Reforms Lab

Telavi Municipality hosted a meeting on "Strengthening Public-Private Partnerships (PPP) at the Subnational level in Georgia”, a project being carried out by Reforms Lab with the support of USAID Good Governance Initiative (GGI) and MRDI.
USAID Good Governance Initiative in Georgia - GGI საქართველოს რეგიონული განვითარებისა და ინფრასტრუქტურის სამინისტრო

"With Corruption, Everyone Pays"

Politicians, businesses, citizens, all agree that effective public institutions, minimal bureaucracy, and a corruption-free environment play a crucial role in the successful functioning of the state.

Corruption exists in some form almost in every country worldwide. However, what matters is the scale of corruption, its invasion in state institutions. Successful countries tend to be able to minimize corruption at all levels, thus ensuring the effective functioning of state institutions and the best possible outcomes for the population.

For developing and emerging markets, corruption is a real trouble, almost part of everyday life, something you used to and already perceive as “normal”. This particular feature makes corruption difficult to fight in those countries. However, it is possible, with strong political will and effective mechanisms. According to the best practices around the world, there are various mechanisms and approaches to fighting corruption. The approach can be more centralized, including creation of an independent anti‐corruption agency, or more decentralized, based on general strategy and the will of the Government to fight corruption at all levels.

In recent years, Georgia has achieved significant progress in fighting against corruption. According to the open governance and corruption perception indexes, Georgia is one of the leaders in the region and is often named as a frontrunner of good practice. As of today, there are several institutions responsible for fighting against corruption in Georgia (e.g. General Prosecutor’s Office, State Security Service, Ministry of Justice). However, there are growing concerns regarding the effectiveness of this “dispersed” approach in fighting corruption and thinking about the possibility of establishment of a centralized, independent institution – an anti-corruption agency. Among the recent concerns is the lack of independence of current institutions from political influence, lack of accountability and transparency, and subsequently lack of public trust, etc.

Let’s have a quick look at the practices around the world. We take several countries with different strategies of fighting corruption.

The first independent Anti-Corruption Service was created in Hong Kong in 1974. The reason for its creation was a study, which revealed that corruption was widespread in multiple areas of public administration. This resulted in the government’s decision to create an independent anti-corruption body with the functions of prevention, detection, investigation, and raising of public awareness about corruption. According to the Corruption Perception Index 2019 (Transparency International), Hong-Kong is 16th worldwide.

Even though, since the 1990s, Lithuania was already a leading country in combating corruption and had comprehensive anti-corruption systems, it still decided to create a separate agency. In 2000, the government separated the Special Investigations Service from the Ministry of Internal Affairs and established it as an independent institution charged with the prevention and investigation of corruption. The results achieved are quite sound and currently, Lithuania is 35th in the Corruption Perception Index 2019.

At the same time, its neighboring Estonia does not have a centralized, independent anti-corruption agency, but rather uses a general Government approach to fight against corruption. Estonia is 18th in the Corruption Perception Index 2019.

We can also name a number of countries having a dedicated anti-corruption agency, where corruption is still a persistent problem and no visible results were achieved.

Based on the abovementioned, it is not so much the approach and strategy chosen by the Government to fight corruption. It is all about strong political will and effective use of well-established anti-corruption mechanisms that help the country achieve significant results in fighting against corruption.

Indeed, corruption is a true enemy of development and progress, so it is time to fight it!

Attention please! New post📣

Covid-19 and Tourism Industry

🔵In the past decades, the world has experienced a number of different challenges and crises, but yet, probably none had similar implications for the global economy as the COVID-19 pandemic. While nowadays, physical distancing seems to be the only way to fight the virus, the Covid-19 pandemic not only affects human life, health, and economic statehood, but it also effectively alters human behavior. Changed behavior and introduced restrictions on global travel hit the tourism and hospitality industry the hardest.

🔵Georgia is the country where the tourism industry holds a sufficient part of the economy. Namely, as of 2019, tourism share in GDP amounted to 11.5%. The official number of employees in the tourism industry in the pre-crisis period was 150 000 persons. However, it is evident that the number is much higher, given the shadow economy's shares and unofficial employment in the tourism industry. Moreover, we all know that hospitality has strong spillover effects on other sectors, particularly retail, construction, agriculture, etc.

🔵During recent years, Georgia was proud of the growing number of international visitors. Indeed, for the country with 3.7 mln. local population, the number of international visitors reached 9.4 mln. in 2019 (and that is despite the "travel ban" from the Russian Federation since summer, 2019).

🔵As for the structure of international visitors, as of 2019, around 60% of all international visitors came from neighboring countries (Armenia, Azerbaijan, Russian Federation, Turkey). Despite an absolute increase in the number of other international visitors (e.g., Israel, Saudi Arabia, some European countries), neighbors still dominate in Georgia's tourism industry.

🔎Let's discuss what Covid-19 pandemic in general and the existing structure of international visitors to Georgia, in particular, tell us about the future of the tourism industry globally and in Georgia.
For the analysis, we take the evidence from previous crises. Evidence from situations like the SARS outbreak in 2003 and the MERS outbreak in 2012, and the global financial crisis shows that no significant long-term decline was observed in global tourism despite some short-term disruptions. However, none of the pandemics of the previous years was that widespread, affecting the entire world.

🔵As already mentioned above, probably the specificity of Covid-19 pandemics would be that it might affect human behavior for a relatively long period. It is not envisaged to fully restore the tourism industry to its pre-pandemic levels in the medium-term period.

🔵In Georgia's case, the situation is a bit worse due to a lack of diversification of international arrivals. As discussed above, most tourists to Georgia come from the neighboring countries, which in addition to the problematic situation related to the recent pandemic (high infection and death rates), experienced severe economic decline. Moreover, we witness ongoing military escalation between Azerbaijan and Armenia. All these events will definitely affect the willingness and ability of people to travel.

🔵All these challenges are subject to a thorough analysis and rethinking of the development of Georgia's tourism industry. During the recent years, Georgia was more oriented towards "quantity" rather than "quality". Georgia remains attractive to the neighboring countries due to historical sentiments. However, the country should start more active work to attract "high-spender" tourists from Europe and the Middle East. This requires a specific strategy and precise identification of goals, including improving quality in the hospitality industry, better qualifications, and better services.

✅The above mentioned is a long-term process, but maybe it is the best time to start!