Trends in the Social and Economic Standing of Georgian Households

CRRC Fellow Dr. Alex Sarishvili recently used the 2004-2005 CRRC Data Initiative (DI) to identify and categorize three distinct groups of Georgian households sharing similar social and economic attributes based on household expenditure and income-related questions. One of Sarishvili's main findings is three clusters of household groups.

• Household Group 1, 11% of the sample, consisted of at least two adults bringing in roughly the same income. The income of the second largest earner was equal to the average household income in Georgia. These families are considerably wealthier, healthier and better educated than the average Georgian household.
• In Household Group 2 (13% of households), the largest income earners earned almost the entirety of the family budget, with other household members making only small contributions. These families are worse off than Group 1 but better off then Group 3.
  
• Household Group 3 represents the overwhelming majority of Georgian households (76%). In these households, both the first and second largest income earners have lower-than-average incomes, and accordingly are most afflicted by poverty and also suffer from lower levels of health.
  

The report in English and a presentation are available on the CRRC-Georgia website.

Social Capital in Armenia | Babken Babajanian

The lack of social capital is often seen as one of the main factors holding back political, social and economic development in the South Caucasus. Social capital here refers to the trust that makes cooperation possible. Without cooperation, commentators note, few ventures can succeed: successful farming relies on sharing experience, seeds, marketing channels; party-based (as opposed to personality-led) politics calls for striving towards shared political goals; even corporations require some social glue if they are to succeed.

So how does one build social capital? One response is the social investment fund model. Favored by the World Bank, the idea is that communities receive funds for investment into their infrastructure (school windows and heating; that one bridge that connects you to the highway; irrigation for the fields; or even just water for the households), but only if they cooperate successfully, and display initiative and community-based bottom-up decision-making. Babken Babajanian, an LSE-based scholar, has examined how these programs worked in Armenia. He relied primarily on qualitative interviews throughout 12 communities.

His finding is that although the infrastructure improved, the process got stuck somewhere between top-down and bottom-up. Ultimately, the success of all of the projects relied on the mayors. Where mayors were "developmental", the community became energized. In other cases, make-do mayors just used social investment funds as an additional source of revenue.

Babajanian argues that ultimately the larger political context often remains stronger than local projects. He seems to suggest that maybe more of a political mobilization is required to change old habits of interaction. The paper provides an excellent overview of the literature. We would have been curious to hear more about how exactly interventions impacted on the views and attitudes of the community, specifically whether they at least helped to create a sense that cooperation is a desirable goal. Arguably such a transformative experience can be beneficial.

The paper, "Promoting community development in post-Soviet Armenia: The social fund model." Social policy and administration 39, no. 4 (2005), pp. 448- 462, can be made available in CRRC libraries.

J-STOR across the South Caucasus

How is the Caucasus plugged into the world-wide research community? One good indicator is this list at J-STOR, since this online database of journal articles is a very valuable resource for researchers.

• Azerbaijan -- we are alone: here it is only CRRC that has J-STOR.
• Armenia -- no one. The problem is the internet connection. Arminco, the monopoly supplier, only offers a connection through a proxy server; research institutes in Armenia request copies from affiliated or friendly institutes in the region. There is, however, a local project to share information through a system called ELCA.
• Georgia -- 4 -- again, CRRC, Caucasus Research Resource Center; Georgian Institute of Public Affairs; National Bank of Georgia; Georgian University of Social Sciences (GUSS).

Small numbers are not necessarily a huge problem: they may just indicate a concentration of research resources. However, Ukraine's case is a little extreme. It has only one subscription at EERC -- not exactly evidence of a vibrant research community. We find the same situation in Kazakhstan (KIMEP) and Kyrgyzstan (OSCE Academy). Slovakia has 2, Latvia and Lithuania 3 (as does Iraq). Estonia and Hungary have 5 subscribers. Iran retains access to 8 subscriptions, in spite of the sanctions (with a physics institute among those online).

By comparison, Russia has 37 subscribers, Turkey 38, China 59 and India 92. Likely, a citation index would find a high correlation between subscriptions and peer-reviewed publications. We plan a post on this soon.

Caucasian Weather: Asia or Europe?

Is it Europe, or is it Asia? Quite literally, where is it on the map? On a rainy Saturday afternoon we took a look at online weather sites (we were looking for hope online), to check where the Caucasus ended up on alignments that cared little for political affiliations:

• CNN Weather (above) sees the Caucasus as part of Asia. Al-Jazeera (below) agrees, and uses a weather map that mirrors CNN's overall design.

