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On 16 January 2013, the Prime Minister of Georgia, Irakli Gharibashvili, met with representatives of Georgian business. At the meeting Gharibashvili presented the economic indices of the last year and spoke about the protection of property rights. According to his statement, “Property rights are protected in Georgia as never before. This is confirmed by the international ratings as well and is respectively reflected by the improved ranking of Georgia in the Global Competitiveness Report of the World Economic Forum for 2013-2014. In particular, Georgia has climbed up five notches in the abovementioned index. According to the report, Georgia has improved its positions in 48 sub-components out of 114. According to Doing Business,

Georgia occupies the eighth position in terms of doing business.”

FactCheck

took interest in the statement of the Prime Minister and decided to check its accuracy.

The Global Competitiveness Report

is an annual report published by the World Economic Forum. The rating assesses countries based upon the Global Competitiveness Index. It evaluates countries according to their capacity to provide a high level of well-being for their citizens and this depends upon how productively the state uses its available resources.

The authors of the report define ‘competitiveness’ as the set of institutions, policies and factors that determine the level of productivity of a country. A more competitive economy is the one that is likely to grow faster over time. The Global Competitiveness Index is calculated through 114 components grouped into 12 pillars of competitiveness. The first pillar comprises institutions, the second one – infrastructure, third – macroeconomic environment, fourth – health and primary education, fifth – higher education and training, sixth – goods market efficiency, seventh – labour market efficiency, eighth – financial market development, ninth – technological readiness, tenth – market size, eleventh – business sophistication and twelfth – components comprising innovation.

In the Global Competitiveness Report for 2013-2014, Georgia occupies the 72nd position out of 148 countries; as compared to the last year, it has in fact climbed up five notches. In 2012-2013 Georgia occupied the 77th position (among 144 states). However, the increase in the number of states does not affect Georgia’s positions. The country is rated based upon the Global Competitiveness Index that relies upon the assessment of the country in terms of 114 components. The Global Competitiveness Index varies between 1 (the lowest) to 7 (the highest). In the 2013-2014 report, Georgia’s Index has 4.15 points which exceeds the indicator of the last year (4.07) by 0.08 points. For comparison, the Global Competitiveness Index assessment of Switzerland, which is number one on the list, comprised 5.67 points this year while the Index assessment of Chad, the last state on the list, was 2.85. In the rating, Georgia is neighboured by Vietnam and Ecuador in the 70th and 71st positions, respectively (their competitiveness indices comprise 4.18 points), and Macedonia (4.14) and Botswana (4.13) in the 73rd and 74th positions, respectively.  As for the geographical neighbours of Georgia, Azerbaijan (4.51) occupies the 39th position, Turkey (4.45) – the 44th position, Russia (4.25) – the 64th position, Armenia (4.10) – the 79th position and Ukraine (4.05) – the 84th

position.

As compared to the report of the last year, Georgia has in fact improved its positions in 48 of the 114 components this year including in property rights, intellectual property, judicial independence, quality of the educational system, effectiveness of the anti-monopoly policy, etc. The statement of the Prime Minister:  “Property rights are protected in Georgia as never before” may be understood as his political evaluation. FactCheck is not going to probe too deeply into this. However, in order to support this statement, Irakli Gharibashvili names the Global Competitiveness Report

which prompted us to look through the indicators for Georgia in terms of property rights in the reports of the last years as well. Given that the report examined different numbers of states in previous years, it was deemed to be in greater fairness to discuss Georgia’s indices not in terms of its position with regard to other states but only considering the indicator obtained by Georgia in this particular component. As becomes obvious from the table below, Georgia’s Index of the current year exceeds the indicators of the previous three years, is equal to the indicator of 2009-2010 and is less than the Index of 2008-2009.

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It is also of note that the improvement of the country’s position in comparison to the other states does not necessarily mean that the state has progress in this respect. The ranking of one state can improve in a particular component but the actual assessment given to the country in this component (Index) may get worse as compared to the previous year. In this case, the Prime Minister speaks of the improved positions in 48 components as compared to the other states. Although, it is of note that Georgia’s assessment (Index) has worsened in five of the 48 components as compared to last year. For instance, according to the current report, Georgia has improved its positions in terms of the transparency of government policymaking (33rd position in 2013-2014 and 36th

in 2012-2013). This notwithstanding, the assessment of the country in this respect has decreased (4.8. last year and 4.7 this year. Same as previously, the assessment scale of this component ranges from 1 (the lowest) to 7 (the highest)).

