Investments determined by privatization

The inflow of FDI into Georgia is continuing to diminish dramatically. Independent analysts explained why there had been a growth of investments at certain times and a dramatic downfall at other times. This is not because of the “excellent investment environment”, which is promoted by the ruling power, but it is mostly determined by the privatization process in the country concerning serious and solid assets. Most FDI was being targeted towards purchasing real estate land or important assets but the level of such investment has slowed down. In 2005 Georgia received USD 450 mln; in 2006 – over one billion; in 2007 – over 2 bln USD; then it declined due to the Russian invasion in Georgia in 2008 and the world financial crisis. However, in 2010 the number was still very low, only USD 553 mln.

Independent analysts think that privatization and purchasing assets alone does not create a favourable investment climate. Normally investments consider opening new enterprises, offering new job opportunities, reviving industry or agriculture and so on.

To reach sustainable development, analysts think that Georgia would need around USD 2 bln investments annually. At this stage, this is merely a dream.