Forum on Economic Development of Georgia: Addressing the Coordination Problems

Georgia Conference

A major theme throughout my internship was that I have been exposed to all levels of coordination in a country’s economy. In other words, I aided with communication and cooperation between the Georgian government, small to mid-sized entrepreneurs and high level business people. Through these interactions, I was able to understand the individual mindset that each person or organization represented. I aided in the synthesis of different information into something that would have been useful for the mission of the Georgia Industrial Development Group in the Ministry of Economy and Sustainable Development of Georgia. I now have a general understanding of what is required of each individual entity and the thought process behind their actions.

On August 4-5, the Forum on Economic Development of Georgia was held in Tbilisi, where I helped in the organization of the overall event. Dani Rodrik of Harvard University and Charles Sabel of Columbia University were keynote speakers. Through their speeches, the Georgian public were able to understand the government’s future actions and thus increased government transparency. Furthermore, the Prime Minister of Georgia, Giorgi Kvirikashvili, outlined his economic vision for the future and emphasized the importance of Georgia Industrial Development Group as one of the leading contributors for economic growth in Georgia. Throughout the forum, Georgia’s specific economic problems and activities were outlined. Agriculture makes up a significant amount of Georgia’s GDP. However, Georgian agriculture has a long ways to go to meet EU and US productivity standards. While increased productivity is a goal, the Prime Minister, Dani Rodrik, and Charles Sabel all emphasized the need for increased manufacturing and industrial projects. I was extremely pleased and excited that there was a culmination of my summer internship where the Georgian public was made aware of our work and the Prime Minister expressed his appreciation for our work.

In terms of my career goals, I believe that my internship allowed me to gain a deeper understanding of what it takes to be successful in each economic sphere. My goals remain the same, but I am now more able to operate independently and productively for the task required. One of my greatest learning moments during my internship was that I realized that not everything will work out according to what one wishes to accomplish, but if one has a plan and vision in place there will be future times where the obstacle can be reevaluated and addressed. The biggest example of this is when we were, at first, unable to obtain much investor interest in basalt stone manufacturing. However, with more time and exposure, our group was able to identify interested parties.

The forum was a very exciting experience for me as the country’s top decision makers were gathered together and began talks to address rapid economic development. If anybody is interested in reading more about the forum, please visit the link below.

http://georgiatoday.ge/news/4408/Foreign-Economists-Share-Experiences-from-Development-Forum-in-Georgia

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The Necessity for Government Intervention in Developing Economies

Flag of Georgia

Adam Smith, who wrote the Wealth of Nations, stated that an invisible hand moves market forces and the economy is operating efficiently when supply and demand are able to achieve equilibrium without government intervention. In the Georgia Industrial Development Group in the Ministry of Economy and Sustainable Development of Georgia offers an interesting opinion on his popular economist notion. The hand is invisible because it does not exist. In short, the group believes that developing economies are unable to achieve their full potential without substantial cooperative government measures.

I have been able to hit the ground running at the beginning of my internship as I have been exposed to many economic concepts that are essential for the group’s work at Boston College. During the week’s discussion, the group was faced with a challenge of pricing of trout for export. While trout in Georgia costs approximately 10 GEL per kg (around 5.4 USD), in the UK the same trout can go for as much as 25 GBP per kg (around 35 USD). While the price of trout in Georgia was at extremely competitive rates, the group feared that an increase in exports would lower prices so much that producers would be unable to expand or profit due to the producer’s wishes that they remain the ones exporting the most. I was able to apply the notion of price floors, which I have thoroughly examined in my economics classes at BC, and state that if the government would declare a minimum price that any producer could not go under, the problem would be solved. While other problems may arise, this example highlights how I have been able to utilize and apply my knowledge gained at BC to real-world problems.

What is evident, thus far, in my internship is that I am able to communicate with other group members regarding economic problems and concepts. As any scholar of economics knows, the equilibrium of supply and demand is essential for the economy’s smooth operation. I have now been able to apply familiar economic concepts to the World Bank’s data and construct models that show how certain sectors are performing in aggregate. This theoretical skill, I believe, is essential for any workplace success and I am enthusiastic to further approach real-world problems with an academic background.

Written by Luka Kachukhashvili, BC Class of 2017