Georgia Improves Position in EU Region in Heritage Foundation Index

The Index of Economic Freedom 2019, an annual guide published by the Heritage Foundation, Washington's No.1 think tank, reads that compared to last year, Georgia has advanced by one position in the region to 8th place among the European Union’s 44 countries.

Georgia’s economic freedom score is 75.9, making its economy the 16th freest in the 2019 Index among the 180 countries covered by the survey.

The Index reads that Georgia’s overall score is above the regional (68.6) and world (60.8) averages. Georgia is among the states which have the status of ‘mostly free’.

However, the report reads that Georgia’s overall score has decreased by 0.3 points, with a “sharp drop in judicial effectiveness and lower scores on government integrity and monetary freedom exceeding a big gain in financial freedom.”

The index mentions that since the 2003 Rose Revolution, reforms carried out in the country have reduced petty corruption, cut regulation, simplified taxes, opened markets, and developed transport and energy infrastructure.

“The government hopes that further reductions in regulation, taxes and corruption will attract foreign investment and stimulate growth. Its maintenance of monetary stability and overall sound fiscal health has fostered macroeconomic resilience,” the survey reads, once again reiterating that deeper and more rapid institutional reforms to enhance judicial independence and effectiveness are still needed to ensure dynamic and lasting economic development.

The Index says that property rights are recognized in Georgia, and the government has made property registration easier. But the report added that only a quarter of private landowners hold a clear title to their property.

“Although the Constitution and laws provide for an independent judiciary, political pressure threatens impartiality. Georgia has made great progress in fighting petty corruption, but high-level corruption by public officials remains a problem,” the organization stated.

In terms of business freedom, the report says that Georgia’s economy has maintained strong momentum in liberalizing economic activity.

“It takes only two procedures and two days to start a business, and no minimum capital is required. The non-salary cost of hiring a worker is not burdensome, but the labor market lacks dynamism,” the Index reads, adding the government is increasing subsidies for green energy and transport projects.

In addition, the survey underlines that with the banking sector growing, access to financing has improved.

“Capital markets continue to evolve, but the stock exchange remains small,” the organization says.

In the world rankings, Hong Kong takes the top position, followed by Singapore, New Zealand, Switzerland, Australia, Ireland, the United Kingdom, Canada, United Arab Emirates and Taiwan.

Algeria, Timor-Leste, Bolivia, Equatorial Guinea, Zimbabwe, Republic of Congo, Eritrea, Cuba, Venezuela and North Korea are at the end of the Index of Economic Freedom 2019 list.

Heritage Foundation measures economic freedom based on 12 quantitative and qualitative factors, grouped into four broad categories, or pillars, of economic freedom:

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

2. Government Size (government spending, tax burden, fiscal health)

3. Regulatory Efficiency (business freedom, labor freedom, monetary freedom)

4. Open Markets (trade freedom, investment freedom, financial freedom)

By Thea Morrison

Image source: luxembourg.public.lu