Georgia’s Economy

James Cobb’s Argument on the Origins of Georgia

James Cobb argues that Georgia was not started by criminals as other people claim. According to him, Oglethorpe received a charter that allowed him to live in Georgia at a time when there were no criminals in that area[1]. The population of Georgia expanded and therefore they started to review the rules that were put in place when they first settled. The Georgian people did not follow these rules especially the rule against slave trade. Georgia’s economy grew as a result of the slave trade, which the first settlers practiced[2]. Also, the population utilized other facilities that were located in Atlanta such as the food cafes. According to Cobb, there was a change in Georgia’s economy because people were investing and making a profit.

Changes in Georgia’s Economy after the Soviet Union

Georgia borders the Black Sea on the eastern side. There were three ethnic boundaries in Georgia namely; South Ossetia, Ajaria, and Abkhazia. Between the tenth and thirteenth century, Georgia had built a firm kingdom. Later on, the Russian empire expanded their territory into Georgia’s land causing it to be incorporated into the Soviet Union after enjoying an independence period from 1918 to 1921. Georgia’s economy became modern as it expanded thus it became sustainable. The diverse changes in Georgia’s economy that occurred after the civil war increased the states’ revenue.

Commercial Treaties and Economic Development in Georgia

The leaders in Georgia were determined to sign commercial treaties with potential nation around the globe. Some of the states that were lured to engage in economic activities in Georgia include; Japan, German and South America. More individuals and state governments were attracted to venture in business in Georgia because of their favorable and sufficient infrastructure. Furthermore, people and corporate firms that had financial deficiencies received financial aid from the Georgian government. Due to this reason, business persons who lived in rural and urban areas had an opportunity to invest in Georgia leading to economic development.

The Role of Georgian Department of Economic Development (GDECD)

People who wanted to trade or partner with the Georgian state had to work closely with the Georgian Department of Economic Development (GDEcD), which was responsible for fostering economic development in Georgia[3]. The government of Georgia elected twenty board members who were responsible for monitoring the activities of GDEcD. Economic activities that the Georgian government funded include tourism, Micro and macro entrepreneurship, film production and recreational programs.

New Discoveries and Economic Growth in Georgia

After the Civil War, the Georgian government diversified its economic activities. Besides farming, members of the community engaged in other economic activities such as turpentine extraction since there was enough water to be used in firms. Charles, H. Herty devised new and better ways of producing turpentine, which was embraced by the Georgian government. As a result of the new discovery by Herty, the production of tar, pitch, and rosin became some of the most successful economic activity of the Georgian nation. Herty, who was a chemist in the Georgian University, also introduced his state to the use of pines in the production of printing materials. His ideas were embraced by the Georgian state because they would lead to economic growth. Later on the cotton companies were extended in order to hold the increased cotton seeds from the farms. Additionally, meat firms were built close to the railway line at the beginning of the Second World War.

Budgeting and Economic Stability in Georgia

The heads of the state departments presented their annual budget to the state governor because he was responsible for overseeing the appropriation of the government’s revenue. The governor worked with the state’s economists for him to know the projected revenue for the year in order to evaluate the feasibility of the budget presented to him. The governor then handed over the budget to the General Assembly for them to approve or suggest amendments in respect to the economy of the state. The changes that were made in the legislation after the civil war led to a stable economy in Georgia. This can be attributed to the rule that restricted the nation to spend more than the total annual revenue every year.

Legal Reforms and Privatization in Georgia

In 1997, the Georgian state adopted the “Law on General Courts” which had provisions to make amendments in the judicial system. This law paved way for the judiciary to be an independent body. Additionally, the law governing ownership of nonagricultural assets was passed in 1998[4]. As a result, privatization of public land was legalized and people could own and manage land. A law to govern the land ownership by individuals and legal entities was also passed in 1998. The market control by the private companies led to the rise of the Georgian economy because the companies worked towards maximizing profit, which consequently contributed to the revenue of the state through taxation. The president of Georgia was mandated to elect the head of the Securities Commission, who controlled the Georgian market and ensured that it was an independent entity.

