Issue 2, 2018. April-May

   

THE BEST MINDS IN THE BUSINESS: FAMOUS ECONOMISTS WEIGH IN ON GEORGIA

Investor.ge is piloting a new column: questions with internationally renowned economists. We are reaching out to economists from all over the world who have written popular and well-regarded books on the issues that are important to the Georgian economy and to developing economies, and to economists working at think tanks that are at the forefront of development policy. We pose questions about the issues they are working on that apply to the challenges Georgia is facing. If you have a question, or a recommendation on who we should talk to, please contact us at amcham@amcham.ge.

For the second column in the series, we spoke with Swedish economist Anders Aslund, a resident senior fellow in the Eurasia Center at the Atlantic Council. He is a well-known specialist on the economic policy of Russia, Ukraine and Eastern Europe and has written extensively on Georgia's economic reforms. He is the author of 14 books and teaches at Georgetown University.

We asked Aslund three questions: what do you think Georgia can learn from other countries in the region; what particular challenges does its post-Soviet heritage bring with it; and do you have any thoughts on the greatest opportunities for the country?

Aslund on lessons Georgia can learn from its neighbors: Unfortunately, I do not think there is much that Georgia can learn from the other post-Soviet countries (not including the Baltic states) because Georgia is so far ahead of them. The overall lesson, best exemplified by Estonia and Georgia, is that it is vital not to reform but to fully rebuild law enforcement, prosecution, and the judicial system from the top down.

Aslund on challenges inherited by Georgia's Soviet heritage: The key problem for post-Soviet countries is to establish property rights. A typical post-Soviet country has a capital outflow of about 5% of GDP each year that does not return because property rights are not safe in the country. Therefore, locals save their money abroad. When the locals dare not invest in the country, foreigners that can do so do not invest. Therefore, countries such as Russia and Ukraine have an investment ratio of 18 percent of GDP, when they should have 25-30 percent of GDP. Georgia looks much sounder in this regard.

Aslund on the best opportunities for the Georgian economy: Georgia is a natural hub in the region for commerce and tourism. The Chinese One Belt One Road [Initiative] offers the country a great opportunity. It needs to guarantee the best legal environment to attract business from the region.

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