• Accuweather also chooses Asia: in its drop-down menu, Georgia is listed between East Timor and India, while Armenia and Azerbaijan are framed by Afghanistan and Bangladesh. The same view is taken by a number of other sites, including Wetter-Online.
• Wetter.com, a German site, believes that Georgia is part of Europe, but lists Armenia and Azerbaijan as being Asian. Curiously, Georgia is on the Asian map, but in the European list.
  
• Yahoo Weather, powered by the Weather Channel and Weather.com agrees that the Caucasus is Asia, but bizarrely has Turkmenistan in its European listing. Probably an intern was in charge.
  

The BBC Weather Site (above) offers a new perspective: it joins the Caucasus nicely into the Middle East. Visually, at least, this makes a good unit. Black Sea, Caspian, Gulf, Arabic Sea, Red Sea, Mediterranean. Seafarers come to mind. Maybe the geographic unit can also be explained by the BBC's large audience in India and Pakistan -- Asia just needs to be disaggregated as an entity.

There is, of course, a different vision, provided by the Russian weather service:

This world-view is unlikely to be very popular in the Caucasus. The site's forecast, however, is excellent.

• Google Directory listings, by contrast, keep their options open: the Caucasus is listed both in Europe and in Asia. Listing side-steps the tough commitment of a map. This probably is the best compromise for a region in which categories run up against each other.
  

We also have compared forecasts. Sadly, on this, there was consensus: last weekend was rainy.

Armenian Election Polling

Pre-election polling has become an increasingly big business in the South Caucasus. The Armenian elections, scheduled for May 12, again illustrate this. Much of the polling appears like a quick job with little attention to scholarly rigor. However, the results from these polls are often presented as gospel, particularly in local media outlets. The article quoted below was put on the wire by ARKA, an Armenian news agency.

The findings themselves could be interesting. But there are many problems in talking about "Armenia's population", and these data should be taken with more than a grain a of salt. I personally would like to to know what "excessively intense" means and what this actually tells us about the election. As a rule, it would be great if journalists asked who funded this research.

43.2% OF ARMENIA'S POPULATION ESTIMATE ELECTION CAMPAIGN AS EXCESSIVELY TENSE 18 April 2007, ARKA - News (Armenia) English (c) 2007 ARKA News Agency YEREVAN\

43.2% of Armenia's population estimate the election campaign as excessively tense, said Director of Independent Sociological Centre "Sociometer" Aharon Adibekyan, when introducing the results of the sociological research. He said that 34% of the respondents think that the political propaganda is conducted in the usual regime without deviations. According to the survey, 9.7% of the electorate thinks that the propaganda is conducted coarsely and importunately, and 8.3% - lower of the moral norms.

The survey was conducted in 19 big cities of Armenia and 8 Yerevan communities. The total number of respondents made 1,500, statistical error is not more than 1%. Centre "Sociometer" intends conducting three more sociological surveys on the parliamentary elections in Armenia - in Yerevan, in the rural regions of Armenia and the final survey, including the voters throughout the country.

Local media would probably increase their authority if they contextualised data for their readers. EurasiaNet carries a comprehensive article highlighting the lack of professional polling, and contrasting it with widespread apathy. Surely that apathy in part is also a result of the lack of any reliable information.

Street Children in Tbilisi

World Vision, a development NGO located in Georgia and worldwide, has come out with a new research report on street children in Georgia. If you are interested in the report, we would be more than happy to send it to you.

Interesting findings in the report include:

1. Many street children are coming to Tbilisi from other parts of the country.
   
2. Often these children have no form of documentation.
3. Adults usually control the funds collected by children's various money earning strategies.
4. Roma street children play a central role.
   
5. It appears that all Roma use one last name and register at the same address, raising interesting questions of Roma begging networks.
   

Methodologically, however, the report leaves a few things to be desired. The reports claims at the beginning that it is a qualitative report and then begins to present quantitative data.

Source: World Vision. 2007. "Street Children and Labor in Tbilisi"

This graph has several large problems, and it illustrates some of the problems that we often encounter in research done by NGOs.

