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Georgia- the 50th Best Country to Do Business: Forbes

Published: November 16, 2012 | 2:07 pm
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The COMMERCIAL TIMES

Georgia occupies the 50th position among the 141 Best Countries to Do Business rating, issues by Forbes on November 15. Best indicators from the post USSR countries were shown by Estonia (22), Lithuania (35) and Latvia (40). Russia is far behind Georgia (105), Kazakhstan (70), Azerbaijan (73), Armenia (77), Moldova (92) and Ukraine (104).

Forbes magazine has rated New Zealand the best country on the planet to do business in. New Zealand has topped a list of the best countries to do business thanks to its “transparent and stable business climate” that fosters entrepreneurship. After coming second in 2011, New Zealand leaped into first place in this year’s list, which is compiled by American business magazine Forbes. Although New Zealand was the smallest economy in the top 10, with GDP of $162 billion, it was ranked highly for personal freedom, investor protection, lack of red tape and lack of corruption.

The Top Ten looks as follows:

New Zealand, Denmark, Hong Kong, Singapore, Canada, Ireland, Sweden, Norway, Finland, United Kingdom.

Georgia’s Profile on Forbes

GDP Growth: 7.0%; GDP/Capita: $3,203; Trade Balance: -12.8%; Population: 4.6 M; Unemployment: 16.3%; Inflation: 8.5%.

Georgia’s main economic activities include the cultivation of agricultural products such as grapes, citrus fruits, and hazelnuts; mining of manganese, copper, and gold; and output of a small industrial sector producing alcoholic and nonalcoholic beverages, metals, machinery, and chemicals.

The country imports nearly all its needed supplies of natural gas and oil products. It has sizeable hydropower capacity that now provides most of its energy needs. Georgia has overcome the chronic energy shortages and gas supply interruptions of the past by renovating hydropower plants and by increasingly relying on natural gas imports from Azerbaijan instead of from Russia. Construction of the Baku-T’bilisi-Ceyhan oil pipeline, the Baku-T’bilisi-Erzerum gas pipeline, and the Kars-Akhalkalaki Railroad are part of a strategy to capitalize on Georgia’s strategic location between Europe and Asia and develop its role as a transit point for gas, oil, and other goods.

Georgia’s economy sustained GDP growth of more than 10% in 2006-07, based on strong inflows of foreign investment and robust government spending. However, GDP growth slowed following the August 2008 conflict with Russia, and turned negative in 2009 as foreign direct investment and workers’ remittances declined in the wake of the global financial crisis. The economy rebounded in 2010-11, with growth rates above 6% per year, but FDI inflows, the engine of Georgian economic growth prior to the 2008 conflict, have not recovered fully. Unemployment has also remained high at 16%. Georgia has historically suffered from a chronic failure to collect tax revenues; however, the government, since coming to power in 2004, has simplified the tax code, improved tax administration, increased tax enforcement, and cracked down on petty corruption, leading to higher revenues. The economic downturn of 2008-09 eroded the tax base and led to a decline in the budget surplus and an increase in public borrowing needs. The country is pinning its hopes for renewed growth on a determined effort to continue to liberalize the economy by reducing regulation, taxes, and corruption in order to attract foreign investment, with a focus on hydropower, agriculture, tourism, and textiles production. Since 2004, the government has taken a series of actions against endemic corruption, including reform of the traffic police and implementation of a fair examination system for entering the university system. The government has received high marks from the World Bank for its anti-corruption efforts.

Rankings

Trade Freedom-5l; Monetary Freedom-87; Property Rights-104; Innovation-118; Technology-73; Red Tape-7; Investor Protection-19; Corruption-55; Personal Freedom-81; Tax Burden- 29.

 

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