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Mamuka Mdinaradze: “Georgia has advanced in each and every aspect of economic freedom (Heritage Foundation) and it is placed in the group of mostly free economies.”

Verdict: FactCheck concludes that Mamuka Mdinaradze’s statement is MOSTLY FALSE.

Resume: Mamuka Mdinaradze refers to the Heritage Foundation’s economic freedom index. The Heritage Foundation measures the degree of the economic freedom (Economic Freedom Index) of over 180 countries every year. Twelve components are used to determine the ranking. Georgia’s overall score has been on the rise in 2012-2021. As compared to the previous period, Georgia’s indicators have worsened in 2021’s ranking in the following components: property rights, government integrity, business freedom, monetary freedom and trade freedom whilst the indicators for investment freedom and financial freedom have not changed. As of 2021, Georgia’s indicators have worsened as compared to 2012 in the following components: business freedom, labour freedom and trade freedom. Of note is that the judicial effectiveness component, which has been measured since 2017, also worsened. Despite the general positive dynamic, Georgia has not advanced in every aspect of the ranking. Therefore, Mr Mdinaradze’s claim that Georgia progresses in each and every component is inaccurate.

In terms of the rating, Georgia belongs to the group of mostly free countries. According to the 2021 Economic Freedom Index, Georgia is ranked 12th with 77.2 points worldwide and is the 7th freest economy of 45 European nations. In 2012, Georgia was ranked 21st worldwide and, therefore, Georgia’s economic freedom did progress, although indicators for certain components have indeed worsened.

Analysis

Georgian Dream parliamentary faction leader, Mamuka Mdinaradze, stated: “Georgia has advanced in each and every aspect of economic freedom. According to the 2021 Economic Freedom Index, Georgia is ranked 12th with a 77.2 total score and is named as the 7th freest economy out of 45 European nations. Georgia is placed in the Index’s group of mostly free economies.”

The Heritage Foundation, founded in 1973, is one of the world’s highly respected research and educational institutions. The aim of the Heritage Foundation is to carry out highly-qualified studies in the fields of the economy and politics and deliver them to their target consumers. Since 1995, the Heritage Foundation has been measuring the degree of the economic freedom (Economic Freedom Index) of over 180 countries every year which is currently determined based on 12 components. These components are merged into four main groups:

• Rule of Law (property rights, judicial effectiveness, government integrity).

• Government size (fiscal health, government spending, tax burden).

• Regulatory efficiency (business freedom, labour freedom, monetary freedom).

• Market openness (trade freedom, investment freedom, financial freedom).

Each of these parameters is ranked between 0 and 100 (with 0 meaning the lowest economic freedom and 100 meaning the highest economic freedom) and shown in a percentage. Of note is that each component or sub-component has equal weight for the final score and none of them has any advantage. Of additional note is that the Heritage Foundation’s annual index is based on information which is a year to a year-and-a-half old. Therefore, figures are taken from the second half of 2019 to the first half of 2020 for 2021’s Economic Freedom Index.

In sum, as stated by Mr Mdinaradze, according to 2021 Economic Freedom Index, Georgia is ranked 12th with a 77.2 total score and is named as the 7th freest economy out of 45 European nations. In 2012, Georgia was ranked 21st worldwide and, therefore, the country’s economic freedom did progress. The countries are conditionally grouped into the following sub-groups – Free, Mostly Free, Moderately Free, Moderately Unfree and Unfree. Georgia is placed in the group of Mostly Free countries.

Table 1: Georgia’s Indicators in the 2012-2021 Economic Freedom Index

Source: Heritage Foundation

Georgia’s overall score has been on the rise in 2012-2021 and increased as compared to both 2020 and 2021. According to 2021’s data, Georgia’s indicators worsened in the following components as compared to 2020: property rights, government integrity, business freedom, monetary freedom and trade freedom. According to 2021’s data, Georgia’s indicators worsened in the following components as compared to 2012: business freedom, labour freedom and trade freedom. Of note is that the judicial effectiveness component, which has been measured since 2017, also worsened.