1. The graph claims that 77% of the street children interviewed are beggars. But 77% of what sample? This graph could lead the reader to think that 77% percent of street children are beggars--while in fact it is only 77% of the sample that already claims not be representative of the entire population of street children.
2. There is a problem of categorization here. It is not that street children are either "beggars,"" thieves" or "laborers." Most likely marginalized children often are a combination of all three. That is, the three categories probably are not mutually exclusive, but rather overlapping.
3. As Dr. Kulick, the resident Tbilisi expert on presenting quantitative data argues, using pie charts is almost never a good idea to display quantitative information (even if the quantitative information was good). 3D pie charts are especially bad because the human mind has a lot of trouble conceptually understanding foreshortened spaces. Therefore the image means relatively little. If you are interested in more articles on this topic, please send us an email. We are happy to share.
   

It is great that NGOs engage in such research, but sometimes just a few more steps would help to ensure that a report gets everything right. There are considerable benefits to the academic practice of presenting research publicly, to get feedback, before publishing the final version. (At any rate, we would be happy to help any research project.)

Media Freedom in the Caucasus

May 3 is World Press Freedom Day, and an occasion to look at how the three countries are doing in terms of press freedom. Freedom House has released a comprehensive report with detailed summaries.

In the Caucasus, these are the results

• Georgia is ranked 122, and as "partially free"
• Armenia comes in at 142, and considered "not free"
• Azerbaijan shares the rank of 164th with Russia, both described as "not free"

By comparison, Latvia is at 31, Turkey 105, Ukraine 112, Saudi Arabia 178 and China 181.


In regional rankings, Georgia's cup is at least half full. In Freedom House's map (see above), it is a little yellow speck. Except for the Baltics, only Ukraine is doing better among post-Soviet states. In this relative post-Soviet ranking, Armenia follows after Georgia. Azerbaijan is not far down that list, lagging behind Moldova and Kyrgyzstan. In other words, the Baltics are way ahead, the Caucasus trails after Ukraine, but generally does better than Russia, Belarus or Central Asia (with Bishkek sneaking ahead of Baku).

So much for the rankings. Freedom House actually provides an extensive summary of the methodology, describing how they evaluate the legal, political and economic environment for press freedom. The weightings are plausible and including the economic environment for press freedom makes a lot of sense.

The narrative summaries provide details to back up the claims. Extensive libel laws in Armenia make it possible for powerful people to suppress criticism. Similarly, Freedom House says that defamation lawsuits seem to be a favorite method of silencing critical journalists in Azerbaijan. The interior minister alone brought five cases last year. But the report also documents several cases of intimidation, beatings, and one unresolved high-profile murder in Baku. In Georgia, a mix of government pressure and journalist self-censorship remain a problem. Not documented, but certainly a factor, is the sheer clumsiness of the Georgian government in handling the media: journalists tell farcical stories about hunting down basic information from government representatives.

In all of the countries, the commercial viability of independent media limits the freedom of expression. An independent Public Broadcaster is a desirable solution, but the very notion of independence is both a precondition and a result of a more mature democracy.

Comparing Local Governance in Armenia, Georgia

Political reporting is often focused on the capitals. However, for the majority of the population politics remains strictly local, with local governance having a huge impact on life. After all, it is the municipalities that provide drinking water, clear waste, and provide minimal infrastructure for economic activity. So how do the three countries differ?

A cross-border evaluation for a GTZ project which we did in the years 2004 and 2005 found the following differences in local government: by and large, Armenia had the most enterprising leaders of municipalities. In Georgia, local governance often was struggling. In Azerbaijan, the executive branch (through the ex-coms) had a disproportionate influence, usually displacing elected leaders, but could also get things done.

One of the shortest explanations for the difference between Armenia and Georgia is structural. Armenia removed the Soviet rayon structure (a mid-level administrative unit, best translated as a district, with typical populations ranging from 20.000 inhabitants upward, and rarely smaller than 500 km²), leaving only oblast/region (referred to as Marz) and municipalities. By contrast, Georgia retained the rayons, and the Gamgebellis (heads of rayon) dominated local life -- so much so that when Shevardnadze was fraudulently returned to office on April 9, 2000, an election watchdog summarized the event as "Gamgebellis elect President".

In effect, the Gamgebellis often suffocate local initiative, and nominally independent, elected heads of municipalities end up taking their orders in the district capital. In Armenia, without this mid-level intervention, the heads of the municipalities just need to get things done. The Marz capital can be far away, and the governor cannot watch 25 heads of municipalities simultaneously.

