Verdict: Archil Talakvadze’s statement is MOSTLY TRUE.
Resume: The Heritage Foundation publishes its Index of Economic Freedom annually. In 2012, Georgia was in 36th place with 70 points in terms of investment freedom which is one of the components of economic freedom in the ranking. As of 2017, Georgia’s overall points increased to 80 and the country moved up to the 21st place. In accordance with the latest 2018 report, Georgia’s overall points remained unchanged; however, as a result of changes in other countries’ indicators, Georgia’s ranking worsened by three positions and it now ranks 24th.
At the session of the Parliament of Georgia, one of the leaders of the Parliamentary Majority, Archil Talakvadze, stated: “We have improvements in terms of investment protection. In accordance with the Heritage Foundation’s report, Georgia moved up in the ranking from the 36th to the 21st place.”
FactCheck took interest in the accuracy of the statement.
In April 2018, the Heritage Foundation published its 2018 Index of Economic Freedom. In accordance with the Index, Georgia is ranked 9th from the 44 countries in our region (Europe) and 16th from the 180 countries of the world. In accordance with the 2017 Index of Economic Freedom, Georgia was ranked 5th in the region and 13th in the world.
Investment freedom is one of the components of economic freedom. However, it does not refer to the “protection” of an investor as such but measures restrictions imposed upon the inflow-outflow of investments. Generally, whilst speaking about property rights and including the protection of the investor/investment, it is more relevant to pay attention to another component of economic freedom – property rights. Georgia’s indicator in the 2018 Index improved from 55.2 points to 62.8 points as compared to 2017. As a result, the country moved up from the 70th place to the 50th. In 2012, Georgia was ranked 71st with 40 points.
Georgia’s achievements in terms of the investment freedom component are assessed at 80 points overall and this figure has remained unchanged since 2014. However, changes in the performance of other countries (improvement or deterioration) prompt changes in rankings in spite of the overall points being the same. In 2018, Georgia’s ranking in terms of investment freedom worsened by three positions as compared to 2017 with the country now ranked in the 24th place. The tendency of changes in the ranking in the period of 2012-2018 is given in Table 1.
Table 1: Georgia in the Index of Economic Freedom Ranking
|Index of Economic Freedom||Points||69.4||72.2||72.6||73||72.6||76||76.2|
|Position in the Region||16||11||12||11||12||5||9|
|Position in the Region||21||19||16||17||18||16||18|
Source: The Heritage Foundation
As illustrated by the table, Georgia was in 36th place in terms of investment freedoms in 2012 and then ranked 21st in 2017. In 2018, the former positive tendency which continued until 2017 stopped and Georgia’s position went downhill both in terms of the Index of Economic Freedom and investment freedom. At the same time, of note is that the country’s overall points in the Index of Economic Freedom did increase by 0.2 points; however, it was not enough the keep its previous position in the ranking.
Similar indicators are given in the World Economic Forum’s Global Competitiveness Reports. In accordance with this source, Georgia was ranked 131st from 144 countries with 3.1 points in terms of property rights in 2012 (2012-2013 accounting period). It ranked 17th in terms of investment protection with 7 points. In accordance with 2017’s data (2017-2018 accounting period), Georgia is 46th with 4.7 points in terms of property rights protection and 7th with 7.7 points in terms of investor protection. Of note is that as compared to the previous period (2016-2017 accounting period), Georgia has fallen back by three positions although it advanced by 13 positions in the ranking of investment protection.