOMIC PROFILE

18. SOCIAL INSTITUTION
Georgians share many social attitudes with neighboring In the event of divorce, the law stipulates that mothers
Mediterranean cultures. Tradition, loyalty to friends and given custody of children. Recent trend show in urban
family, and generosity toward guests are viewed as areas in nuclear families, people prefer hire nanny for
important values. Nepotism—the system by which children take care because of both working parents.
relatives help each other get jobs—is considered Nevertheless, in complex family structure, women have
honorable. Important relationships might help a child been more responsible for brought up their child or if
enter a university, gain a promotion for a family member, there are elder people in family then they help in taking
or give a close friend a new business opportunity. caring of children.
According to a Georgian proverb, "A guest is sent by
God." Guests are always treated generously in a Georgian Marriage and Courtship
home, even if the host cannot really afford it. Guests Georgian constitution requires the free consent of both
usually bring a symbolic gift, such as flowers or spouses for marriage, the minimum age for marriage at
chocolates, when they visit. Even if an enemy crosses a 18 years for both men and women. In exceptional
Georgian threshold, he or she must be treated well and circumstances, marriage may be authorized from age of
not harmed. The best way to show respect for guests is to 16 years. According to United Nation, report estimated
honor them with a keipi , or feast. The keipi is a central 16% of Georgian girls between 15 and 19 years of age
part of Georgian social life. were married, divorced or widowed. There are cases of
arranged marriages in rural areas, which usually found in
Family Muslim community in country and practice in old
In urban area, Georgian family structure follows nuclear conventional family.
family structure. Increasing unemployment in a past two
Female/Male roles
decade had also compelled people to move in cities, and
The constitution of Georgia supports the principle of
adopting smaller ways of life. From last two decades,
equal right for men and women. However, the current
there has been significant changing in a traditional way of
situation in the country creates many challenges for
life. Despite this fact, only half of Georgian families
women. Women’s lives have changed dramatically after
adhere to the nuclear structure, and 50% families are still
collapsed of Soviet Union in 1991. Georgia faced into a
following complex or joint family structures.
period of internal politics conflict, until 1994 Georgian
Dynamics of family GDP contracted by 72%. Nevertheless, from 1995 the
economy began to recover. Until 2006, 51% Georgian
Parental roles were living below the official poverty line. Following
Georgian constitution gives guarantees an equal right for economic changes affected social atmosphere, poverty
both men and women in parental authority. Traditionally, and unemployment have been a persistent problem in
women do domestic chores and men exert authority Georgia. As most emigrants were men, increasing
within the family, but attitudes are changing. In urban numbers of women are now the sole provider for their
areas, many women work and some earn higher earnings families. About 50% of Georgian women are unemployed;
than their husband does. As a result, parental authority those who do work earn, on average, only half as much as
within the family is increasingly shared by both spouses. men.
18 SOCIAL INSTITUTION | SOCIOECONOMIC PROFILE

19. EDUCATION
"Knowledge is all about the learning of our past in university level after 12 grades. However, students are
generation. The transmission of knowledge from one passive toward recent amendment in education; new
generation to another is what education is all about." reform seems shock for students. In soviet era every
university in a Georgia had the own entrance exam
Georgia has attained world-class levels of a combined system, in which practice of bribery was very common to
primary, secondary and tertiary education system.
get admission. With starting of Unified National
Georgian education system divided into elementary (six Examination, Government officials are claiming “We have
years; age level 6-12), basic (three years; age level 12-15), finally come up with a system that almost surely excludes
and secondary (three years; age level 15-18), alternatively any possibility of bribe-taking.” New reform in the
vocational studies (two years). Students with a secondary education system in Georgia shook everyone in the
school certificate have access to higher education. Only country. This is a radical change going on in a Georgian
the students who have passed the Unified National
education system.
Examinations may enroll in a state-accredited higher
educational institution, based on ranking of scores he/she Role of education
received at the exams. Most of these institutions offer
Education in Georgia is mandatory for all children aged
three level studies: a Bachelor's Programme (3–4 years); a
from 6-14. During Rose Revolution, the condition of
Master's Programme (two years), and Doctoral
education suffered terribly. In particular, higher education
Programme (three years).
was deeply affected. This meant an unbalanced ratio of
The high human development countries index shows, untrained workers to the demand of society. This
Georgia education index 0.90 is comparable to other deficiency was identified, and the government
countries like Singapore (0.86), which signifies. Georgia's commitment to reform was reinforced by plans for 12
literacy rate is 100%, which is a remarkable figure. At the years compulsory school program, and for providing good
same time, however, there is little doubt on the Georgian quality higher education. Still there is a need of public-
education system needs serious improvement. Since the private investment to improve country education
Soviet Union dismantled the past soviet education still infrastructure.
reflex in a current situation. “In past teachers are trained
Georgia tries to distance itself from its Soviet legacy; the
to deliver one curriculum that reflected a very positivist
ministry is placing more emphasis on humanities,
view of knowledge, where there was only one truth and
specifically country history and culture, and less on math
that was contained in a single text book.
and science. Institutions have increased the number of
Recent report of BBC.com indicates that country hours spent studying foreign languages, humanities, the
education is highly corrupt, bribery is quite frequent to get history and geography of Georgia, and native language
grads and marks in an examination, which is become a and literature. The constitution requires schools to
very serious problem for entire Georgian education provide education in the Georgian, Russian, Armenian,
system. Government is trying to control bribery practice Azeri, Ossetia, and Abkhazian languages. Georgian is by far
and started Unified National Examination to get admission the main language of instruction.
19 EDUCATION | SOCIOECONOMIC PROFILE