On the ground, politicians recognize the difference. As an Armenian governor explained with a shrug: Georgia needs the rayon structure, since it is too heterogenous to support larger cohesive units. Some changes are underway in Georgia, but recent research by a political scientist (soon to be published, stay tuned) found that the structural change had not yet had an impact on the way local government works.

Public Opinion in Armenia on America, Darfur, Genocide and Climate Change

The Chicago Council on Global Affairs and WorldPublicOpinion.org have released their data from several of their most recent World Public Opinion -- Global Issues surveys. The surveys cover 18 countries and the Palestinian territories and includes Armenia! (Why Armenia was chosen is an interesting issue -- anybody who knows or has thoughts about this, we would welcome your commentary.)

In Armenia, the fieldwork was carried out by the Armenian Center for National and International Studies. In the survey documentation, it states that the Armenian survey was done in 1300 nationally representative households using face-to-face interviews. However, how a nationally representative sample was obtained is not mentioned. Also, the sampling frame is not discussed. This leaves many questions of quality in terms of representativeness.

Nevertheless, the data is quite fascinating and it would be great to be able to compare among the South Caucasus countries. Four surveys were recently released: "Views of the United States," "Genocide and Darfur," "Climate Change and the Global Environment," "Labor and Environmental Standards in Trade Agreements." The former three will be covered briefly in this blog entry.

Views of the United States

Armenia's views of the United States appear to fall in the middle of the surveyed countries. 63% of Armenians responded that they thought that the "U.S. is playing the role of world policemen more than it should be." However, even more Americans (76%) agreed with this statement. Indeed, only in one country -- Philippines -- did more than half of the population disagree with the statement.

Asked, if they trust the U.S. to act responsibly in the world, 27% of Armenians said "not at all" and 31% "not very much." This puts Armenia squarely in the middle of responding countries. Argentina is the most distrustful (69% "not at all" and 15% "not very much" and Israel (56% "a great deal" and 25% "somwhat") the most trustful.


Genocide and Darfur

Questions related to Genocide would seem particularly interesting to ask in Armenia, given the hotly debated use of the term in the Armenian context. So how do Armenians respond? When asked if the UN has the responsibility to intervene against the will of a government where the genocide is taking place, 66% of Armenians thought that the UN had that responsibility--though a large percentage (19%) said they were not sure or declined to answer.

However, the survey indicates that Armenian interest in the politics of genocide may not transfer to other contexts-- or perhaps there is no media coverage. When asked if the UN had the right to intervene in Darfur, 46% of Armenians said they were not sure or declined to answer (similarly high rates occurred in Ukraine, Poland, Thailand and Argentina). Of those who answered, the largest percentage (29%) did think that the UN had the responsibility to authorize intervention.

Climate Change and the Global Environment

According to the survey, Armenians respond similarly to Russians. When given a series of statements ranking the importance of global warming, 19% of Armenian and 22% of Russians chose the statement that took global warming the least seriously, saying that "Until we are sure that global warming is really a problem, we should not take any steps that would have economic costs." Only India had a higher percentage that chose this response -- 24% -- though the U.S. did not do much better at 17%. The margin of error is different in each country, so maybe the U.S. is worse than Armenia but not nearly as conscious as Thailand, where only 7% chose the response.

The Least Healthy City in the World?

So, where is the least healthy city in the world? According to Mercer Human Resource Consulting, "The lowest-ranking city for health and sanitation is Baku in Azerbaijan, which scores just 27.6. Other low-scoring cities include Dhaka in Bangladesh, Antananarivo in Madagascar and Port Au Prince in Haiti, which score 29.6, 30.1 and 34 respectively."
Mercer takes into consideration the following indicators:

• Hospital Services;
• Medical Supplies;
  
• Infectious Diseases;
  
• Water Potability;
• Troublesome and destructive animals/insects;
• Waste Removal;
  
• Sewage and Air Pollution.

Of course, one must keep in mind that Mercer is not an academic survey. Mercer is a consulting firm that sells reports to businesses looking at adjusting such items as hardship pay and cost of living adjustments to expats (mainly from Europe and North America) posted throughout the world; they charge heavily for their services. In fact, we decided that it was not worth the 370 dollars to compare two cities.

Furthermore, their methodology is not publicly available. While Baku may have health problems, it is hard to imagine that it deserves a score lower than Port-au-Prince or Dhaka (of course no offense to these cities intended).

We'd love to hear your opinion and other data for or against Mercer's results. Please post a comment.

