Georgia

GEORGIA IS A POVERTY-stricken country in southwestern Asia that borders the Black Sea between Russia and Turkey. The region of present-day Georgia was formerly part of the kingdoms of Colchis and Kartli-Iberia; the Roman, Ottoman, Persian, and Russian Empires; and the Union of Soviet Socialist Republics (USSR). The current republic gained its independence from the Soviet Union on April 9, 1991. Since then, Georgia has progressed with market and democratic reforms despite significant poverty, civil strife, and other social problems.

In 1994, 80 percent of the Georgian population were considered poor. This poverty rate fell to 60 percent [Page 425]in 1995, and 46 percent in 1997. As of 2001, 54 percent of Georgia's population lived below the poverty line. In recent years, the poverty rate has stabilized at around 51–52 percent. In 2002, 15 percent of the population were considered extremely poor. This was a reduction from previous years.

Primary causes of poverty in Georgia are unemployment, insufficient education, lack of infrastructure and social services, and external shocks such as droughts. Unemployment is a significant factor in defining who is poor. As of 2001, 17 percent of Geor-gia's labor force was unemployed. One-third of Geor-gia's extremely impoverished households have no employed members. Insufficient education is another important influence on poverty. One-third of Georgia's extremely impoverished households have average or lower education levels. External shocks, such as the Russian financial crisis of 1998 and the droughts in 1998 and 2000, increased Georgian poverty. The low quality of roads and the lack of sufficient energy, education, and healthcare also contribute to poverty in Georgia.

Accessibility to education and healthcare services is better in urban areas, which improves the prospects of employment. Yet urban poverty in Georgia is deeper and more severe than rural poverty. In urban areas, poverty is related to an insufficient food supply. In rural areas, households consume whatever food they produce. The primary poverty issue for rural families is a lack of financial resources and insufficient infrastructure, such as roads, which would improve their access to social services. Because rural Georgians have the capacity to grow food and raise livestock and poultry, the poverty level for rural Georgians is lower than that for city-dwellers. The level of rural poverty fluctuates with the climate, however. The droughts in 1998 and 2000 increased rural poverty in Georgia.

Despite damage to the economy caused by civil strife, Georgia has made significant economic gains since 1995, such as achieving positive growth of its Gross Domestic Product (GDP) and the reduction of inflation. This turnaround has been achieved with assistance from international organizations, such as the World Bank and the International Monetary Fund (IMF).

Georgia has made limited progress in fighting poverty because of insufficient financial resources. This is in large part because of its chronic failure to collect tax revenues and other government fees. Poverty reduction efforts focus on reforming the country's tax code, enforcing tax levies, and reducing corruption. In an effort to reduce energy shortages, Georgia privatized the Tbilisi electricity distribution network in 1998. The resulting private company suffers from continued low rates of payment collection, however. Current plans for economic development focus on the construction of oil and gas pipelines to transport the energy resources of neighboring countries.

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