Investment in Georgia

The Rose Revolution administration in Georgia considers its greatest achievement is attracting foreign investments into the country. Since 2004 USD 6.2 billion FDI has entered Georgia. The peak of this investment was in 2007 when USD 2.3 billion was attracted. A growth tendency was observed in this field until Russia invaded Georgia in 2008, although the financial crisis then followed to further decrease investments.

The figures are impressive but independent experts have their doubts about a different issue. Privatization, the sale of concrete assets, is not investment. However according to official statistics the big inflow of foreign investments is primarily connected with mass privatization. There are many cases in which these investments are not connected with development.

Economic expert Jakob Meskhia thinks such an approach is incorrect. He says that only incoming money which ensures development and the growth of enterprise should be called investment. In Georgia the substantial part of FDI is accounted for simply by the purchase of real estate, with no additional investments being applied and no financial or rather economic activities taking place. The biggest investor in Georgia is the UK, then come Holland, Turkey, the UAE, the USA, Kazakhstan, the British Virgin Islands, Cyprus, Azerbaijan and Russia, but this calculation is based on the dubious definition of investment just quoted.

Experts are skeptical about this offshore investment, asking who is behind it. Professor Meskhia thinks that Georgia welcomes investments without applying any control over the money. The country should be promoting local investors and imposing certain limits to external investment which would ensure the economic and political safety of the country, thinks Meskhia.