World Values Survey | Visualizing where we are

This is the Inglehart-Welzel map based on the World Values Survey. Up front, note that much of this data comes from the mid-1990s. Still, it's an impressive overview and various positions on this map correlate with other attitudes. Where the Caucasus is, the endorsement of divorce, single child families, respect for authority and post-materialist values are far away. Disaggregated and in response to direct questions, Armenia is least happy, Georgia in between and Azerbaijan happiest.

All these details are well documented on the exemplary website (see above), which also contains more material that may be interesting to explore.

How has the Caucasus changed? We integrated some key questions from the World Values Survey questionnaire into this year's Data Initiative, so stay posted for updates on recent changes. (Moreover, some other surveys have been using similar questions, but we don't yet have the data sets.)

IRI Release New Georgian Poll | Questions and Highlights

IRI has released a new poll chock full of data (to see all their polls, click here). They interviewed 1500 Georgian voters over the age of 18 in February 2007. This yields an image of political developments, but also provides suggestions to political parties on what the electorate cares about.

We have some misgivings on this poll as a research tool (see below), but let me present some brief highlights.

Conflict

• Relations with the CIS remain cold. 60% think that Georgia should not remain a member of the organization.

• Optimism about resolving armed conflict has significantly dropped. In the recent poll, 32% of respondents now don’t know if South Ossetia will return under Georgian control and 17% of respondents believe it will take more than 6 years. In presumably the same poll done in 2004, 21% thought that South Ossetia would be returned to Georgian control within a year. Now only 5 % believe this will occur.

• Over 90% still oppose using force in resolving the separatist conflicts.

Politics

• In data supported by CRRC’s Data Initiative, trust in the judicial system remains low, according to the poll. After unemployment, the judiciary is the field most in need of reform, according to respondents. Additionally, 78% of respondents are not satisfied with the Girgvliani court decision.

• Other things being equal, 50% of voters would choose a male candidate over a female, whereas only 6% would prefer the female (42% claiming indifference). 8% believe that women have too much power in Georgia (we'd love to see what these 8% think about other issues; are they the male part of the 16% who would like to see a return of constitutional monarchy, for example?).

• 42% of respondents believe abortion should be made illegal, while 38% believe it shouldn't. (Again, we'd like to see how that breaks down into male and female respondents.)

• In an interesting statistic about participatory democracy, 59% of respondents did not know the name of the majoritarian MP of their rayon. Nevertheless, half thought that their MP was doing a bad job (whoever that person is). If IRI would make the data set publicly available, lots of interesting comparisons could be made here. What is the relationship between knowledge of the majoritarian MP and judgment of his job? This among other indicators, could judge how effectively politicians were making themselves stand out as individuals. Another reason to promote open data sources!

• In a statistic that may break with impressions created by public discussion, 56% of respondents support the new statue of St. George on Freedom Square. Again, the breakdown of who these supporters would be interesting to know, as I have a feeling they correlate with other behaviors.

• 37% believe that many people are afraid to openly express their views. This number has been climbing slowly, but steadily from a baseline of 22% in October 2004. Only 8% believe that the government fully respects citizen's human rights. At the same time, 48% believe the country is developing in the right direction, up from 39% in April 2006.
  

• Unsurprisingly, unemployment and relations with Russian were the government's biggest failures, while electricity and paving roads the government’s biggest successes. The respondents also thought that unemployment is the largest problem that Georgia is facing.

• Impressively, only 2% reported having to pay a bribe in the last 12 months to get a service or decision, and 78% believed that the criminal situation had improved (showing a consistent trend over the last few years).

Data, data, data!!!

For this survey to become a research tool, it would be desirable if IRI would

• make the raw data set available, allowing researchers to look for correlations;

• tell us about sampling, and non-response, to give a better understanding what type of data we are looking at;

• release the Georgian questionnaire, so that one can find out exactly what was asked.

It would desirable if such basic transparency requirements became a standard for surveys financed by international donors.

Migration Resource Centers: Data on Those Seeking Advice About Leaving Georgia

IOM collects data on those people who use their Migration Resource Centers. While the sample is certainly not representative of the population, it provides insights into those seeking advice about leaving the country in the areas where IOM operates resource centers. IOM conducted 384 interviews in its centers in Tbilisi, Kutaisi and Gurjaani.

