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.
FactCheck 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 72
nd (4.15 points) to 69
th (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 48
th position in general requirements (4.88 points), 79
th in effectiveness stimulating factors (3.92 points) and the 118
th 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 48
th 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 – 40
th position (1.3% to GDP), domestic savings – 72
nd position (19.4%), inflation – 78
th position (-0.5%), government debt – 41
st position (31.8% to GDP) and the credit rating of the country – 84
th position (38.3 points).
According to the two-year old 2012-2013 report, Georgia held the 88
th position by its macroeconomic stability, 37
th by budget deficit (0.9% to GDP), 122
nd by domestic savings (10.9%), 115
th by inflation (8.5%), 53
rd by government debt (33.9% to GDP) and 84
th 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 113
th (business development) and 121
st (innovation) positions in the ranking. From the effectiveness stimulating factors, market size – 103
rd position (2.98 points) and higher education and training – 92
nd 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 118
th to the 122
nd positions.
Conclusion
Georgia has improved its position from last year’s 72
nd to 69
th in the 2014-2015 Global Competitiveness Report of the World Economic Forum. According to the 2012-2013 Report, Georgia held the 77
th 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 48
th position by general requirements (64
th and 57
th positions in the previous years) and the 79
th by effectiveness stimulating factors (87
th and 86
th in the previous years). The innovative factors field has also seen a slight improvement at the 118
th position (120
th and 122
nd 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 88
th position (2012-2013) to the 48
th (2014-2015). The production market effectiveness ranking has also improved moving from the 82
nd to the 60
th position. In the field of financial market development Georgia moved from the 93
rd to the 76
th position.
There has been no significant worsening in any field in the past two years. The fields of innovation and business development (118
th to 120
th positions) and market size (99
th to 103
rd 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.