Challenges to Georgia’s Economy

The Georgian government did not meet its budget by the end of 1999. Wages and pension financial needs had an estimated balance of Lari 240 million. Georgia experienced financial constraint due to tax evasion by the investors. Therefore the government’s expenditure exceeded the total revenue. On the other hand, the International Accounting Standards (IAS) restricted the Georgian government from imposing tax rates against its requirements. Additionally, people argued that there was political influence towards regulating the tax duties on items, hence the decline in Georgia’s economy.

Impact of Wars on Georgia’s Economy

Georgia’s economy became unstable in the 1990s because of the separatism movement that was formed, leading to separation between the Abkhazia and South Ossetia. The number of people living in Georgia increased during Soviet period. They embraced technology in their economic activities thus fostering rapid growth of the Georgia’s economy. During this period, more than 50% of the population was engaged in economic activities in the cities. Additionally, the rural dwellers were also engaging in commercial activities of the towns which were within their locality.

Rise of Georgia’s Economy

The economy of Georgia decreased significantly, resulting from the collapse of the Soviet Union that had been in place before the twentieth century. Nonetheless, it did not take long before the GDP increased by 100% due to the impact of the Rose Revolution that was established later. Georgia had become popular because of the fast transition from a failing economy to the most stable economy in the world[5]. The National bank of Georgia funded the economy of the state, thus, creating room for the economy to growth rapidly. The significant growth of Georgia’s economy was prompted by President Shevardnadze who ruled the state between 1995 and 2003.

Rural-Urban Migration and Economic Growth

In the 21st century, individuals moved to the urban centers in large numbers, causing population distribution disparities. Due to this reason, the Georgian government implemented a program that would minimize rural to urban migration. New agricultural factories for processing produce were built in the rural areas thus causing the villages to grow economically. Tea and subtropical crops that people in the rural also contributed to the rapid economic growth of Georgia.

The Role of Agriculture in Georgia’s Economy

Agriculture was the main economic activity of the Georgian economy. The state had mechanized production and processing systems that made it possible for farmers to maximize profit. Half of the Georgian population was involved in agricultural activities thereby contributing to more than a quarter of the state’s economy. After independence, the economy of Georgia was unstable because international investors pulled out. There was political unrest which made it difficult for the Soviet states to build stable trading unions. The destruction of the transport and distribution infrastructure, which was largely distributed between South Ossetia Ajaria, and Abkhazia during the Civil War also led to a decline in the state’s economy.

Privatization and Economic Transformation in Georgia

Later on, the economy of the Georgian state was changed and there were overall change in economic transactions. More specifically, privatization of the government entities, price liberalization and banking system were reformed. More than 10,500 small and medium-sized firms and companies were privatized by the Georgian government between the year1990 and 2000. Despite the privatization process being slow, more than 1,200 enterprises had been transformed into joint firms for the Georgian market.

External Assistance in Georgia’s Economic Rise

After the independence of the Georgian state, the United State contributed to its rise from a humanitarian driven state to an economic state. People’s social life was stable hence their ability to contribute to the economy of their state. The United State facilitated a successful growth of the Georgia’s economy by offering technical and legal advisory assistance to the people who were responsible for controlling Georgian economic activities. The parliamentarians, legal officers, and economic experts were also trained, thus managing developmental programs more efficiently.

Unemployment and Economic Growth in Georgia

According to, National Statistics Office (Georgia) more citizens were struggling when seeking for employment since the independence of the Georgian state. Nonetheless, the unemployment rate reduced gradually as the state’s economy grew. The privatization of the government-controlled companies led to entrepreneurial independence in market control thus creating more business opportunities for the people. The rural farming system also led to the creation of more jobs for the communities. Individuals who were the heads of the family were considered to be business people who sourced their workforce from the family members. As a result, the cost of production was lower since the family members offered free or cheap labor. Consequently, the profit margin was higher in the rural areas than in the urban areas such as Tbilisi.

