Monday, July 11, 2016

Who should Georgia’s closest economic partners be?

Reports on Georgia’s shifting public opinion of Russia and the West have been widely discussed on this blog and elsewhere. Focusing specifically on economic aspects, the Georgian population thinks both Russia and the EU have a greater influence on the Georgian economy than they should, although this perception is not necessarily based on the country’s actual economic relations with either Russia or the EU. More diverse economic partnerships and the population’s awareness of these partnerships could decrease this perceived influence. Notably, there are signs that many regional economic powers are happy to increase their trade with Georgia: with Iran looking to triple or quadruple trade with Georgia and China investing in Georgia as part of the new Silk Road initiative, new players are stepping into the Georgian economy. Iran and China aside, Turkey has long seen Georgia as a market for Turkish goods and a transit corridor to trade partners in Central Asia, especially now that diplomatic and trade ties between Russia and Turkey have deteriorated. This blog post looks at the Georgian population’s attitudes towards economic relations with several countries, using CRRC-Georgia’s survey on Knowledge and Attitudes towards the EU in Georgia (EU survey), which was carried out for Europe Foundation in 2015.

When asked to choose which countries or unions Georgia should have the closest economic cooperation with, people most often name Russia, the EU, and Turkey. The answers are, however, rather different by settlement type, as well as between ethnic minority and majority populations.

Note: While answering this question, respondents were asked to choose three countries/unions from a list of 14 provided on a show card. 

The choice of Russia for preferred economic partner is notable considering Georgia’s current level of trade with the country. While the share of exports to Russia has increased over the last three years, since Russia lifted the 2006 embargo on Georgian exports in 2013 and 2014, it still only accounts for 7% of exports from Georgia, and 8% of Georgia’s imports come from Russia. As expected, younger, urban dwellers tend to mention the EU as Georgia’s preferred economic partner more often, while older rural dwellers tend to mention Russia. Ethnic minorities mention Russia or Turkey more often than the EU. Compared to the population of the rest of the country, those living in Tbilisi are more likely to mention the EU and new economic partners like China.

The EU and Turkey, Georgia’s largest economic partners, are far more involved in the Georgian market, yet overall, fewer answered they would prefer them as the closest economic partner compared to Russia. While trade with the EU has doubled since 2009, fewer people mentioned the EU as a partner that Georgia should have the closest economic cooperation with in 2015 (47%) than in 2013 (60%). Ironically, the drop in 2015 coincides with the introduction of the Deep and Comprehensive Free Trade Agreement (DCFTA) in 2014, which aims at increasing trade between the EU and Georgia.

In the same survey, a similar question was asked about countries or unions that Georgia should have closest political cooperation with. There is a strong statistical correlation between the answers to questions about political and economic cooperation, with Spearman’s correlation coefficients ranging from .623 to .754 when tested for Russia, the EU, Turkey, China, and Iran.

The majority of Georgia’s population still prefers Russia as an economic partner regardless of Georgia’s growing trade ties elsewhere. There may be a number of possible explanations for this finding, two of which seem quite reasonable. On the one hand, the population is likely not entirely aware of the diversity of Georgia’s trade relations and concomitant economic interests. On the other hand, attitudes towards economic partnership may be influenced by political attitudes.

To explore the data more, take a look at our Online Data Analysis platform.

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