Republic of Georgia Ranked #3 in Economic Freedom

About fafc

The goal of the “Find a Free Country Project” is to research, explore and find a safe and secure free country outside the USA, that is not too large, has a relatively open immigration policy, has a friendly business climate, has a non-intrusive government committed to freedom, and then move to it.
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  1. Croatian Capitalist says:

    Great news, the future looks bright for Georgia at the moment.

  2. Greg says:

    They’re #22 on the Index of Economic Freedom, which isn’t out with their 2016 rankings yet:

  3. fafc says:

    YUp. The Republic of Georgia is pretty awesome no matter how you measure it. IMHO.

  4. Croatian Capitalist says:

    The overall ranking is supposed to come out on the first day of February.

    One thing I really like about Georgia is the fact that unlike in the vast majority of the World all of the parliamentary parties are pro-market, so you don’t have to worry about socialists coming to power and ruining/threatening all of the progress the country has made under capitalist rule (like what is happening in Chile for example).

    • fafc says:

      I also like that there seems to be no crop of professional politicians. Whether you agree with them or not, they are not in office to see how much they can steal. Last month Irakli Garibashvili resigned after essentially accomplishing everything he had promised to accomplish. As a business man he didn’t need to cling to power after checking off all the boxes of his to-do list. I really like that.

      • Croatian Capitalist says:

        That’s another big positive, and as I have already written, the only real issue(s) I have with Georgia (and which prevents me from seriously considering it) is that the Georgian politicians don’t seem to realise what the EU(SSR) is, and that the majority of the population seems to support handing over Georgia’s sovereignty to Brussels as well.

        Joining the EU would nullify more or less every advantage Georgia currently enjoys over countries such as Estonia and Poland, so until the Georgians realise what the EU(SSR) is (or the EU(SSR) collapses), I won’t seriously consider Georgia.

  5. Croatian Capitalist says:

    Ready or not, joining the EU(SSR) will improve nothing in Georgia (I live in a country that has joined the EU, and what have we gotten from joining it? A million new regulations that make life harder for people who actually have to work for the living, gay parades being held at the taxpayers expense every year and anti free speech laws enacted (in theory you could now spend 3 years in jail for telling a joke involving some minority if a judge deems it “hate speech”), the only people who have benefited are the politicians who have gotten well paying EU(SSR) “jobs”, and people who want to study in or move to other EU(SSR) states), the (very) few good things that EU(SSR) membership offers can all be gotten through bilateral agreements, joining the EU isn’t necessary to gain them, and i don’t really see the point in joining the EEU as it is now either, Georgia should in my view be neutral politically and try to have good economic relations with all of the major economic powers.

    • fafc says:

      I agree. The associate agreement is more than good enough. Georgian goods can enter the EU now and the travel restrictions are being liberalized. So I really don’t see what further benefits can be had from the EU for now, and the harm will be profound.

  6. Croatian Capitalist says:

    Well, even if the Georgians don’t come to their senses on this issue, the EU(SSR) might save Georgia by collapsing itself with it’s unsustainable open borders policy.

    Anyway, I have two questions for you regarding Georgia:

    1) How easy is it to get by with English in Tbilisi in your experience?

    2) Have you come across any long-term projections regarding Georgia’s economy? Like for example how long will it take for Georgia’s GDP (PPP) per capita to reach Poland’s or Estonia’s current level?

    • fafc says:

      In regards to the EU collapsing we can only hope.

      Russia would be better than English among the general population, among the younger people English works great.

      As for eocnomic projections, I have not seen any that I would put any money on. On the other hand the real estate prices are so low that all that would be required is a bit of stabilizing of the Lari and you would see some real increases in valuation.

  7. Croatian Capitalist says:

    I really can’t see how the EU(SSR) could survive with it’s current policies, I mean just Germany let in over a million third worlders into the country last year, the vast majority of whom are functionally illiterate, when you add to that the anti-business laws that get passed all the time and the constant work “liberal” fifth columnists put in to destroy Western society in general, I really don’t see the EU(SSR) being around 10 or 20 year from now unless something drastic is immediately done.

    Hopefully the British will vote to leave the EU(SSR) next year, even though I believe that the UK itself is already done for regardless of whether it stays in the EU(SSR) or not, but it would be nice if the British produced one final piece of sanity by starting the domino effect of countries leaving the EU(SSR) and the EU(SSR) getting disbanded as a result.