20. Table 4 School Enrolment
Primary education The school days for basic, or the lower level of secondary
The Georgian government works to develop the education, are five to six hours per day; for the higher
personality of children through pre-school programs. level, it is six to seven hours per day. Most students also
There are two types of preschool programs: nursery have two or more hours of homework. History,
schools for baby age 1-2 and kindergarten for children geography, biology, physics, chemistry, and foreign
age 3-6. Student in primary grads studied about seven languages are studied at the secondary level and, at the
subjects. Primary school subjects include native language higher level; students choose an emphasis to study. The
study, math, fine arts, music, physical education, natural choices include humanities, physics and math, chemistry
studies, Russian, and literature. The school day is and biology, vocational education, or language. High
approximately three hours in the primary grades. school is the highest level of education before students
reach eligibility for entering higher education.
Secondary education
In 1997-1998, there were about 275,000 students in the Higher Education
country's two divisions of secondary education. The lower University studies typically provide highly specialized,
division is called basic, or secondary. The higher level is rigid training focusing on a single area of study. Law and
called upper secondary, or high school. The basic level medicine students do not attend regular university, but
consists of grades 7 through 9, and higher level is grades go directly to law and medical school from high school.
10 and 11. There is some hope of adding a twelfth grade Law school takes five years to complete and medical
in the future. schools seven, plus two to three years of ordinatura,
which is comparable to an internship.
20 EDUCATION | SOCIOECONOMIC PROFILE

21. POLITICAL SYSTEM
Georgia is still not a full-fledged democracy. The Georgian ranging from transforming the country into a
political system is a presidential republic. The Parliament parliamentary republic to re-establishing the monarchy.
consists of a unicameral Republican Council (commonly Observers note the deficit of trust in relations between
referred to as Parliament) with 235 seats. Members are the Government and the opposition. Different opinions
elected by a popular vote for a four-year term, 150 seats exist regarding the degree of political freedom in Georgia.
are determined by proportional representation and 75 President Saakashvili believes that the country is
represent single-seat constituencies. essentially free; many opposition leaders claim that
Georgia is a dictatorship, and Freedom House puts
The political system remains in the process of transition, Georgia in the group of somewhat free countries, along
with frequent adjustments to the balance of power
with countries like Turkey, Venezuela and Bosnia.
between the President and Parliament, and proposals
Table 5 Political structure
Form of state Democratic republic of nine region
Legal system Based on constitution adopted 24 August 1995
National Legislature Unicameral Parliament (also known as Supreme Council or Umaghlesi
Sabcho) (150 seats; 75 members elected by proportional
representation, 75 from single-seat constituencies; members to
serve five-year terms)
Electoral system Universal direct suffrage age 18 years
National elections President elected by popular vote for a five-year term (eligible for a
second term); election last held on 5 January 2008 (next to be held in
January 2013)
Head of state The president is the chief of state and serves as head of government
for the power ministries of internal affairs and defense
National Government The prime minister is head of government for all the ministries of
government except the power ministries of internal affairs and
defense
Observation: Georgia is an extremely politicized society. seem blocked in separate mindset ideology. All the main
There are hundreds of political parties, of which many are parties have different objective and vision, yet everyone
unregistered. There is no single party represent the is unhappy with the economic and political situation.
society through main parties’ leaders from coalition. They
21 POLITICAL SYSTEM | SOCIOECONOMIC PROFILE

