Doing Business in Georgia
Johan Norberg in his Liberalism-Capitalism-Globalization Blog
I mentioned that Georgia is reforming. More than anyone else, actually. According to the Doing Business index 2007, Georgia has moved from place 112 to 37 in just one year - unprecedented in the history of the report.
Georgia has reduced the minimum capital required to start a new business by 90 percent, and the number of days to meet bureaucratic requirements to export from 54 to 13 days. The labour market has been deregulated and social security contributions have been reduced from 31 percent of wages to 20 percent.
At the same time, the number of new businesses has increased by 20 percent and unemployment has fallen by 2 percentage points.
The problem is implementation. The new laws are not always upheld by the local civil servant and policeman. So the priority is improved governance and anti-corruption reform. And, naturally, deregulation that strips the bureaucracy of powers entirely.
For example, the Georgian government recently decided to abolish all tariffs until 2008. Way to go.
A couple of days ago I've been to talking to a friend of mine who's starting a consumer electronics import business. He is a specialist in the trade and has worked in the industry in Russia for years. Due to a recent changes to the customs laws he will have nothing to pay when importing his goods. It took him and his partners a couple of months to transform the idea to an actual start-up, financed by a bank loan and ready for the first import in coming 4 weeks. As of now he has not have pay a single bribe. He agrees that was he in Moscow things would have been very different.
Kaxa Bendukidze is actually the one who is to be thanked for the liberalism in the economy.
Cross-posted to georgia_ge