Economic Strategy 2020 – no breakthrough?
27 February, 2014
Economic Strategy 2020 –  no breakthrough?
The much expected draft paper for social and economic development in Georgia until 2020 was released on 12 February. The paper is the fruit of collaboration between the cabinet of ministers, business associations, and the central bank, as well as independent economic analysts – and it aims to raise the competitive power and welfare of the country as its ultimate goal. The draft is up for public review on the official web-pages of the economic and finance ministries, prior to
approval of the public sector and its legal confirmation.
The group of economists started working on the strategy shortly after former Premier Bidzina Ivanishvili, the richest Georgian tycoon, went into politics and founded the opposition political coalition Georgian Dream in February of 2012. The strategy was supposed to be worked out by the Parliamentary elections in October 2012; however, it was delayed until now.
The GDP per capita is targeted to increase from the current USD 5811.7 to USD 13 thousand by 2020, with the 0.41 of GINI coefficient shrinking to 0.35. The Foreign Direct Investments (FDIs) share in the GDP must drop from the current 6.8% to 5-6%, and 35% of export share in GDP will reach half of it. Some sector analysts think the draft strategy is a breakthrough;others, that it simply pays lip service to what has been proposed before by the previous government.
The draft acknowledges that Georgian competitive power is much below par, and to increase this power authorities plan to work in three key directions: to boost competitiveness in the private sector, improve human resources, and make financial resources as available as possible.
The paper also admits that the economic development of Georgia was not inclusive during the first two decades of its independence, and promises to redistribute national wealth proportionally henceforth. The project pledges as well to put the investment climate more in line with the best EU practice, and based on the fundamental pillars of a fair court and strong property rights protection.
However, no discernible progress has been made on the illegally seized property issues, nor on the stagnant legal projects on anti-trust and securities, since the new governmenttook office a year ago.
Lado Papava - a member of the Consulting Council of the Ministry of Finances of Georgia - during the draft discussion at the Council meeting on 14 February stated that the authorities have never before succeeded in drafting such a foresighted and progressive strategy during this decade. The focus on innovative economic development and Euro-integration makes him think this.
Kakha Kokhreidze, Vice President of Georgian Trade and Commerce Chamber, after discussion of the strategy between Chamber members and the Finance Minister on 21 February, appeared hopeful that government has the right orientation and is open to dialogue with business. He expects business grievances will be taken into consideration in many directions, particularly in taxation and in relationships with financial institutions.
But Soso Archvadze, an economic analyst, thinks the draft strategy for 2020 is deficient and superficial paperwork, as ever. “I believe even some members of government are not happy about the result,” he told GJ. According to him, the country needs clear orientation for development that should be based on internal potential and exogenous political factors that are overlooked. The draft fails to express any effective slogan to mobilize the population; nor does it offer real tools with which to achieve the prosperity promised by the forecasts of the project. “It sounds like ‘it is good to be rich and healthy,’ but how? This question is unanswered. This is not the 80s; people today can look through similar documents of other countries and make a comparison,” Archaize said.

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