    As for Georgia’s economy, assuming they are smart enough to continue their pro-market course. stay out of the various political unions and fix their economic relations with Russia, I would think that an average GDP growth of at least 5% over the next 20 year would be realistic, which would put Georgia somewhere around Poland’s current economic level, while if the economy really took off and had an average growth rate of around 10% for 20 years (China had such an average from 1979 until 2010, so it has been done in modern times), in 20 years Georgia would be around Switzerland’s current economic level.

    Also, speaking about the EU(SSR)’s idiocy, one of it’s consequences is definitely going to be that many of Germany’s, Sweden’s, the UK’s, etc. best and brightest are going to leave those countries behind for good, so if Georgia could convince even a small percentage of them to move to Georgia, it would really aid Georgia’s economic development, but sadly I don’t believe that there will be a concentrated effort to do so

  8. Croatian Capitalist says:

    , or that even if there will be one, that it well probably be started too late to have any significant effect, because Georgia is not the USA of old, even among the best and brightest Westerners I think that you would struggle to find a big number who know much more about it than that it is an Orthodox Christian country located in the Caucasus region and that it’s capital is Tbilisi, so the “marketing” campaign would have to start before things in Germany, Sweden, etc. reach the (low) point where the majority of it’s best and brightest decide it’s time to leave those countries behind for good, and if they are not well acquainted with Georgia and it’s potential when that happens, it’s highly unlikely that Georgia would even cross their mind as a potential emigration destination (in 99% of cases), and since Georgia’s politicians think so highly of the EU(SSR), I can’t see them doing such a campaign in time for Georgia to seriously benefit.

    • fafc says:

      There is a constant trickle of European and American immigrants coming here (along with immigrants from the former Soviet Union). It is appealing for many different reasons to many different people. There being no social welfare system, they either come here to work or they come here with some money to invest or just live on. Who knows. I came thinking to set up a business consulting operation which I did but it is more or less dead. Instead I am investing in real estate and starting a micro-brewery/distillery with a Georgian partner. So many different opportunities here. I hope the Georgians don’t screw it up.

      • Croatian Capitalist says:

        I hope so too, I am looking at back-up options (I have finally chosen which country I will move to eventually), and Georgia is one of the few countries I am considering.

  9. Croatian Capitalist says:

    The new overall ranking is out and Georgia is ranked 23rd (with a lower score than last year):

    • fafc says:

      I must admit I am curious as to why. But 2015 was a tough year for Georgia, and 23rd isn’t so bad.

      When I looked at the reason it has to do with issues regarding “Rule of Law”. I am not sure they are valid. I also suspect they are being subjective against Shakashvili and his allies who are being prosecuted for corruption (quite rightly I believe).

  10. Croatian Capitalist says:

    23rd in not bad at all, Croatia is 103rd, and it should be even lower (because under the fiscal freedom part they don’t seem to take into account the 600+ indirect taxes that exist in Croatia)!

    It will be interesting to see whether or not Shakashvili’s party will get elected back into power this year.

  11. Croatian Capitalist says:

    Anyway, considering that based on current trends the EU(SSR) is likely to collapse way before Georgia gets a chance to join, I have started thinking about other issues with moving to Georgia, and one potential problem that almost immediately comes to mind (unless you plan to open an export oriented business) is the lack of purchasing power of the local population, so what is your take on that? Are there enough people in Tbilisi with enough money to spend to make it viable to successfully run a high(er)-end business?

    • fafc says:

      Georgia is an infant economy, but it is growing. There are lots of problems, but also lots of opportunities. Industry and business is growing. I think attitudes are the real problems here. Georgians do not understand the free market system and there is no reason for them to since they have never lived in such a system, and their education system is no better (but no worse) than any other in that regards). But I believe that will change also. People here are a strange mixture of cynical and hopeful. I hope they add a bit of practical. As for spending money you are right. This is not the USA. But costs are 25% of the USA. So if I can make my liquor and it costs 25% of what it would cost in the USA it will also cost me 25% to make here. There are less regulations, taxes, etc. What I make will go a lot farther. Plus the rental market is booming. Yes rentals are low, but the real estate is also low so you can make money by owning a property and renting it out. The problem is that Georgians do not understand the value of money and investment. They have a little rundown apartment that they rent out and make some money. They don’t think to invest in improving the property to increase their rents. Instead they buy a car. I am frankly happy because it leaves great opportunities for others to come in and invest a little money and some time, and produce viable rental properties or AirBnB properties.

