/Economic Dependency Index

The dynamics of the Economic Dependency Index (EDI) over the years provides a clear picture of the changes in Georgia’s economic attitudes over time.

As of 2021, the index is skewed towards full and flawed democracies – a total of 62.4%. Out which 37.2% of economy is dependent on full democracy, and 25.2% on flawed democracy;

For the year of 2007, this index was approximately the same – 62.4% in total, with the difference that dependence on full democracy was 50.9%, and flawed democracy was 11.5%.

The index is mainly determined by two components – the state foreign debt and direct foreign investments. According to which, the major inflows of investment in Georgian economy, as well as long-term budgetary and state loans, come from the democratic countries, contributing to the advancement and development of the Georgian economy.

There is a sharp change between economic dependence on authoritarian regimes between 2007 (11%) and 2021 (23.4%).

This transition can be explained on one hand by the change in the quality of democracy among the countries around the globe. For example, in 2011 Russia transitioned from hydride to authoritarian regime which drastically increased Georgia’s dependency on authoritarian countries. This can be clearly observed on the graphs as well.

On the hand, even though the list of top ten partner countries contributing to Georgian economy has not changed much over the past decade, the scale of contribution/dependency has been altered significant – especially for the external trade and remittances. Charts for isolated indicators provide more in-depth insight into the described tendencies.

The indicator unites all data of Georgia’s government external debt starting from 2007. The indicator unites external debt taken by the government and/or with the government guarantee. In particular, government received foreign debt, debt issued by the international monetary funds to the national bank; state bonds
denominated in foreign convertible currency; state guaranteed debt denominated in foreign currency.

The indicator unites Georgia’s import statistics from 2007 on annual basis according to country groups (full democracy, flawed democracy, hybrid and authoritarian regimes, as per the annual data of the democracy index).
Crossing of the country’s economic territory is the prerequisite for considering a good as imported. Import unites goods brought in the country, as well as reimport of exported goods.

The main sources of information for external trade operations is the customs declarations’ database of the revenue service and import data of natural gas and electricity. Import partner country is the country of origin of imported goods.

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The indicator unites Georgia’s export statistics from 2007 on annual basis according to country groups (full democracy, flawed democracy, hybrid and authoritarian regimes, as per the annual data of the democracy index).

Export of goods means crossing the country’s economic territory. Export unites products produces nationally, as well re-export of imported goods. Local exports united products produced national, as well as imported from abroad, that were substantially processed internally through creating a greater value added. Export in goods indicator does not include transited goods and simplified customs declaration data, as well as unorganized trade.

Partner country for the export is the country of final destination.

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The indicator unites foreign direct investments (FDI) inflow to Georgia starting from 2007 onwards.

FDI is a category of cross-border investment associated with a resident in one economy having control or a significant degree of influence on the management of an enterprise that is resident in another economy. Direct investment covers not only initial transaction of capital investment, but also all further transactions between direct investor and direct investment enterprise. Investor, who owns no less than 10% of the shares of an enterprise or equivalent of such participation, is regarded as a direct investor. Direct investors may be
individuals, incorporated or unincorporated private or state-owned entities.

FDI statistics unites all sectors of economy – financial as well as non-financial.

The data covers all controlled territories of Georgia, on international scale – all countries.

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Money transfers indicator unites international transfers via electronic money transfer systems (Western Union, Money Gram, Anelik, Unistream and others). Source: commercial banks operating on the territory of Georgia (including branches of non-resident banks), statistical reports of the micro-finance organizations.