22. Table 5.1 Main political parties in Georgia
Party Name Leader Name
United National Movement or UNM Mikheil Saakashvili
Christian Democratic Movement Giorgi Targamadze
Conservative Party Kakha Kukava
Democratic Movement United Georgia Nino Burjanadze
For Fair Georgia Zurab Nogaideli
Georgian People's Front Nodar Natadze
Georgia's Way Party Salome Zourabichvili
Greens Giorgi Gachechikadze
Industry Will Save Georgia (Industrialists) or IWSG Georgi Topadze
Labor Party Shalva Natelashvili
National Democratic Party or NDP Bachuki Kardava
National Forum Kakhaber Shartava
New Rights David Gamkrelidze
Our Georgia-Free Democrats (OGFD) or Alliance for Georgia Irakli Alasania
People's Party Koba Davitashvili
Republican Party David Usupashvili
Socialist Party or SPG Irakli Mindeli
Traditionalists Akaki Asatiani
22 POLITICAL SYSTEM | SOCIOECONOMIC PROFILE

23. LEGAL SYSTEM
The Georgian legal system is structured in hierarchical The Supreme Court of Georgia represents the court of the
layers. The Judiciary System of Georgia consists of three highest and final instance for justice administration in the
stages: country, which was established in 2005 as a purely the
cassation instance court. It oversees the administration of
 District (City) Court justice at common courts of Georgia, and its activities are
 Court of Appeal guided by the principles of legality, equality of parties and
 Court of Cassation (Supreme Court). competitiveness, as well as irreplaceable inviolability and
independence of justices.
Legal Structure
Supreme Court: Tbilisi
Jurisdiction: The Supreme Court is envisioned as the highest appellate court, but it also hears some capital cases and appeals
from the Central Electoral Commission.
Court of Appeal (court of the second instance)
Jurisdiction: Appeal against first-instance decision by the regional court.
District court Regional Court
Jurisdiction: District courts hear petty criminal and Jurisdiction: Regional courts of appeal have original and appellate
civil cases. jurisdiction. They try major criminal and civil cases, review cases, and
can remand cases to the lower court for retrial.
Civil Code
Georgian civil code created during 992-997, with Book two: Law of Things (Property Law) – regulates
collaborative efforts of Georgian and foreign experts possession, ownership, property rights, measures for
(especially- German). The code has incorporated the best securing claim (security interest, mortgage), rules of
idea developed in civil law. Therefore, expert rate acquiring and loss of ownership.
Georgian civil code along with the new Netherlands civil
Book three: Law of Obligations, given its significance and
code, as one of the most refined and modern statues.
Historically, the country law has been part of continental magnitude, is the heart of the civil law system, through
European family of law. The Civil code of Georgia consists which the freedom of contract is exercised.
of five books. Book four: It regulates family relations.
Book one: General part is a set of common rules that Book five and last book: It governs the law of
govern the entire Private Law and strengthen its inheritance. The Georgia civil code regulates all the key
underlying institutions, such as the doctrine of subjects of issues from person’s birth until its death. Therefore, the
law, doctrine of transactions, exercise of rights, periods of utmost importance of this statute is undisputable.
time, limitations (prescription).
23 LEGAL SYSTEM | SOCIOECONOMIC PROFILE

