One of these transitional economies is Georgia. Georgia was one of the countries that made up the USSR before its fall in 1992, when Georgia regained their independence. Georgia is a country in Europe which is on the borders of Russia and Turkey and is classified as a transition economy. The table below shows statistics from 1995 concerning Georgia’s economy.
On the table, the GDP is growing which is a positive sign that there is at least some economic growth in the country. Also the unemployment rate is steadily going down. Even though there was some rise in the unemployment in 2001, the country soon regained their balance and is improving.
However the balance of payments is not as good as it could be. Georgia received help from the World Bank and the IMF; these organizations help Less Developed Countries with money to improve their economy. Although the country has med most of the criteria of the IMF, they are returning to be in more deficit than when they were financially helped. This is also because there is substantially more import than export to other countries. In 2006 (est.) the country was exporting 1.761billion US dollars and importing 3.32billion. This is not desirable for the country at all. For the country’s economy to be stable the amount of export and import should be at equilibrium. Since this is not so, the country will not be growing at a rate that is needed. The reason for the deficit is the country’s need for energy sources and how they are unable to produce all the energy they need.
People are also migrating abroad (-4.45 migrants/ 1000 population (2007 est.). Therefore the labour force in the country is slowly decreasing. This means that a factor of production, resources needed to produce goods or services, is even more scarce than before. Moreover the population growth is negative; people are reproducing less which means even less labour force.
The country had problems with collecting taxes too. Nevertheless they seem to be making progress and improve the government’s infrastructure to a well functioning one. With the taxes the government can provide for the population. 54% of the whole population is below the poverty line, and these people need the government to provide for them the necessities they need, such as food, education, health care, etc.
The main problem the country is facing is supplying energy for the whole population. Georgia imports 2.4 billion kWh of energy, mostly from Russia. This is a great problem that the country must import energy because it is the major cause for the imbalance of import and export. The developing government must see to it that Georgia develops technology so that they do not need to rely on imports for energy in the future.
In general, Georgia is improving. They have not improved as much as the other former USSR countries, but they are steadily making progress. After being helped by the World Bank and IMF, the country has become increasingly better off, although there are still more goals they need to achieve. The country has also applied to be in the European Union; however they were rejected because of the country’s low standard of livings. The country has hope for the future. If they solve the major problems then they might have a chance of becoming a EU state, confirming their economic progress in the future.
