Resume: In accordance with the World Economic Forum’s 2019 report, Georgia moved down eight positions in the Global Competitiveness Index and now ranks 74^th.

Analysis

On 9 October 2019, the Legal Issues Committee of the Parliament of Georgia held hearing for Shalva Tadumadze, nominee for the Supreme Court Justice. At the hearing, Levan Koberidze, an independent MP, stated that Georgia had moved down by eight positions in the World Economic Forum’s 2019 report.

The World Economic Forum (WEF) is an independent international organisation which has been publishing its Global Competitiveness Index since 2004. The index aims to measure productivity drivers whilst the level of productivity, as defined by the World Economic Forum, is the main propellant of the economic growth.

The Global Competitiveness Index comprises 103 individual indicators which are grouped into 12 columns. These columns comprise institutions, infrastructure, technological preparedness, the macroeconomic environment, healthcare and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, market size, business sophistication and innovations. Each column is assessed from 0 to 100 points where 100 is the top score.

According to the World Economic Forum’s 2019 report, Georgia is ranked 74th from 141 countries with 60.6 points and has moved eight positions down as compared to the previous year.

Graph 1: Georgia’s 2019 Indicators in the Global Competitiveness Index

Institutions, Infrastructure, Technological Preparedness, Macroeconomic Environment, Healthcare and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Development, Market Size, Business Sophistication, Innovations

Source: World Economic Forum 2019 Report

As seen in the graph, Georgia has relatively better indicators in the macroeconomic environment and healthcare components whilst the innovations and market size component indicators are relatively worse.

As compared to 2018, Georgia’s performance has worsened in the technological preparedness, healthcare and primary education and goods and labour market efficiency components. Georgia had better performance in infrastructure, higher education and training, financial market efficiency and market size components. The rest of the components have remained the same.

Of note is that the Minister of Economy and Sustainable Development of Georgia, Natia Turnava, stated that Georgia’s backsliding by eight positions was due to a change in the WEF methodology. Ms Turnava clarified that Georgia’s assessment has not worsened and the country was still awarded 61 points which she believes is quite a high assessment.

In the World Economic Forum’s 2018 report, Georgia had 60.9 points. In regard to changes in the methodology, the 2019 report reads that the current year’s methodology was slightly altered which, as clarified by the WEF, means that these changes did not have much impact vis-à-vis comparing the reports of the previous years.

More specifically, changes were enacted in the institutions, goods market efficiency and labour market efficiency components.

In the institutions component, changes were enacted in the budget transparency subcomponent. In particular, budget transparency indicators were changed into a budget transparency index. In addition, three new indicators were added to the government’s future orientation subcomponent: regulation of energy efficiency, regulation of renewable energy and ratification of environmental treaties. As of 2018, Georgia had 73.1 points in the budget transparency sub-component whilst it improved in 2019 and reached 82 points. In total, in spite of adding the three indicators, the institutions component was given 61 points, similar to the previous year.

Restrictions on trade in the services index was taken away from the goods market efficiency component. Georgia’s trade in services transparency was assessed with 88.5 points in 2018. In total, Georgia’s goods market efficiency assessment for 2019 worsened by 2.6 points as compared to the previous year.

In the labour market efficiency component, the market internal mobility sub-component is no longer applied to small countries such as Bahrain, Brunei, the Hong Kong region, Kuwait, Malta, Qatar and Singapore.

Table 1: Georgia’s Positions in the Global Competitiveness Index Ranking in 2009-2019

Source: World Economic Forum’s 2009-2019 Reports

The table shows Georgia’s positions in the Global Competitiveness Index ranking from 2009 to 2019. It seems that since 2009, Georgia’s best performance in the ranking was in the 2016-2017 report.