Home / Economy / Legatum Prosperity Index: A look at Georgia’s Economic Profile

Legatum Prosperity Index: A look at Georgia’s Economic Profile

Georgia ranked 80th among 142 countries on a UAE-based think-tank Legatum Institute’s Prosperity Index. The country moved up four points compared to the last year’s ranking. Georgia is preceded by Azerbaijan occupying 79th place, and followed by South Africa, ranking 81st.

01

Legatum’s Prosperity Index is an annual ranking of 142 countries assessing prosperity beyond the dry macro-economic indicators. The organization suggests a more subjective look to an economic analysis of a country – they approach economics from an individual’s point of view. How much does one trust the government elections in the country? How comfortable/uncomfortable does an individual feel searching for a job at the moment? How much of a social support network does one in the selected country have?

The institute’s outlook is the following: “Most people would agree that prosperity is more than just the accumulation of material wealth, it is also the joy of everyday life and the prospect of being able to build an even better life in the future.” To asses these quite subjective social matters the Legatum Institute introduces such “Prosperity Principles” into their equation as: Personal Freedom, Entrepreneurship and Opportunity, Safety and Security, etc.

So how does Georgia rank compared to other countries? What are our country’s strong social points? Turns out, we are in the middle to high range on the spectrum of the selected 142 countries. Occupying the 80th place, Georgian population demonstrates strong trust in the government sector – 69,9% — when the global average percentage stands at 49.9%. Presented is the data analyzing the people’s attitude in the year 2013. Georgia has moved up 11 points in this category since the year 2012. Considering the country’s political transition in this period – the change from the United National Movement to the Georgian Dream Coaliton – it seems the people of the South Caucasian country were significantly confident in the political shift taking place on the political arena. This trend, perhaps, can also be observed in the move by 23 points in the ‘Personal Freedom’ category, from 79th in 2012 to 56th today.

02

Surprisingly for such a collective society that Georgia is, where individuals have very close ties with their relatives and rely on nepotism as a driving force of the labor market, the country scored lowest on its “Social Capital” index: 132nd. This category of the Legatum Institute’s survey is determined by such questions as: “Can you rely on a friend and family for help? Are you married? Do you think that most people can be trusted?” More importantly: “Have you volunteered your time in past month? Donated money to charity in past month?” Georgia scored the lowest in the latter: 4% compared to the global average of 28.9%. Turns out, that the social atmosphere of the country is not just determined by how many friends or relatives one has, but also by how generous the population of a country is toward the less well-off individuals of the society.

‘Economy’ ranking 91, and ‘Health’ at 92 follow right after ‘Social Capital ’ in terms of the scores. It is no surprise that a developing country should score low on these categories. However, a considerable increase, up by 41 points, in ‘Economy’ from 132nd place in 2012 to 91st in 2013 should be noted. The 5-year GDP per capita growth rate of Georgia is 3.1% as opposed to the global 1.8%. Perhaps, Georgia owes its drastic improvement this year in the ‘Economy’ category to this figure.

Although the dreary facts of the Georgian society still remain unchanged: out of Georgia’s population only 32% are employed when the global mean is 54%. Only 28% of the population of the country is satisfied with living standards, as opposed to the 59% of global citizens who are happy with the material well-being they can afford in their countries.

Intimately tied with the above figures of unemployment is the country’s ranking in the ‘Entrepreneurship and Opportunity’ category. Meaning, how much leeway is there for a citizen to improve his or her current social status. How much economic mobility can a Georgian citizen experience through applying their entrepreneur self? Considering that Georgia was recently ranked 15th by World Bank in the ‘Doing Business’ category, the picture should be a hopeful one. Accordingly, Georgia has a fairly good score on the global scale: 70. The majority of the population, 73% thinks that one can ‘get ahead’ by working hard. This hope is justified by the country’s position in the ‘Entrepreneurship and Opportunity’ category.

03

The big picture that one gets by looking at Georgia’s profile created by Legatum Institute is that the small South Caucasian country is a politically optimistic state with a rather high unemployment rate and tangible entrepreneurial opportunities.

Having looked at a short overview of what categories constitute the Legatum Prosperity Index, an educated reader should recognize Georgia’s move up by four places as a significant shift in the country’s economic well-being. It is definitely a figure that a person interested in the country’s economic development should not overlook.

 NINO GOJIASHVILI