Georgia has unresolved problems with land ownership. The state owns all of the country’s timber and natural resources as well as 70% of agricultural land.
In developed countries, agricultural land is all privately owned. Mineral resources and most of the timber supplies are also under private ownership.
Low prices and liquidity lead to the destruction of these natural resource which should serve to boost a country’s economic development. Cheap land resources (the average price for 1 hectare of agricultural land is USD 1,000) cannot attract enough funds to finance their farming. Therefore, the local production is not able to compete with imported goods.
In Georgia, timber resources are in a very poor state. Twenty-two years ago, the country was covered by 2.7 million hectares (or 38% of the territory) of forests but environmentalists now state that this number has decreased significantly due to cutting. Nature has the ability to restore forests but only 4 million cubic meters are being restored whereas annually as opposed to the 6 million cubic meters which are being cut. One of the main reasons for this is that forests in Georgia are not privately owned.
“Forests are illegally cut by the people as well as by licensees. For the resource to survive, it needs an owner.” Minerals also occupy an important place in the list of Georgia’s exports but the country’s mining industry faces serious problems because none of the 1,000 or so mines in the country employ modern technologies. For example, instead of receiving 100 grams of a precious metal which is mined, only one-third of the metal is retained which means that the remainder is lost forever alongside environmental damage which results as a part of the process. Rivers are poisoned, fish and other wild life are killed and so on.. Privatization of these resources is required in order for Georgia to be able to enter international trade and attract investments.
In our opinion, privatization of these land resources should be done by special method, i.e. by special “money” which will be given to the population as a gift. The process should be long-term and permanent. Every month, citizens should be made aware of the property which will be offered for privatization, but it is important that the only „gifted money” should be authorized to buy a portion of the lend. The first few months, citizens may “waste” their “special money”, but when they permanently realize the results of wasted special money, they will rationally use it in the following months. This will prevent a property concentration in the narrow circle of people, thus it will bring the same positive results for all “special money” holders on the market.
Mate Gardava – PhD Candidate at Tbilisi State University
Ketevan Krialashvili, Director at the Economic Education and Strategic Research Center