Georgia - Poverty dynamics, 2003-2010
For Georgia, the 2000s were characterized not only by sweeping economic reforms and subsequent strong growth, but also by two major shocks. Following the rose revolution, the Georgian economy and institutions underwent major positive transformations and saw significant improvements in the functioning of the public institutions. The Government of Georgia (GOG) made a sustained effort to improve the climate for doing business, promote private sector development, and establish the policy framework to attract foreign direct investment (FDI). Buoyed by sound policies and structural reforms, Georgia achieved an average annual Gross Domestic Product (GDP) growth rate of more than 9 percent from 2004-2007. The potential poverty and social impacts of the major shocks that resulted in decline of economic output in the second half of 2008 and in 2009 are also unknown. There is a general belief that poverty incidence increased during the crises. However, again due to a lack of relevant and comparable data, the magnitude of change in poverty incidence is largely unknown. The main objective of this note is to fill this information gap. The report shows the trends in monetary dimensions of living standards and the dynamics in the distribution of the poor at the urban and rural level for various time periods. It presents empirical estimations regarding how much poverty declined during the high growth period and increased during the crises. Specifically, the note seeks answers to the following questions: What were the gains in poverty reduction before the conflict with Russia and the global recession? What happened to poverty incidence in the aftermath of the crises? What are the urban and rural dimensions of poverty over time? Understanding the impact of the policy changes and the resulting economic growth on poverty and inequality is a key for ensuring that the benefits of growth are widely and more equitably shared.
| Summary: | For Georgia, the 2000s were
characterized not only by sweeping economic reforms and
subsequent strong growth, but also by two major shocks.
Following the rose revolution, the Georgian economy and
institutions underwent major positive transformations and
saw significant improvements in the functioning of the
public institutions. The Government of Georgia (GOG) made a
sustained effort to improve the climate for doing business,
promote private sector development, and establish the policy
framework to attract foreign direct investment (FDI). Buoyed
by sound policies and structural reforms, Georgia achieved
an average annual Gross Domestic Product (GDP) growth rate
of more than 9 percent from 2004-2007. The potential poverty
and social impacts of the major shocks that resulted in
decline of economic output in the second half of 2008 and in
2009 are also unknown. There is a general belief that
poverty incidence increased during the crises. However,
again due to a lack of relevant and comparable data, the
magnitude of change in poverty incidence is largely unknown.
The main objective of this note is to fill this information
gap. The report shows the trends in monetary dimensions of
living standards and the dynamics in the distribution of the
poor at the urban and rural level for various time periods.
It presents empirical estimations regarding how much poverty
declined during the high growth period and increased during
the crises. Specifically, the note seeks answers to the
following questions: What were the gains in poverty
reduction before the conflict with Russia and the global
recession? What happened to poverty incidence in the
aftermath of the crises? What are the urban and rural
dimensions of poverty over time? Understanding the impact of
the policy changes and the resulting economic growth on
poverty and inequality is a key for ensuring that the
benefits of growth are widely and more equitably shared. |
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