Main Crops and Agriculture in Georgia

Cotton farming had been the main source of Georgia’s economy. The cotton plantation was first planted in 1734 and it was in existence until the 20th century. There were other crops, which contributed to Georgia’s economy such as tobacco, corn, wheat, sweet potatoes, and rice. After the First World War, the Georgian state introduced more crops in the agricultural program in order to boost its economy. Peanut and tobacco production increased in high rates thus contributing equally to the economy just like cotton. At the beginning of the year 2000, peach fruits were also introduced in the state’s agriculture and its outcome was rewarding because it increased the Georgia’s revenue. Notably, the Northern and central region of Georgia primarily grew tobacco while the Southwest grew peanuts.

Farming in Georgia and Land Consolidation

Georgia’s land was consolidated in high rate from 1940. The number of tractors available for farming also increased, leading to farming efficiency. In 1940, more than 60% of the land in Georgia was leased. As a result, people used the land for commercial purposes, which meant that there would be more production in the agricultural sector. In 1995, the number of available farms was 226,000 but this number has reduced over time as Georgia’s population engage in commercial activities in large numbers. The Georgian leadership also fostered rapid economic growth because of its transparency. All the activities that the economists engaged in were subjected to government’s scrutiny leading to the proper use of the state’s finances. These achievements resulted from the financial support offered by Georgia’s World Bank.

Impact of Natural Disasters on Georgia

Georgia’s economy declined by 50% in 1994 when the state experienced flooding causing gross damages in the farms and the processing sector at large. Furthermore, drought struck the state later in 2000 because there was no rainfall for more than two years. Therefore, the farming sector was unproductive as more than 80% farmers struggled to irrigate their farms[6]. Cotton and peanut, which were the main contributors to the Georgian economy, were no longer functioning and therefore, there was a decline in the annual revenue for the state. Consequently, the government of Georgia restricted irrigation activities among the farmers to ensure that there was an equal contribution of the little water in all sectors. At the same time, the governor of the state approached the Florida and Alabama leaders and asked them to allow his state to access their water sources in order to support the agricultural sector and meet domestic needs for water.

Impact of Immigration on Georgia’s Economy

The main contributors toward Georgia’s immigration were England, Scotts, and Germany. The number of slaves who were transported to Georgia in 1776 was almost 20,000. Later on, there were more immigrants from Hispaniola and Germany due to revolution. More immigrants from Russia and Italy could be seen as a result of the Civil War. Between 1940 and 1960, the rate of migration increased to 502,000 leading to an enormous loss. Despite this great loss, Georgia’s economy increased between1970 and 1990 because there were more than 500,000 immigrants. There was a population growth of 18% by the year 1998, which translated to increased labor force and a high rate of production in the agricultural sector thus, over 50% Georgia’s economic growth.

Tourism and Textile Industry in the Georgian Economy

After the civil war, more tourists were attracted to Georgia’s national parks and the conventional places, which are located in Atlanta. The tourism industry contributed significantly to the state’s economy because of the revenue collected from the visitors. On the other hand, the textile industry flourished as it received a boost from the Augusta and Atlantic spokespeople namely; Patrick Walsh and Henry Grady.

Impact of World War II on Georgia’s Economy

The World War II led to a great change in the Georgian economy. People were considering trading in Georgia because there was cheap labor which was offered by the slaves. The tax burden on the investors was also low. Therefore, over 40% of northern industries relocated to Georgia and utilized their cheap resources. Nonetheless, Georgian government incurred losses despite the heavy investment from the investors. During the World War II, more people were engaging in livestock and poultry rearing as opposed to cultivating the land.

Economic Shifts and Job Opportunities in Georgia

The labor force in the agricultural sector declined to less than 1% in 1997. Salespeople, manufacturers, and service providers were more than 71% in the same year[7]. Due to the shift in economic activities in Georgia, its productivity increased and more revenue was generated in the subsequent years. Nevertheless, the main income generating activity, which was textile production extinguished in 1999. The annual production of textile reduced with 8.4% while food production increases by 12.1%. The Income from Georgia’s economic activities increased with 16% between 1997 and 2000.

