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Natia Turnava: “Advancement to the 5th position in the Economic Freedom of the World ranking means that the degree of economic freedom in Georgia is quite high.”

Verdict: Natia Turnava’s statement is a MANIPULATION.

Resume: The Fraser Institute publishes its annual Economic Freedom of the World Index which ranks countries based on five areas. According to the Fraser Institute’s 2021 index which is based on 2019 data, Georgia improved its indicators in three of the five components such as government size, legal structure and property rights as well as freedom to trade internationally and, therefore, the country moved to the 5th position from the 8th position which it occupied according to the 2020 index (which in turn was based on 2018’s data).

Over the last two decades, Georgia has risen from 57th to 5th place in the rankings. However, in some cases, Georgia's average score deteriorated, for example, in the 2016 ranking, which reflected the situation in 2014, Georgia had a score of 8.31, and in the 2018 rating, the score deteriorated to 8.15. In terms of promotion in the rankings, the economic reforms implemented in the post-2003 Rose Revolution were a turning point. In 2005, Georgia was already ranked 23rd. The promotion continued in the following years and already in 2016 Georgia was promoted to the 5th place in the ranking of the World Economic Freedom Index, and after a further decline, Georgia was again in the 5th place for the 2021 report, although there was no improvement compared to the Y/2016 score.

The report to which the Minister is referring does not reflect the pandemic-induced crisis and its respective economic management nor the processes unfolding in regard to the judiciary in 2020-2021, etc. Natia Turnava’s statement in which she highlights that the legal system and business are areas where Georgia’s indicators have improved does not show the aforementioned context and, therefore, renders her statement a manipulation.

Analysis:

On 14 September 2021, Natia Turnava made the following statement in regard to Georgia’s advanced position in the Fraser Institute’s Economic Freedom of the World Index:

“Georgia’s advancement to the 5th position in the Economic Freedom of the World ranking and the improvement of our indicators means that the degree of economic freedom in Georgia is quite high and, notably, of those areas where our indicators have improved, one of them is the legal system and business freedom. This is truly an achievement brought about by our team in terms of business freedom, freedom for entrepreneurism and respect of private property and it is delightful that unbiased international ranking companies assess this very adequately.”

FactCheck decided to verify accuracy of the statement.

The Fraser Institute publishes its annual Economic Freedom in the World Index where a total of 162 countries are ranked. The ranking is based on five criteria such as access to sound money, government size, legal structure and property rights, freedom to trade internationally and the regulation of credit, labour and freedom.

Of note is the specific nature of the index which means that the 2021 index is based on 2019 data and the index published in 2020 is based on 2018 data and so on.

Over the last two decades, Georgia has risen from 57th to 5th place in the rankings. However, in some cases, Georgia's average score deteriorated, for example, in the 2016 ranking, which reflected the situation in 2014, Georgia had a score of 8.31, and in the 2018 rating, the score deteriorated to 8.15. In terms of promotion in the rankings, the economic reforms implemented in the post-2003 Rose Revolution were a turning point. In 2005, Georgia was already ranked 23rd. The promotion continued in the following years and already in 2016 Georgia was promoted to the 5th place in the ranking of the World Economic Freedom Index, and after a further decline, Georgia was again in the 5th place for the 2021 report, although there was no improvement compared to the Y/2016 score.

Graph 1: Economic Freedom of the World Index, 2000-2019

Source: Fraser Institute

According to the Graph 1, Georgia has constantly been among the top ten and two times among the top five since 2012. In 2019, Georgia improved its indicators in three components such as government size, legal structure and property rights, and the freedom to trade internationally. Therefore, the total points have also improved and increased from 8.24 (2018) to 8.26 (2019) meaning an advancement to the 5th position in the ranking. Georgia’s advancement in the ranking happened because of improved indicators in three out of the five criteria and not because other countries exhibited a worse performance. Georgia was in the 8th position according to the 2020 index (which in turn was based on 2018 data). Of note is that the country’s average points decreased by 0.05 as compared to 2014.

Of additional interest is that Georgia’s being ranked among the top performing countries according to the Fraser Institute’s Economic Freedom in the World Index means that the institute concludes that the country successfully met the relevant criteria in the specific period. Naturally, the ranking may not fully reflect the existing reality in the country.

As mentioned earlier, this index is based on data collected two years before. Therefore, the 2021 index does not include the outcomes of the 2020 pandemic and, most importantly, it says nothing about the problems related to the Georgian judiciary in 2020-2021 because of which Georgia could not get EUR 75 million in macro-financial assistance from the European Union.

Given all of the aforementioned circumstances, Natia Turnava’s statement about Georgia’s advancing in the Fraser Institute’s Economic Freedom in the World Index and improving in three of the five criteria of the index is a manipulation.