Some features of IOM's statistics stand out. First, 58% of respondents are unemployed and looking for a job, while 26% are only employed part-time. Of those unemployed, 16% have been unemployed for more than 5 years and another 29% have been unemployed for over a year, showing a high degree of structural unemployment within the group of those looking to migrate. Interestingly, very few of the unemployed are officially registered.

What do potential migrants prefer to do abroad? The data shows a quite realistic understanding of opportunities for Georgian migrants. 30% would like to work as a caregiver, 8% in the restaurant/hotel industry, and 7% in the agrarian sector. 19% say they will take any job that they can find.

Migrants' preferred countries of destination are not surprising, particularly given the current tensions between Russia and Georgia. The United States, Greece, Great Britain, Germany, Italy, Canada and Ukraine top the list of places Georgian potential migrants would like to go. IOM's data also supports network theories of migration. When asked why they want to go to their preferred country of destination, over half of respondents say it is because they have friends who can help them there.



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Divorce Rates: the seven-year-itch?

According to popular lore, marriages often break up after around seven years. What does the Georgian data say? How long have those who are getting divorced typically been married?

Georgian data does not support the seven-year itch hypothesis. Divorces seem to be pretty equally distributed across the years, with some fluctuations, year-by-year.

In some ways, a fairly high number of divorces still takes place after 15 years (according to the data, the number of couples breaking up after more than 20 years is the single largest group of divorcees, but it consolidates all 20+ data).

As for the total divorce number, it has remained stable from 2001 to 2005, at around 1900 divorces per year. By comparison, around 13.000 people married annually, with an upward tendency more recently (2005 a bumper year, with 18.012 marriages).

According to one divorce league table (some inconsistency here), Georgia has about 12% divorces per marriage, Azerbaijan 15%, Armenia at 18%. Matrimonial harmony, or at least stubborn persistence, compared to Kyrgyzstan (25), Kazakhstan (39), United States (41), Russia (65) or Belarus (69). Take another league table in which divorces are listed by 1000 people, and the US comes first in divorces (4.95), Russia third (3.36), and Georgia would still come below Syria, with less than 0.5 divorces per 1000 people.

The Georgian data, and much more engaging information, is available on these pages of the Georgian Department of Statistics.

(Incomplete) BigMac Index for the Caucasus

When comparing iPod pricing across the South Caucasus, we promised more information on the Big Mac index. As described then, the Big Mac index has been suggested by the Economist as a measure of purchasing power parity. The argument is that Big Macs across countries bundle identical products and services, and therefore can serve as a comparable basket.

Unfortunately, the comparison is incomplete: no McDonald's yet in Yerevan (with various explanations offered, including that the region is served through Turkey). That may lend some credence to the Golden Arches Theory of Conflict Prevention, which suggests that countries that have McDonald's are less likely to be in conflict with each other, because they are in the same globalized orbit. (But this theory happens to be dubious, so Ron MacDonald is not yet standing in line for the Nobel Peace Prize.)

How do Georgia and Azerbaijan compare? In Azerbaijan, a Big Mac goes for 2.5 New Azerbaijani Manat, which currently puts it at 2.73 US dollars. At 4.60 GEL, the Georgian Big Mac is at 2.60 USD, 13 Cents less.

Comparing this with the 2006 Big Mac Index (admittedly one that looks forward to an update), the Caucasus is between Hungary (2.90) and Mexico/South Korea (2.63). If you believe the theory behind the index, the Caucasus is sort of close to purchasing power parity, since the American Big Mac costs $3.10.

By comparison, the Euro-BigMac is at 3.86 USD, the Swiss at 5.10, but the Chinese Yen, radically undervalued, at 1.30. Strikingly, the Russian Big Mac is a lot cheaper and goes for 1.83 USD, and the Ukrainian is in the same league at 1.88 dollars.

As with the iPod, pricing may be driven by maximising the margins, not by the actual basket. MacDonald's in both countries is an upmarket product. In Russia and Ukraine it plays to the mass market and is priced accordingly.

Scale will also play a role: with few restaurants in the Caucasus, McDonald's does not enjoy the advantages of scale. On that level, the index underlines that the local cost of doing business still is higher than it will be in Poland, Ukraine, Russia or Hungary.

Comments welcome.

Economic Liberty as a Response to Georgia's Social Problems

Murtaz Kvirkvaia, a CRRC fellow, investigated a range of social problems in Georgia. According to his findings, 55% of the population lives on the brink of poverty and 9.6% of the population is extremely poor. By Kvirkvaia’s estimations, the unemployment rate is 3.5 times higher than the official data claim and a third of economically active citizens are jobless.

