In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.
Foreign direct investment dropped in Georgia since 2009, mainly due to the conflict with Russia in South Ossetia in summer 2008. Aside from the economic and financial difficulties, political stability is a key reason for the attractiveness of the country.
To attract investors, the country offers many tax and legislative benefits. The Georgian economy has been almost fully liberalized and it is now one of the most interesting countries in the region. Corruption, historically very present at intermediate levels, has been eradicated, which meant a major breakthrough in terms of attracting FDI. According to the Transparency International rating, in 2013 the country ranked better than Italy or Brazil, ranking 51st of 174 countries surveyed.
The main investors are the Netherlands, the United States and Turkey. FDI reached 860 million USD in 2013, is still struggling to regain 2007 levels at USD $2 billion.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).
|Georgia||Eastern Europe & Central Asia||United States||Germany|
|Index of Transaction Transparency*||9.0||7.0||7.0||5.0|
|Index of Manager’s Responsibility**||6.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||9.0||5.0|
|Index of Investor Protection****||7.0||5.9||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||1,048||911||1,010|
|FDI Stock (million USD)||9,526||10,454||11,676|
|Performance Index*, Ranking on 181 Economies||60||-||-|
|Potential Index**, Ranking on 177 Economies||104||-||-|
|Number of Greenfield Investments***||30||21||19|
|FDI Inwards (in % of GFCF****)||32.3||23.2||25.1|
|FDI Stock (in % of GDP)||66.0||66.0||72.2|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
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Last Updates: October 2014