Home / Economy / Competitive Capacity of Georgian Economy Slightly Improved

Competitive Capacity of Georgian Economy Slightly Improved

Georgia Gains One Position in Global Competitiveness Rating and Comes up with Three Leading Countries in Eurasia Region

According to the 2018 Global Competitiveness Index, Georgia has gain one position compared to 2017. The report describes competitive capacity of 140 countries. According to this report, Georgia has moved to the 66th position from the 67th place. According to the World Economic Forum’s rating, Georgia improved indicators by 1.1 point and is leader in Eurasia Region due to the transparency indicator.

Among key problems the report authors have named financial system and opportunity for establishing innovations. For the purpose of improving these components, labour market reformation is one of the mechanisms.

According to Ministry of Economy and Sustainable Development, important methodological changes were carried out in the 2018 report, namely, various indicators were removed from the rating and new indicators were added. Moreover, the rating scale was also changed and the maximum 7-point evaluation system was replaced by 100-point system.

Georgia has improved rating points in 12 categories: institutions, readiness for accepting ICT, skills, trade openness, market size, business dynamicity, innovative skills and so on. At the same time,  rating of such directions as infrastructure, macroeconomic stability, financial system and labour market have been worsened.

“In the 2018 index, Georgia has made important progress in many indicators. For example, we have significant improvement in media freedom. We have also very good positions in terms of confidence in police, anti-corruption reforms and we surpass even several countries of EU in this respect. It is also noteworthy that we occupy first positions in terms of electrification indicator and trading tariffs, as well as the fastest procedures for business inauguration and property rights protection.

It is also interesting that the country has recorded a leading position in use of fibre internet. According to the WEF report, such forms of organized crimes as business rocketing and extortion remain on the low level and in this category we surpass such countries as Germany, France, Sweden, United Kingdom and the USA.

The country has to perform serious job in some categories, including the education sector. Graduates of private higher schools cannot satisfy the market requirements and low qualification of professors and teachers is a key reasons, as well as low competitive environment and absence of self-development motivation. Regretfully, we have essential problems in this component”, economist Vakhtang Charaia noted.

It is noteworthy that Vakhtang Charaia was named among three Georgian specialists, who have cooperated with the World Economic Forum as part of the Global Competitiveness Index preparation.

In the regions, better indicators were recorded by Russia, Kazakhstan and Turkey. As to Azerbaijan, this country ranks 69th, Armenia is 70th, Ukraine is 83rd. The WEF launched publishing the Global Competitiveness Index in 2005. It measures the quality of macroeconomic quality, steadiness of public institutions  and the level of technological  readiness.

It should be noted that Georgia has deserved one of the highest points in the rating of safety and the country ranks 29th with 86.3 point among 140 countries. This direction comprises four components and Georgia has improved positions in all four components.

Improved position in the rating was preconditioned by advancements in factors ensuring favourable business environment. Georgia’s key advantage in relation to other countries of the region is:  low bureaucracy and low taxes. Free trade agreements with EU, China and other countries of the Region are also very important as they enable the country to have essential advantage in doing business.

Georgia’s progress in the Global Competitiveness Index signifies that the country has been strengthening its competitive capacity. When thinking of where to make investments in the region, investors pay attention to the Global Competitiveness rating. This is a very good signal for investors to show interest in Georgia and launch business activities in the country, Business Ombudsman of Georgia Irakli Lekvinadze noted.

By Merab Janiashvili
Economic Analyst
More by By Merab Janiashvili