2017 Index of Economic Freedom

Georgia

overall score76.0
world rank13
Rule of Law

Property Rights55.1

Government Integrity65.0

Judicial Effectiveness66.5

Government Size

Government Spending74.4

Tax Burden87.3

Fiscal Health93.5

Regulatory Efficiency

Business Freedom87.2

Labor Freedom75.9

Monetary Freedom78.2

Open Markets

Trade Freedom88.6

Investment Freedom80.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 4.5 million
  • GDP (PPP):
    • $35.6 billion
    • 2.8% growth
    • 4.9% 5-year compound annual growth
    • $9,630 per capita
  • Unemployment:
    • 12.3%
  • Inflation (CPI):
    • 4.0%
  • FDI Inflow:
    • $1.4 billion
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Georgia’s government has maintained strong momentum in liberalizing economic activity while taking steps to restore fiscal discipline. Public debt and budget deficits remain under control. Open-market policies, supported by competitively low tax rates and regulatory efficiency, have facilitated flows of trade and investment. Large-scale privatization has advanced, and anticorruption efforts have yielded some notable results.

With monetary stability and the overall soundness of fiscal health relatively well maintained, Georgia has enjoyed macroeconomic resilience. Nonetheless, deeper and more rapid institutional reforms to enhance judicial independence and effectiveness remain critical to ensuring further dynamic and lasting economic development.

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Background

Russia invaded Georgia in 2008 and continues to occupy its South Ossetia and Abkhazia regions, which make up about 20 percent of Georgia’s territory. In 2012, billionaire Bidzina Ivanishvili and his Georgian Dream coalition defeated President Mikheil Saakashvili’s United National Movement. Victory by Prime Minister Giorgi Kvirikashvili and his Georgian Dream party in the 2016 parliamentary elections reinforced the party’s political dominance. Georgia has been affected by the economic downturn in Russia and by low oil prices. Agriculture or related industries employ over half of the workforce. Georgia signed an Association Agreement with the European Union in June 2014 and is an official aspirant country for NATO membership.

Rule of LawView Methodology

Property Rights 55.1 Create a Graph using this measurement

Government Integrity 65.0 Create a Graph using this measurement

Judicial Effectiveness 66.5 Create a Graph using this measurement

Protection of property rights has improved, and the government has made enforcement of contracts easier. Although the constitution and law provide for an independent judiciary, there has been little progress in the past year on judicial reforms, and the government does not fully respect judicial independence. Georgia still struggles with the lingering effects of Soviet-era corruption as well as ongoing Russian influence.

Government SizeView Methodology

The flat individual income tax rate is 20 percent, and the flat corporate tax rate is 15 percent. Other taxes include a value-added tax and a tax on dividends. The overall tax burden equals 25.3 percent of total domestic income. Government spending has amounted to 29.2 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.4 percent of GDP. Public debt is equivalent to 41.2 percent of GDP.

Regulatory EfficiencyView Methodology

The regulatory environment is efficient. It takes only three procedures and three days to start a business, and no minimum capital is required. The nonsalary cost of hiring a worker is not burdensome, but the labor market lacks dynamism, and unemployment remains fairly high. Dollarization of the economy is high, and the local currency was devalued in 2015 but stabilized in 2016. Inflationary pressure has been kept under control.

Open MarketsView Methodology

Trade is extremely important to Georgia’s economy; the value of exports and imports taken together equals 110 percent of GDP. The average applied tariff rate is 0.7 percent. There are some restrictions on foreign ownership of agricultural land. With the banking sector growing and modernized, access to financing has improved. Capital markets continue to evolve, but the stock exchange remains small and underdeveloped.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.50.5
2Estonia79.11.9
3Ireland76.7-0.6
4United Kingdom76.40.0
5Georgia763.4
6Luxembourg75.92.0
7The Netherlands75.81.2
8Lithuania75.80.6
9Denmark75.1-0.2
10Sweden74.92.9
11Latvia74.84.4
12Iceland74.41.1
13Finland741.4
14Norway743.2
15Germany73.8-0.6
16Czech Republic73.30.1
17Austria72.30.6
18Macedonia70.73.2
19Armenia70.33.3
20Romania69.74.1
21Poland68.3-1.0
22Kosovo67.96.5
23Bulgaria67.92.0
24Cyprus67.9-0.8
25Belgium67.8-0.6
26Malta67.71.0
27Hungary 65.8-0.2
28Slovakia65.7-0.9
29Turkey65.23.1
30Albania64.4-1.5
31Spain63.6-4.9
32France63.31.0
33Portugal62.6-2.5
34Italy62.51.3
35Montenegro62-2.9
36Bosnia and Herzegovina60.21.6
37Croatia59.40.3
38Slovenia59.2-1.4
39Serbia 58.9-3.2
40Belarus58.69.8
41Moldova580.6
42Russia57.16.5
43Greece551.8
44Ukraine48.11.3
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