24. HUMAN AND THE UNIVERSE: PHILOSOPHY AND RELIGION
Religion and Belief system
Georgian people practice Orthodox Christianity. Georgia There are small groups of Yezid Kurds, Russian Molokans
was the second after Armenia to accept Christianity as and Dukhobors, and Jews.
the established religion in 326 A.D. Despite the huge
influence of Christianity in Georgia. They are very tolerant Many of the popular beliefs and rituals regarding death
and respectful of the representatives of other religions. and afterlife stem from a mixture of Christians and pagan
There are a lot of Muslims. Some Abkhazians and concepts, with many superstitions and cultural
Georgians from southern and southwest area practice borrowings. Respecting the deceased is a very important
part of social life, and much time is spent attending
Sunni Islam. Azerbaijanis, Assyrians and Kurds are
Muslims. In Georgia, there is also a small number of funerals and wakes and caring for graves. Although
Catholics. Several Protestant churches are active, with people believe in an eternal afterlife, there is no clear
the Baptists being the most successful. The most ethnic understanding of its nature; people observe rules and try
Armenians belong to the Gregorian Christian Church. to reduce their grief by ritualizing the mourning process.
Aesthetics
Georgian folk songs are often centered on feasts called
Art supra, where songs and toasts to God, fatherland, long
Literature: Literature is in a dire condition because of the life, love and other topics. Traditional feast songs include
political and economic crisis that started long before "Zamtari", which is about winter and is sung to
independence. There are only a few young talented commemorate ancestors, and "Mravalzhamier", a joyous
writers, poets, and almost none from the older hymn. Work songs are also widespread. There is
generation. The literary market is dominated by moreover a distinct and rich tradition of Georgian sacred
translations of bestsellers, detective stories, and erotica. music, both settings of hymns for the Orthodox Church,
and folk hymns and ritual songs that contain a great deal
Graphic Arts: Graphic arts are popular, and many young
of "pagans".
artists are demonstrating high levels of creativity and
skill. Many artists sell their work in the West. Folk music styles from different regions of Georgia differ
very widely, which makes it difficult to speak of
Performance Arts: The performance arts are in a crisis
characteristics of "Georgian folk music" as a monolithic
because limitations imposed by language hinder the art
whole. Table songs from Kakheti in eastern Georgia
from finding a wider audience. Several ballet dancers,
usually feature a simple, drone-like bass part with two
opera singers, and theater directors have achieved
soloists singing the top two parts. Kakhetian melodies
success in other countries. However, in Tbilisi,
sound like recitative part of the time (with great
performance art and dramatic art are alive and rich.
emphasis on the words, which are highly poetic), and
Music then break into series of ornate, cascading ornaments.
The music of Georgia has a long history. Georgian folk The two melody parts do play off each other, but there is
music possesses the oldest tradition of polyphonic music not the type of complicated back-and-forth between the
in the world, predating the introduction of Christianity. parts that one hears in Gurian trio songs. Perhaps the
Georgian folk remains vibrant across the country, while most well-known example of music in Kakhetian style is
modern rock and pop also exists. the patriotic "Chakrulo", which was chosen to accompany
the Voyager spacecraft in 1977.
24 HUMAN AND THE UNIVERSE | SOCIOECONOMIC PROFILE

25. In Rach'a and Ajara, male singers accompany themselves men's and women's backs always remain straight and
on a bagpipe. Dissonance is prominent in the west, in motionless. In Georgia, there is such a concept as
Mingrelia and Guria, which also features high pitches and “dancing dialect”. It means that each region of Georgia
outrageous, yodelling-like vocals called krimanchuli. has its special manner of dancing such as Kakhetian,
Svaneti's traditions are perhaps the oldest and most Kartalian, Svanetian, Mingrelian, Imeretin, Gurian,
traditional due to the region's isolation. Svan harmonies Adzharian, Mtiulian, etc.
are irregular and angular, and the middle voice leads two
supporting vocals, all with a narrow range. The 20th Georgian singing and dancing culture is rich in genres.
century has seen professional choirs achieve renown in The national performing style and the traditions, which
Georgia, especially Anzor Erkomaishvili's Rustavi Choir. were passed from generation to generation, have been in
formation for many centuries.
Georgia is home to a form of urban music with
sentimental, lovelorn lyrics, as well as a rougher and Today Georgia is proud of such temples of musical and
dancing art as the Georgian Opera and Ballet Theatre
crude urban music featuring clarinets, doli and duduks.
(founded in 1851), and the Theatre of Musical Comedy.
Traditional dance and Performance Tbilisi Conservatory has deserved the reputation of
Georgian dances are divided into solo, twosome and educational institution training great performers of
group. Women move gracefully in short steps. Men show classical music. The State Symphony Orchestra and a
the eagerness to fight, which is expressed in fast number of folk song and dance ensembles such as
movements, high jumps and courageous pirouettes. Both “Erisioni” and "Rustavi" are known all over the world.
25 HUMAN AND THE UNIVERSE | SOCIOECONOMIC PROFILE

