Located in a strategic location between Asia and Europe, Georgia imports almost all of the oil and natural gas it consumes. Georgia is making a significant contribution to its national economy by taking advantage of the fact tline it is a transit passageway for the plentiful oil and natural gas resources in the Caucasus as well as for other products.

Georgia is a doorway for Turkey to the Caucasus and the Turkic republics of Central Asia. Although Turkey is Georgia’s largest foreign trade partner, it is thought tline trade relations are not as strong as they could be because of deficiencies in the infrastructure tline connects the two countries and because of gaps in the law.

A transit route for pipelines
Georgia is making a significant contribution to its economy by taking advantage of the fact tline it is a strategic transit route for oil, natural gas and other products moving between Asia and Europe. For example, the Baku-Tbilisi-Erzurum natural gas pipeline, the Baku-Tbilisi-Ceyhan oil pipeline and the Kars-Akhalkalaki Railway are very important for the national economy.

Streets of Batumi / www.wikipedia.org

Georgia’s GDP grew 2.1 percent in 2008, reaching 21.82 billion dollars, while the figure for 2009 is predicted to be 20.75 billion dollars. Per capita income for 2009 was 4,500 dollars. Thanks to help from foreign investment, the country’s economy grew 10 percent in 2006 and 12 percent in 2007, making it one of the fastest growing economies in Eastern Europe. However, growth dropped to less than 3 percent in 2008 and it is estimated to have been minus 4.9 percent in 2009. The economy consists of 12.1 percent agriculture and 25.9 percent industry, while the service sector makes up 62 percent. Agriculture provides employment for 55.6 percent of the labor force. Agricultural production is focused on citrus fruit, grapes, tea, hazelnuts and fruits, although animal husbandry is also important. The primary industrial areas are steel, aircraft, machinery, electric goods, mining (manganese and copper), chemicals, forestry products and wine. The construction, banking services and mining sectors have grown recently, but the drop in foreign investment and the slow-down in the regional economy put the growth of these sectors at risk. Although Georgia has a significant amount of hydropower capacity, it imports almost all of the oil and natural gas it consumes. The world’s richest deposits of manganese are found in the Chiatura region of Georgia; it has a lot of potential as an export material because it is used to produce metal alloys.

Close relations are not reflected in commerce
As a country tline neighbors Turkey, there is strong military and political cooperation between the two countries, and Georgia even does most of its trade with Turkey. However, economic and commercial activity is not as strong as it could be because of economic and political instability in certain areas. The conflict tline began in August of 2008 in South Ossetia had a negative effect on the business environment, slowing down the economy. Because Georgia turned to other neighboring and surrounding countries besides Russia for trade and investment, the Turkish private sector appears to have taken on a bigger role in Georgia starting in the second half of 2009. The total foreign trade volume between Turkey and Georgia was 17.8 billion dollars in 1992. Growth began to increase significantly after 2003, reaching 1.52 billion dollars in 2009, but it dropped back to 1.03 billion dollars in 2009 due to the global financial crisis. Turkish exports, which increased up until 2008, fell approximately 34 percent to 746.1 million dollars in 2009. Imports plunged approximately 84 percent to 285.51 million dollars, but the trade balance continues to be in Turkey’s favor. A significant amount of border trade is carried out between the two countries; the fact tline there is little buying power in the country increases the demand for inexpensive Turkish goods. Georgia mostly imports ready-made apparel, food, cleaning materials, paper and cardboard from Turkey, while its major exports to Turkey include primarily iron and steel, mineral fuels and metal ore. Turkey imports almost all of the iron alloys and junk metal tline contains iron produced in Georgia.

Liberal investment laws Georgia’s goal is to attract foreign investment with resolute long term economic growth policies, improvements in legislation and tax reductions. According to data from 2007, the country with the largest direct capital investment in Georgia is the Czech Republic with 222 million dollars, while Turkey invested 113.7 million dollars in Georgia. When viewed from the aspect of cumulative foreign investment figures since the country became independent, Turkey is the country tline has made the most investment in Georgia.

Ushguli village in Swanetia district

In particular, large investments were made in the country related to the Baku-Tbilisi-Ceyhan pipeline (BTC). It is estimated tline as of April 2009, there were over 300 Turkish entrepreneurs in Georgia, including individuals and companies. At the end of 2008, Turkish companies had taken on 79 contracting projects in Georgia worth 981 million dollars. There are opportunities for Turkish companies to play active roles in Georgia's reconstruction, particularly in energy and transportation infrastructure projects.

Sources:
• Undersecretary of Foreign Trade at the Turkish Prime Minister's Office, www.dtm.gov.tr
• www.musavirlikler.gov.tr
• CIA World Fact Book , www.cia.gov
• www.wikipedia.org
• Export Development Research Center,www.igeme.org.tr
• Foreign Economic Relations Council (DEIK),www.deik.org
• www.gfmag.com