Georgia’s need for FDI and its purposeful utilisation

In 2009 foreign direct investments in Georgia considerably decreased. The Government projection was that we would receive USD 1.8 billion, but according to the data of the first three quarters of 2009 Georgia received only a little over USD 500 million, and it is unlikely that the country will have received significant additional amounts in the fourth quarter.

In 2010 Georgia urgently needs extra FDI. So far, apart from verbal promises from the country’s leadership, there is no real prospect of this happening. Professor of Economy Lado Papava highlights the imbalance between the financial resources entering from abroad and the development of the domestic economy. The money which enters, he says, mostly goes on purchasing real estate (and land - The Messenger) and not actual economic development activities. Furthermore it is often funds imports, meaning that it is actually being used to support the economies of other countries.

Some economists are more optimistic however. Emzar Jgeranaia suggests that as the American refinancing interest rate is low investors will be happy to put their capital into markets with high risk but high potential profit as well. Therefore Georgia still has a chance of attracting investments, Jgeranaia says.