26. LIVING CONDITIONS
Georgia is going through rapid economy and social A typical festive table ( supra) might consist of puréed
reform. When Georgia was part of the U.S.S.R. (from beets, and spinach sprinkled with pomegranate seeds,
1921 to 1991), people lived well, although their incomes khachapuri (a baked cheese bread), satsivi (chicken in
were small. Services such as health care and education walnut sauce), chanakhi (a lamb and vegetable stew),
were free. Most people in cities paid very little for rent tolma (minced meat wrapped in vine leaves), and
and utilities, and food was cheap. The switch to a market- badrizhani nivrit (eggplant with garlic). Wine is an
based economy, which began in 1991, Georgians become essential part of any meal. Georgians make a wide variety
much more self-reliant. of red wines (such as Mukuzani ) and white wines (such
as Tsinandali ). Regional differences in cuisine are
In recent years, living condition in a country has been pronounced. In the west, one is more likely to eat mchadi
changing dramatically. The cost of living in Georgia is (cornbread) and cheese bread such as Acharuli, which has
moderate. Alcohol & Tobacco, Clothing, education,
an egg baked in the middle of the cheese and dough.
transport is expensive and Communication, furniture &
appliance, grocery, healthcare relative less expensive in Recreational Activity
comparison to any other country based on 13 services
Georgians love going to the theater and classical
and goods basket. The switch to a free market based
concerts. A favorite Georgian pastime is sitting around a
economy; Georgia is now much more self-reliant. table with friends and singing. Some of the popular songs
are Suliko, Mravalzamier (Be long living), and Shen khar
Clothing
venakhi (You are the vine). Most young people are fans of
Georgians have always had a reputation for being stylish Western rock bands. Many have their own rock bands as
dressers. Today they wear casual clothes and follow the
well.
latest fashions. However, on special occasions they wear
traditional costumes. The chokha is the man's tunic. It is Language and Minority Groups
usually magenta or white, is belted at the waist, and has
There are mainly four ethnic groups in Georgia. Azeri and
decorative cartridge pouches on the chest. The kartuli
Armenia people from the largest, numbering and making
kaba is the traditional female costume. It consists of a silk
up 12% percent of the country's population. Other
veil and a long, embroidered dress having wide sleeves
minorities contribute only 4% percent in Georgian
and gathered at the waist.
population. The Azeri people live all over the country but
There are also costumes associated with various regions their compact communities are in the eastern region in
and professions. The women in Khevsureti are well the country. Armenian minority was once dominating
known for their tsinda-pachich , Thick knee-length socks country economic and the political conditions. The
colored with natural dyes. In the mountains, shepherds minority nationalities constitute 16% of the country's
still wear the nabadi. This is a black felt cloak with stiff total population, and they live mainly in the border
wide shoulders that can be used for shelter in winter regions.
weather. Georgian is considered a single national language.
Georgian government policies encourage the
Food
development and learning other languages with the
Georgian food combines Turkish, Greek, Arabic, and even native language to understand and create a better
Indian influences. It is often spicy, flavored, especially qualified workforce in the region; recently the
with coriander, tarragon, and khmeli suneli (a mixture of government has introduced English as important
spices). Hot and cold dishes are served with side dishes of language to learn in school to college for adopting
tomatoes, cucumber, spring onions, sulguni (a cheese),
internationalized standards of country workforce.
and puri (unleavened bread baked in an open brick oven).
26 LIVING CONDITION | SOCIOECONOMIC PROFILE

