On 3 September 2014, the Minister of Finance of Georgia, Nodar Khaduri, talked about the improvement of Georgia’s position in the world economic competitiveness rankings in his interview with the media. According to Mr Khaduri, the Government of Georgia is doing its best to facilitate the further improvement of Georgia’s rank of competitiveness. “It is very important that our competitiveness is growing. We have made significant progress over the period of the last two years and it is very good that a field such as macroeconomic stability is being improved as it is the direct competence of the Ministry of Finance and the Ministry of Economy and Sustainable Development of Georgia. We are doing everything in our power in order to improve the competitiveness rating which will ensure that Georgian production and the Georgian economy will be competitive on the world market,” said Khaduri.

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took interest in this statement and verified its accuracy.

The Global Competitiveness Report is published by the World Economic Forum (WEF) every year. The rating of every year is created based upon the data of the previous year. For example, the 2014-2015 rating is based upon the 2013 data whilst the 2013-2014 rating reflects the situation in 2012.

The World Economic Forum

is a Swiss non-commercial fund, holding a large-scale summit meeting in the city of Davos every year. The meeting is attended by over 2,500 businessmen, politicians and scientists. The world economic challenges and their solutions are discussed at the forum. The economic competitiveness ratings of 144 countries are published by the Forum every year.

Georgia improved its position from last year’s 72nd (4.15 points) to 69th (4.22 points) in the 2014-2015 Global Competitiveness Report

of the World Economic Forum.

The structure of the Global Competitiveness Index consists of three main blocks. These blocks are:  general requirements, effectiveness stimulating factors and innovative factors. The general requirements include:  state institutions, infrastructure, macroeconomic environment, basic education and healthcare. The effectiveness stimulating factors are:  higher education, effectiveness of the labour and goods market, development of financial markets, technologies and the size of the market. As for innovative factors, these include:  business development and innovations.

According to the 2014-2015 report, Georgia holds the 48th position in general requirements (4.88 points), 79th in effectiveness stimulating factors (3.92 points) and the 118th

position in innovative factors (3.1 points).

In his statement Nodar Khaduri focuses upon macroeconomic stability; therefore, we shall look into this indicator more closely.

Macroeconomic stability is among the general requirements. According to the data of 2014-2015, Georgia holds the 48th position by its macroeconomic stability with 5.14 points. The macroeconomic stability is determined by five main components. These are:  budget deficit, domestic savings, inflation, government debt and the credit rating of the country. In 2014-2015, in these fields Georgia held the following positions: budget deficit – 40th position (1.3% to GDP), domestic savings – 72nd position (19.4%), inflation – 78th position (-0.5%), government debt – 41st position (31.8% to GDP) and the credit rating of the country – 84th

position (38.3 points).

According to the two-year old 2012-2013 report, Georgia held the 88th position by its macroeconomic stability, 37th by budget deficit (0.9% to GDP), 122nd by domestic savings (10.9%), 115th by inflation (8.5%), 53rd by government debt (33.9% to GDP) and 84th

by the credit rating of the country (35.7 points).

According to the 2014-2015 report, Georgia has the worst results in the innovation and business development fields. It holds the 113th (business development) and 121st (innovation) positions in the ranking. From the effectiveness stimulating factors, market size – 103rd position (2.98 points) and higher education and training – 92nd 

position (3.89 points) are the most problematic.

In order to determine whether or not Georgia’s international competitiveness has improved, we looked into the reports published from 2006-2007 to 2014-2015. The main data of the Global Competitiveness Report ratings are represented in the chart below:

  Competitiveness Ranking General Requirements Effectiveness Stimulating Factors Innovative Factors Macroeconomic Stability
2014-2015 69 48 79 118 48
2013-2014 72 57 86 122 61
2012-2013 77 64 87 120 88
2011-2012 88 86 89 117 137
2010-2011 93 95 94 121 130
2009-2010 90 85 89 117 117
2008-2009 90 91 87 109 118
2007-2008 90 87 90 119 -
2006-2007 85 82 87 113 93
According to the chart, the improvement of Georgia’s global competitiveness ranking started in 2010-2011. All of the main indicators have improved since 2011, except the innovative factors which vary from the 118th to the 122nd

positions.

Conclusion Georgia has improved its position from last year’s 72nd to 69th in the 2014-2015 Global Competitiveness Report of the World Economic Forum. According to the 2012-2013 Report, Georgia held the 77th

position.

In his statement Nodar Khaduri focuses upon the past two years; so, we compared the data of the last two years as well.

All of the main determinants of the ratings have been improved over the past two years. In the ratings of 2014-2015, Georgia holds the 48th position by general requirements (64th and 57th positions in the previous years) and the 79th by effectiveness stimulating factors (87th and 86th in the previous years). The innovative factors field has also seen a slight improvement at the 118th position (120th and 122nd

in the previous years).

According to the reports, the biggest improvement in the past two years was recorded in the field of macroeconomic stability. Georgia moved from the 88th position (2012-2013) to the 48th (2014-2015). The production market effectiveness ranking has also improved moving from the 82nd to the 60th position. In the field of financial market development Georgia moved from the 93rd to the 76th

position.

There has been no significant worsening in any field in the past two years. The fields of innovation and business development (118th to 120th positions) and market size (99th to 103rd

positions) remain stably problematic.

Based upon the analysis of the World Economic Forum’s recent reports, we conclude that Nodar Khaduri’s statement:  “Our competitiveness is growing. We have made significant progress over the period of the last two years… A field such as macroeconomic stability is being improved,” is TRUE.

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