  12. Croatian Capitalist says:

    There is no question that Georgia is an attractive place to start an export-oriented business (especially if relations with Russia are fully normalized), but I would prefer to start a business which does all or most of it business domestically (dealing in real estate doesn’t interest me).

    • fafc says:

      What are you thinking of? Pretty much everything is wide open. And that has been my same conclusion. To bell with dealing with exporting. Maybe importing into Georgia but that is a rather cut-throat business. You better have some unique connections or products.

  13. Croatian Capitalist says:

    Well, it’s hard to say exactly without me visiting Georgia first and evaluating everything, but ideally I would like to have my own agricultural production of some sort, although realistically in the short-term I would probably open up a restaurant or something of that sort. Now that you mention importing, maybe being a representative of some Croatian company wouldn’t be a bad idea either.

    Since you are going into real estate, I have question for you that has just crossed my mind, namely since the communists stole private property like crazy everywhere else, I am sure the Soviets did it in Georgia as well, so are the land deeds sorted out in Georgia? I wouldn’t want to buy some land and then have it contested because the Soviets stole it from some farmer 90 years ago or something like that.

    In regards to exporting, even though I have nothing against having such a business as such, but I would prefer my (main) source of income to be local, especially if I moved to Georgia, because imagine for example if you founded let’s say a wind turbine production company, and let’s say you got orders worth millions of USD from Russia and Iran for them, and you manufactured them and they were ready to get shipped, but a week before the shipping date the USA and the EU decided to introduce sanctions to Russia and Iran, and Georgia’s government decided to immediately join the sanctions, you would be left with millions in debt and with wind-turbines nobody would buy at their full price, so basically you would be ruined, I consider something like this to be a serious risk in countries such as Georgia, and it’s not one I am willing to take, I would much rather run a business limited to the Tbilisi metropolitan area.

    • fafc says:

      In regards to land issues, title is good here, and there is no fear of having someone come back and claim a property based upon 90 years ago. HOwever, title is confusing so I would strongly advise use of an attorney. It is very easy for a property to “look” clean but find out that some crazy aunt has a right to refuse a transfer built into a prior deed, and since all transactions need to be in cash on the day of transfer it really pays to be careful. Also, some older properties were not “properly” registered in the past so they have to be “properly” registered now prior to transfer. A bit of a pain, but I have had no problem with this. Just involves issuing new drawings and getting them approved, and then filing them with the registry. Again, never try this without an attorney who is familiar with this stuff.

      As for local transactions I agree. That is why I am working on establishing a local company to make alcoholic beverages from local products. There is always a demand for this but the supply is mostly foreign in a number of product lines. I am sure there are other similar things out there.

  14. Croatian Capitalist says:

    OK, thanks.

  15. Croatian Capitalist says:

    Another question: What are the employment laws like in Georgia?

    • fafc says:

      I am no expert, and not really being very interested in employment for myself I have not explored this. But employment rules seem fairly loose and easy to manage on the employer side. Not a great deal of mandates, and it seems rather easy to hire and fire people. As an employee you don’t have many rights and employers expect you to work long hours for little compensation. As a result employees tend to be unmotivated and surly. But I blame the employers more than anything else. Georgians are still in the infancy of their business/market learning curve. Very few understand the value of “investment” in capital of any kind, human, real estate, etc. They just want to squeeze as much as they can get, and move on. Those that do understand the value of investment tend to be much more successful.

      • Croatian Capitalist says:

        I did mean from the employer’s side, so you answered my question with your second sentence, thank you.

        The reason I asked this question is because the work laws here in Croatia are one of the many reasons why only Greece and Spain have worse youth unemployment than Croatia in Europe and and we are also near the top in the overall unemployment as well, they are very rigid.

  16. Croatian Capitalist says:

    The British people have voted to leave the EU(SSR), which probably means it is the beginning of the end for the EU(SSR), which would be great news for Georgia.

    • fafc says:

      That was my thoughts. However one of the biggest problems here is a lack of confidence. Georgians don’t think they can do anything on their own. I don’t think they like the EU, but they hate and fear Russia, and believe they have no choices given the constant Russian threat and continued Russian provocations.