27. BUSINESS CUSTOMS AND PRACTICES
• Similarly, Georgians can be emotive speakers. When
Meeting and Greeting discussing a topic, voices may become raised and
• Georgian business culture is noticeably less formal hand gestures increased.
than in other countries. • Direct eye contact conveys trust. Estonians will
• Shake hands with everyone upon arriving and leaving. generally maintain eye contact throughout a
• Maintain eye contact during the greeting. discussion. Looking away or making intermittent eye
• The person of the higher status should initiate the contact may be misinterpreted as a sign that you are
handshake. not telling the truth.
• It is polite to wait for a woman to extend her hand. • Although Georgia has a relationship orientated
• Academic and professional titles are commonly used culture, they can also be very direct.
with the surname.
• Always wait until invited before moving to a first- Business Meetings
name basis. • At the beginning of meetings, introductions are the
norm. These are generally made in order of seniority
Business Card Etiquette although women are often introduced first. Be
prepared to give an overview of your background,
• Business cards are exchanged without any formal
experience and general purpose for your visit.
ritual.
• It can also prove fruitful to send a full biography of
• It is a nice touch to have one side of your business
everyone who will attend the meeting beforehand to
card translated into Georgian or Russian.
save time and also offer a more thorough
Communication Style introduction.
• Georgians are very relationship orientated in their • A first meeting is often more about seeing if doing
outlook. business together is possible. Do not expect any
• This means that people's feelings take precedence contracts to be signed on a first meeting. Time and
over facts. It is important to appreciate that you may patience are needed.
not the whole truth if there is bad news. Similarly, • Meetings may continue over a lunch or dinner. The
you should be sensitive when communicating difficult topic of conversation will shift away from business
information. but this should be used as the time to let the
• Similarly, in an eagerness to establish a business Georgian hosts get to know you on a personal level.
relationship, Georgians may offer an affirmative • In most cases, decisions are made at the top of a
response, even if they know it is far from the truth. company. Unless you are meeting with the boss or
• One way in which this cultural influence manifests is owner bear in mind that all your meeting will achieve
in asking questions in a negative fashion so that the is getting across the key points that will then be
person responding may give a positive response for a passed upwards to the decision maker. Meetings can
negative answer. be frequently interrupted. Do not interpret this as a
• Georgians are not afraid to express their emotions no sign of disinterest but Georgians will not see any
matter how bad. Do not be surprised if people do issues with dealing with more than one issue at a
display anger or extreme disappointment during time.
business.
27 BUSINESS CUSTOM AND PRACTICES | SOCIOECONOMIC PROFILE

28. CONCLUSION
The world is becoming increasingly internationalized. However, cultures have not converged to one way of thinking.
Rather, markets remain to be characterized by idiosyncrasies. Before considering doing business and setup shop in the
country, the conscientious manager must conquer a comprehensive understanding of the cultural facets of a country.
Following on, and economic profile is the next stage in checking a country to determine its viability for future ventures
and doing business in Georgia.
28 CONCLUSION | SOCIOECONOMIC PROFILE

29. FOCUS ON SETUP SHOP & DOING BUSINESS

30. GEORGIA PERFORMANCE
Georgia has improved ranks on a number of international institution indices. The most important rank's
improvement achieved was on the World Bank’s doing a business index, moving from 112th place in 2006 to
12th place in 2011. Georgia has also improved ranks in other international organization indices. An
improvement in international indices put Georgia in same tier as countries such as Australia, Japan, Norway
and Switzerland.
Georgia’s ranking by the different international institution indices
INDICES INSTITUTION COMPETITIVE RAKING
Ease of Doing Business The World Bank 12th (2011)
Global Integrity Index Global Integrity 5th
Economic Freedom Index Heritage Foundation 26th
Open Budget Index International Budget Partnership 34th
Global Enabling Trade World Economic Forum 37th
Management Index (Political Bertelsmann Stiftung 42nd
Leadership Towards Democracy and a
market Economy)
Status Index (Political and Economic Bertelsmann Stiftung 52nd
Transformation)
Tax Misery & Reform Index Forbes 62nd
Corruption Perception Index Transparency International 68th
Global competitiveness Index World Economic Forum 93rd
Networked Readiness Index World Economic Forum 93rd
International Logistics Performance The World Bank 96th
Index(LPI)
Inward FDI Potential Index United Nation Conference 102nd
30 GEORGIA PERFORMANCE | SOCIOECONOMIC PROFILE

31. ECONOMIC ACTIVITY
Table 6 ECONOMIC STATISTICS
GDP (US$) $11.9 billion (2009 est.)
GDP rate of growth -4.0% (2009 est.)
Income per capita $2,447.35 (2009 est.)
Family Income – Gini index 40.8 Lowest 10%: 1.9%, Highest 10%: 30.6%
(2005)
Population below poverty line 31% (2006)
Unemployment rate 16.4%
Labor force 1.918 million (2007)
Labor force – by occupation Agriculture 56.6%
Industry 8.9%
Services: 35.5%
Inflation rate 1.7%
Figure 6 Gross domestic production growth
14.00% $14,000,000,000.00
12.00% 12.34%
9.59% $12,000,000,000.00
10.00% 9.38%
8.00% $10,000,000,000.00
6.00% $8,000,000,000.00
5.86%
4.00%
2.00% 2.31% $6,000,000,000.00
0.00% $4,000,000,000.00
-2.00%
$2,000,000,000.00
-4.00% -4.00%
-6.00% $-
2004 2005 2006 2007 2008 2009
Source: World Bank, 2010
Figure 7 Income per capita growth rate
$3,500.00 12.58% 14.00%
$2,917.93 12.00%
$3,000.00
8.51% 8.47% $2,447.35 10.00%
$2,500.00 $2,318.12
6.11% 8.00%
$2,000.00 $1,761.11 6.00%
$1,469.97 4.00%
$1,500.00 $1,186.97 2.42% 2.00%
$1,000.00 0.00%
-2.00%
$500.00
-4.07% -4.00%
$0.00 -6.00%
2004 2005 2006 2007 2008 2009
Source: World Bank, 2010
31 ECONOMIC ACTIVITY | SOCIOECONOMIC PROFILE