Economic Changes after the National Recession

During the national recession, the production profit declined by 50%. The income from manufacturing industries reduced by 8.3 % and therefore the Gross Domestic Production (GDP) declined in the years that the World War II prevailed. Nonetheless, there was a significant growth in the economy when the War in Georgian state ended. Moreover, the governor and the heads of states worked together in order to regulate the annual expenditure of the Georgian state to maintain it below the annual revenue. Taking this step enabled the government to reduce or increase its expenditure depending on the economic status of the state.

Conclusion

Conclusively, there was a drastic change in the Georgian economy, which was caused by the Civil War. The shift from agriculture to industrialization contributed to an increase in revenue. As a result, the Georgian economy was stable. Nonetheless, the neighboring states, which relocated to Georgia during the II World War impacted on its economy negatively. The decline in Georgian economy was attributed to the cheap labor offered by the slaves and the unstable taxation process that could not be controlled during the World War.

The tourism industry also contributed to the Georgian economy. More tourists were attracted to the conventional parks especially in Atlanta thus increasing the state revenue every year. The Georgian’s infrastructure contributed to the growth of its economy because there was sufficient means of transportation. According to James Cobb, people started doing businesses along the railway line in order to attend to customers who were within its environs.

The GDEcD offered training and controlled the economic activities of Georgia. As a result, investors were equipped with skills on how to run their businesses efficiently. The Georgian state also extended loan facilities to individuals and legal entities that needed financial aid. Moreover, people had enough opportunities to engage in income generating activities because of the support that they received from the Georgian government. The rules that were set to guide the investors who were trading in Georgia guarded the interests of the nation, while giving room for people to operate their businesses conveniently.

The law that legalized privatization of public land led to the increase in the number of private investor in Georgia. The Georgian government allowed people who owned nonagricultural land to sell or lease it to private investors. Therefore, Georgia’s economy changed as the investors controlled the market. Georgia realized an increase in revenue collection during the privatization period. Despite the drastic change that occurred during the Civil War, Georgia’s leaders regulated economic activities to foster sustainability of the economy. The changes that were observed before 21st century are significant to the current state of Georgia[8]. It was a refining moment that enabled the Georgian government to implement strategic plans that would make the state to have a stable and sustainable source of revenue.

Bibliography

Ciment, James, and Kenneth Hill. Encyclopedia of conflicts since World War II. Routledge, 2012.

Cobb, James Charles. Georgia odyssey. University of Georgia Press, 2008.

Jennison, Watson W. Cultivating Race: The Expansion of Slavery in Georgia, 1750-1860. University Press of Kentucky, 2012.

Range, Willard. A century of Georgia Agriculture, 1850-1950. University of Georgia Press, 2010.

Sullivan, Buddy. Georgia: A state history. Arcadia Publishing, 2010.

[1]

Cobb, James Charles. Georgia odyssey. University of Georgia Press, 2008.

[2]

Sullivan, Buddy. Georgia: A state history. Arcadia Publishing, 2010.

[3]

Jennison, Watson W. Cultivating Race: The Expansion of Slavery in Georgia, 1750-1860. University Press of Kentucky, 2012.

[4]

Range, Willard. A century of Georgia Agriculture, 1850-1950. University of Georgia Press, 2010.

[5]

Range, Willard. A century of Georgia Agriculture, 1850-1950. University of Georgia Press, 2010.

[6]

Jennison, Watson W. Cultivating Race: The Expansion of Slavery in Georgia, 1750-1860. University Press of Kentucky, 2012.

[7]

Ciment, James, and Kenneth Hill. Encyclopedia of conflicts since World War II. Routledge, 2012.

[8]

Ciment, James, and Kenneth Hill. Encyclopedia of conflicts since World War II. Routledge, 2012.