      • Croatian Capitalist says:

        The general lack of confidence is a problem here in Croatia as well (but even so, it took media propaganda the likes of which would make Goebbels blush (for example scaring elderly people by stating that they wouldn’t get pensions if Croatia didn’t join the EU) to get the majority of people who even bothered to vote in the referendum (the turnout was around 43%) to vote for joining the EU).

        As for Georgia and it’s fear of Russia, I could understand the logic of joining NATO (even though I would prefer that Georgia modelled itself militarily on Israel instead), but joining the EU won’t help Georgia’s security in any way, what would the EU do if Russia invaded Georgia? Send a “strongly worded” letter to Putin? That would surely cause the Russians to withdraw…, and the Russians wouldn’t even need to attack Georgia directly, they could just rile up the ethnic Armenians in Samtskhe-Javakheti and then send “volunteers” to make sure the Georgians can’t take back the region.

        • fafc says:

          That is exactly my view. Georgia should work very hard at strengthening its economy and military (I rather prefer the Swiss model myself given all the mountains…), and avoid external entanglements. The EU is just such an entanglement; it offers Georgia nothing in exchange for provoking the Russians. NATO would be nice, but NATO is insisting the Georgia further provoke Russia while providing Georgia no safeguards. Rather like encouraging a little kid to get into a fight with the biggest bully then sitting back and watching as the bully beats the crap out of the kid.

          • Croatian Capitalist says:

            The Swiss model would be good too, hopefully the Georgians will wise up (or at the very least by lucky enough to avoid problems).

  17. Croatian Capitalist says:

    The Georgian economy seems to be developing nicely: Fitch to raise forecast for Georgia 2016 GDP growth to 2.8-2.9 pct:

    • fafc says:

      Let’s hope this continues. But the Georgians have a bad habit of allowing EU representatives to come in and give advice that results in economic damage. The Georgians are so desperate to be accepted by the EU that they are sadly eager to shoot themselves in the foot (feet?).

  18. Croatian Capitalist says:

    The Fraser Institute has released it’s ranking:

    Georgia is ranked joint fifth with Canada, Croatia is ranked 81st.

  19. Croatian Capitalist says:

    The new Index is out and Georgia has improved it’s score:

    • fafc says:

      Glad to see slow and steady progress.

      • Croatian Capitalist says:

        Yes, hopefully outside forces (primarily the EU) won’t manage to derail that progress.

        Anyway, looking at the rest of the list, I am happy to see many other countries (Estonia, South Korea, Latvia, etc.) besides Georgia are making serious progress in economic freedom, surprised/disappointed that the scores of Poland, Hungary and Slovakia have fallen since last year, and then you have the two expected disappointments, namely Chile continuing it’s path back towards socialism and Hussein Obama leading the USA to it’s worst position ever in this index.

        • fafc says:

          My biggest worry is the EU. There is a very significant part of the Georgian population that don’t really care about anything other than visa free travel to Europe. They would sell their mothers and sisters into prostitution if they could get that visa. They would sell themselves into prostitution. They yell and scream about how they hate Russia, but that is just noise. They don’t care about Georgia or Russia, they just want to become an illegal alien in Europe or the USA. As such when the EU comes in says, “You have to destroy your economy and your culture in order to get a visa free waiver,” they just demand those changes. I hope when the visa free travel is approved, we see about 500,000 of these people leave and never come back.

          • Croatian Capitalist says:

            Getting rid of all of the deadweight would be great, but I doubt that it will happen, and even if it did, they would all just come back once Georgia becomes the Caucasian Singapore.

          • fafc says:

            By then they won’t be able to interfere and ruin it!

  20. Croatian Capitalist says:

    EU approves visa liberalisation for Georgia:

    I guess we will soon see whether your wish comes true.

    • fafc says:

      Yes. This is only good. I hope it will attract the right type of foreigner who wants to relocate here while at the same time getting rid of all the wrong type of Georgians who care nothing about Georgia and would sell their heritage and security to the EU for a visa waiver.

      • Croatian Capitalist says:

        What do you mean? I think people from more or less every first World country could stay in Georgia for a year without a visa even before this agreement was reached, so I see nothing new in regards to foreigners here.

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