32. Observation: Georgian GDP growth during 2006-2007 condition for the creditor, because they were paid back
was 9-10%, which is a good sign for investment and with the more value for the same money. Somehow, it is
setting business in the country, although Aug 2008 related with increased unemployment rate in the
Russian aggression on Georgian territory and global country, because of few available qualified workforces.
financial crisis slowed the country growth, and economy
contracted by 4% but GDP growth for 2010 in Figure 8 Inflation rate (annual %)
conservatively estimated at up to range from 5%. As the 12.00%
response of conflict with the Russia, 38 countries and 15 9.16% 9.24%
10.00% 9.99%
international organization pledge to provide US$ 4.5bln
8.00%
to Georgia for maintain economic condition and societal 8.27%
sovereignty. There are positive impressions for stead 6.00%
4.00% 5.70%
growth of economy as Government commitment to the
free market based economy. Therefore, privatization in 2.00%
public sector seems excellent opportunities for 0.00% 1.72%
investment. GDP structure by industry sectors showed, 2004 2005 2006 2007 2008 2009
Georgia, became primarily service based economy.
Source: World Bank, 2010
Unemployment rate: Unemployment rate increasing
progressively because of demand of qualified workforce.
As a country adopted, free economy based model.
Figure 9 Unemployment rate
Therefore, demand for qualified worker increases and
20.00%
lack of qualification to get work done is a serious problem 16.40%
in Georgia though people are educated but not qualified 13.80%
15.00%
to do the specific task related to job. Which could an
13.60% 13.30% 13.80%
opportunity for investment in the education sector, 10.00% 12.60%
opening private schools, college and starting a new
course that concentrates on providing technical 5.00%
knowledge?
0.00%
Inflation: Inflation decreased, which shows that it is a 2004 2005 2006 2007 2008 2009
disinflation situation in Georgia, considerable rise in Source: World Bank, 2010
income while a low rise in cost of goods. It is a good
Table 6.1 PRINCIPLE INDUSTRY
Principle Industry Steel, Aircraft, machine tools, electrical appliances, mining
(manganese and copper), chemicals, wood products and wine.
Industry value added growth rate -2.0%
GDP contribution by each industry Agriculture 12.2% Products: Citrus, Grapes, Tea, Hazelnuts,
Vegetables and Livestock
Industry 26% Types: Steel, machine tools, mining, chemicals,
wine, construction and wood products
Service 61.8% Types: Trade, Hotels, Social services, Education
and professional services.
32 ECONOMIC ACTIVITY | SOCIOECONOMIC PROFILE

33. Figure 10 GDP Structure by sector contribution
34%
Agriculture, forestry and fishing
11%
10% Industry
Trade
13%
Transport and communication
16%
Public administration
16%
Other sectors
Source: Geostat, 2010
Figure 11 Industry value added growth rate
Ratio of publicly owned industries
15.00% 12.34% 13.39%
After 2003 Rose revolution, privatizations become
10.00% 12.84% 13.47%
necessary for a country to be established as a free
market economy, investment is the main engine 5.00%
for Georgian economy therefore selling of the
0.00% -2.00%
majority of all companies demanded, today more
2004 2005 2006 2007 2008 2009
of the companies are privately owned or -5.00%
government supported with main service -5.48%
-10.00%
regulated by the government.
Source: World Bank, 2010
33 ECONOMIC ACTIVITY | SOCIOECONOMIC PROFILE

