Lack of Foreign Direct Investments

Georgia depends much on foreign direct investments. Unfortunately the August Russian invasion, the world financial crisis and the strained situation in the country have decreased the inflow of FDI. Attracting this is a priority of the country’s leadership, but things are not working out as planned.

FDI was at its highest level in 2007, more than USD 2 billion. In 2008 it decreased to just over USD 1.5 billion. In the first quarter of 2009 Georgia received USD 124.7 million in FDI, as opposed to more than USD 500 million in the same period of 2008.

Prime Minister Gilauri, when firing Minister of Economy Zhvania, blamed him for the low inflow of FDI into Georgia. Analysts think that not only one person is to blame for this and it is unlikely that the situation will change radically simply by removing Zhvania.

Avtandil Silagadze, a former Minister during the Shevardnadze administration, says that it has been known for some time that there are problems in attracting investment and sacking one Minister will not change this situation. Analysts think that the very serious involvement of different state institutions is needed to attract investors. Even local Georgian investors refrain from making investments in their home country at present.