Georgia ranks 16th among 186 countries in the Heritage Foundation 2018 Index of Economic Freedom. Compared to the 2017 Index, Georgia went down three points. Georgia’s overall ranking has worsened even though the overall points it got is 76.2, which is 0.2 more compared to the 2017 data.
In 13th position, which Georgia had year, is now taken by Taiwan, which has 76.6 points.
According to the report, countries were assessed by four main criteria: rule of law, Government size, regulatory efficiency, and open markets.
Georgia’s assessment per criteria:
Rule of Law
Property Rights - 62.8, increase by 7.7 points
Government Integrity - 61.8, decrease by 3.2 points
Judicial Effectiveness - 64.2, decrease by 2.3 points
Heritage Foundation says the improvement in property rights is connected to the raised quality in the implementation of contracts by the government, as well as court reforms. However, the report also says that court practice is uncertain in civil matters and the professionalism of judges is under question.
Government Spending - 73.3, decrease by 0.9 points
Tax Burden - 87.0, decrease by 0.3 points
Fiscal Health - 91.8, decrease by 1.7 points
“Over the past three years, government spending has amounted to 29.8 percent of total output (GDP), and budget deficits have averaged 1.6 percent of GDP. Public debt is equivalent to 44.9 percent of GDP,” the Index of Economic Freedom says.
Business Freedom - 86.9, decrease by 0.3 points
Labor Freedom - 77.3, increase by 1.4 points
Monetary Freedom - 79.6, increase by 1.4 points
In regards to Regulatory efficiency, the report emphasizes that “the labor market lacks dynamism, and unemployment is fairly high. Dollarization of the economy is high; over 60 percent of bank loans are denominated in foreign currency, and the local currency continued to devalue in 2017.”
Trade Freedom - 89.4, increase by 0.8 points
Investment Freedom - 80.0, unchanged
Financial Freedom - 60.0, unchanged
Legislative base in regards to foreign trade is positively assessed by Heritage Foundation. It also says that the bank sector in Georgia is quite stable.
The Index suggests that nontariff barriers impede some trade, but “In general, government policies do not significantly interfere with foreign investment. The growing banking sector offers improved access to financing, but the stock exchange remains small and underdeveloped.”
Georgia’s ranking in the Index of Economic Freedom 2012-2018:
- 2012 - 34th place
- 2013 - 21st place
- 2014 - 22nd place
- 2015 - 22nd place
- 2016 - 23rd place
- 2017 - 13th place
- 2018 - 16th place
Top 5 Countries with the Most Free Economies:
1. Hong Kong - 90 points
2. Singapore - 88.8 points
3. New Zealand - 84 points
4. Switzerland - 82 points
5. Australia - 81 points