34. FOREIGN DIRECT INVESTMENT
Table 7 FDI INFLOW IN ECONOMIC SECTORS
FDI to Georgia in 2009 $759.1 million
Sectors (1000 USD) Agriculture, Fishing 8,833.1
Industry 204,145.7
Energy -1,138.9
Construction 79,701.3
Transport and Communication 153,571.2
Real estate 132,043.5
Financial Sector 45,290.2
Other Services 124,632.3
As a result of privatization Not Stated** 12,000.1
Figure 12 FDI net inflow of GDP (US$ )
20.00% $2,000,000,000.00
17.20%
15.00% 15.10% $1,500,000,000.00
12.22%
10.00% 9.60% $1,000,000,000.00
7.06% 7.11%
5.00% $500,000,000.00
0.00% $-
2004 2005 2006 2007 2008 2009
Source: World Bank, 2010 Investment in US$ Net inflows (% of GDP)
Figure 13 FDI by Economic Sectors Observation: Foreign direct investment is most
important source of capital for Georgian, Georgia has a
Financial
Not stated**
sector
2%
diverse sector for investment. Last five-year statistic data
6% Other
services Agriculture, demonstrate increase inflow of FDI in the country.
16% fishing
1% Telecommunication, transport, real estate and hydro
Real estate
17% power sector attracted most of the FDI inflow in the
Industry
27% country during 2005-07. Following the Russian aggression
on Georgia FDI fell to US$ 759.1 million, down from US$
1.56 billion in 2007.
Transports
and
communicati Construction Energy sector
ons 11% 0%
20% Source: Geostat, 2010
34 FOREIGN DIRECT INVESTMENT | SOCIOECONOMIC PROFILE

35. Table 7.1 Foreign direct investment by countries
1000 USD
S.No. Major Countries 2008 2009* 2010* Q1
1 Austria $ 51,463.37 $ 14,451.30 $ 1,863.00
2 Belgium $ 61.97 $ 132.96 $ 8.31
3 Bulgaria $ 12.66 $ (317.46) $ 5.72
4 Cyprus $ 26,165.77 $ (3,372.60) $ (1,396.33)
5 Czech Republic $ 34,857.63 $ 15,057.25 $ 19,777.90
6 Denmark $ 256.28 $ 139.79 $ 53.68
7 France $ 8,179.67 $ 11,944.75 $ (1,245.29)
8 Germany $ 40,590.62 $ 3,658.04 $ 1,715.19
9 Greece $ (1,850.42) $ 2,515.32 $ 921.07
10 Ireland $ 223.55 $ 50.82 $ 39.46
11 Italy $ 6,047.79 $ 1,172.54 $ (946.23)
12 Lithuania $ (113.93) $ 3,430.05 $ 228.53
13 Luxembourg $ 5,731.05 $ 6,206.34 $ 3,330.15
14 Netherlands $ 135,870.21 $ 105,679.72 $ 8,622.38
15 Sweden $ 7,634.83 $ (4,324.43) $ 506.30
16 United Kingdom $ 148,907.60 $ 63,549.17 $ (1,377.45)
17 Azerbaijan $ 23,942.70 $ 24,596.00 $ 6,492.35
18 Armenia $ (15,061.44) $ (8,602.94) $ (1,107.29)
19 Kazakhstan $ 65,941.73 $ (6,431.78) $ (14,020.36)
20 Russia $ 26,212.18 $ 2,049.53 $ 5,312.00
21 Ukraine $ (6,441.96) $ (1,805.58) $ 14.21
22 Belize $ 37,822.53 $ 1,035.90 $ 345.35
23 Virgin Islands, British $ 156,847.32 $ 5,691.78 $ (9,114.83)
24 China $ (2,271.40) $ (1,309.46) $ (1,366.39)
25 Gibraltar $ 5,307.02 $ 909.06 $ 847.04
26 Iran $ 1,448.50 $ 814.75 $ 209.31
27 Israel $ (2,047.66) $ 3,062.03 $ 1,298.62
28 Japan $ 11,655.35 $ (30,127.23) $ 15,651.01
29 Jordan - $ 1,845.05 $ (375.92)
30 Liechtenstein $ 5,015.96 $ 1,907.54 $ (189.60)
31 Norway $ 2,693.35 $ 1,877.29 $ (262.56)
32 Marshall Islands $ 1,501.16 $ 4,121.10 $ 1,262.11
33 United Arab Emirates $ 306,576.32 $ 169,783.99 $ (320.82)
34 Turkey $ 164,525.59 $ 89,506.34 $ 20,303.63
35 International organizations
$ 23,650.95 $ 30,141.09 $ 2,360.31
36 Others $ 292,606.07 $ 250,040.60 $ 16,361.55
Total $ 1,563,962.92 $ 759,078.61 $ 75,806.13
35 FOREIGN DIRECT INVESTMENT | SOCIOECONOMIC PROFILE