It is also possible that the assessment of the country in any component may increase but the position in the ranking may get worse which most probably depends upon the progress made by the other states. According to the report of the current year, Georgia (the country’s Index) has improved in 50 of the 114 components although out of this number, Georgia’s positions in nine components have worsened in comparison to the other states.

Overall, in terms of the assessment, Georgia’s condition has improved in 50 of the 114 components, it has worsened in 34 and remained the same in 24. As compared to the other states, Georgia’s positions, as admitted by the Prime Minister, have improved in 48 components while they have decreased in 49 and remained the same in 11.

To describe the assessment in more details, as compared to last year, Georgia’s position is represented in the table

where the yellow colour indicates the improvement as compared to the last year, blue denotes the maintaining of the same positions and red – a deterioration of the positions.

As indicated by the Prime Minister, as compared to the report of 2012-2013, Georgia’s position this year has climbed up five notches as compared to the other states; however, in order to see the whole picture, we believe the dynamics of the past years would also be interesting.

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*The brackets show the quantity of the states examined and the position of Georgia in the ranking as compared to the states examined in the last year As for the data of Doing Business, FactCheck studied this issue in the previous article as well. Doing Business

annually publishes the ranking of 189 countries in terms of the business environment. The publication is the joint research of the World Bank and the International Finance Corporation (IFC) and analyses the regulations and the procedures concerning the start-up of business, international trade, tax payment and liquidation. The ranking is based upon ten respective indicators.

According to Doing Business

for 2014, Georgia occupies the eighth position of the 189 states in terms of the ease of doing business. Georgia has climbed up a notch as compared to the last year.

Conclusion According to the Global Competitiveness Report for 2013-2014, Georgia climbed up five notches as compared to the last year and occupies the 72nd

position out of the 148 states in the report.

In the current year’s ranking, Georgia has in fact improved its positions in 48 of the 114 components in comparison to the other states, including the property rights component. In this component, Georgia’s assessment (Index) has increased as well; however, since the Prime Minister also spoke about the data of the last year, we also took into account the Index of 2013. The current Index for Georgia exceeds the indicators of the last three years, equals the data from 2009-2010 and is less than the Index of 2009-2010. Therefore, the Prime Minister is right when speaking about the improvement in terms of property rights as compared to the last year; nevertheless, his statement is less accurate in the part where he claims that the improvement had been witnessed in comparison to the previous years as well.

Additionally, the enhancement of the country’s positions in respect to the other states does not always mean that the state has an actual progress in those directions. The ratings of a state can improve in a certain component although the assessment of the abovementioned component (Index) may deteriorate if compared to the previous year. In this case, the Prime Minister speaks about the improvement made in 48 components. This notwithstanding, Georgia’s assessment (Index) became worse in five components as compared to the last year.

It is also possible that the assessment of a state may improve in certain components but its position in the ranking may get worse which is most probably caused by the progress made by the other states.

Overall, in terms of the assessment index, Georgia has seen progress in 50 of the 114 components, its indices worsened in 34 and remained the same in 24. As compared to the other states, Georgia has improved its ranking in 48 components, as was underlined by the Prime Minister, however it deteriorated in 49 components and remained the same in 11 which is also a very important detail even though overlooked by the Prime Minister.

As for the data of Doing Business, the 2014 report

shows Georgia occupying the eighth position of the 189 states in terms of the ease of doing business. This position improved by one notch as compared to the last year.

Therefore, FactCheck concludes that Irakli Gharibashvili’s statement:  “Property rights are protected in Georgia as never before. This is confirmed by the international ratings as well and is respectively reflected by the improved ranking of Georgia in the Global Competitiveness Report of the World Economic Forum for 2013-2014. In particular, Georgia has climbed up five notches in the abovementioned index. According to the report, Georgia has improved its positions in 48 sub-components out of 114. According to Doing Business, Georgia occupies the eighth position in terms of doing business,” is HALF TRUE.

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