However, the most vulnerable of groups, the fellow argues, are pensioners. The analysis showed that the pension system is founded on an intergenerational contract, where today’s pensions are being paid by future generations, which makes pensioners’ social problems impossible to resolve.

Based on his research, the fellow put forth a framework to resolve Georgia’s social problems. He argues that the state cannot play the leading role in resolving social problems for the majority of the population, like it used to do during the Soviet era. Accordingly, Kvirkvaia considers economic liberty as the main factor in economic growth and the best solution to social problems. Economic liberty would enable the government to liberate itself from the necessity of solving economic and social problems that should not fall within its purview. For instance, the fellow argues that a system based on an intergenerational contract, which underlies what is known as the “Bismarck model” for pension systems, is effective only in cases where the number of employed people is four times larger than the number of pensioners; this is clearly not the case in Georgia, which must develop a pension system that is more reliant on the market.

If you are interested in research about economic liberty in Georgia, you can get in touch with the scholar directly.

Methods of Political Corruption in Armenia

Part of the problem in coping with corruption is actually identifying the methods that corrupt officials use to besmirch their office. These techniques often vary from country to country and prove difficult for non-locals to fully understand.

To help clarify methods of corruption in Armenia, Masis Poghoyan analyzed the undemocratic techniques used during political elections and developed recommendations to promote free and transparent political campaigns and democratic elections in the country. He conducted this research using qualitative methods including expert interviews and focus groups.

From his research, Poghoyan developed a typology of the undemocratic methods used in Armenia, which included categories such as “usage of resources available to the candidates occupying administrative posts,” “application of pressure on voters,” “buying/bribing of voters,” “manipulation of public opinion” and “falsification of election results.” He gave a detailed explanation of each undemocratic technique and its subtypes and showed that these techniques were often combined.

Based on his typology, Poghoyan developed a set of recommendations for combating fraudulent election processes, which include the implementation of legislative reforms, public information campaigns, the provision of consultation/training to voters, and the improvement of the election commissions. The researcher's paper is available from the CRRC-Armenia Web site, however, we also encourage you to get in touch with the scholar directly. His email address is also available on the CRRC-Armenia Web site.

Cows in the Caucasus: overgrazing, underfed

How do we get a measure on what's happening with agriculture? It turns out that dairy farming provides powerful indicators. According to an IFC expert, the average Georgian cow yields 1000 liters of milk per year. By comparison, a wholesome Swedish cow can provide up to 9000 liters.

Intensive Western farming practices may not be a desirable model -- they require investment, expertise, and bring their own perverse results. Nor can practices be transplanted: under current circumstances, the expert said, a Holsten cow in Georgia simply would not survive.

But the status quo is not sustainable either. There are an estimated 700.000 cows in Georgia, severely overgrazing the pastures (together with the sheep, and overall numbers are growing). It is a classic example of the tragedy of the commons: a free resource for which there is unlimited appetite eventually gets exploited beyond carrying capacity. In the Caucasus overgrazing leads to desertification and erosion, while also destroying the habitat of other species.

If properly fed and kept, the average Georgian cow could provide 4000 liters. What is missing? Expertise is in short supply, and so much farming is subsistence-based that it is difficult to introduce better practices. Cows themselves count as capital, so farmers don't think much about increasing the productivity of individual cows, but rather want to have more of them. Larger dairy farms are very rare. Nor are the cows bred systematically. Investment would be required, but there is little capital. One of the problems is also that milk powder, subsidized by the European Union, apparently is smuggled in from Russia and makes dairy farming uncompetitive (many locally-made milk products actually are made from EU milk powder, rather than from local milk).

Land reform may be one solution, but there is little political appetite for it. In the meantime, various organizations are working with farmers to bring more expertise. Fortunately, it is easy to demonstrate the impact of better practices, so some farmers are catching on.

Households and Their Economic Condition

Ekaterine Pirtskhalava analyzed the incomes and perceptions of poverty and wealth in the three South Caucasus countries, based on the 2004 CRRC Data Initiative data. At the same time, she studied similarities and differences in the profile of poverty and reasons leading to it across the three countries.

The survey data elucidate the difficult economic conditions in which citizens of the three countries live. Those families that perceive themselves to be poor or extremely poor families compose the largest percentage of respondents in Georgia (48.7%), and a slightly smaller percentage (46.2%) in Armenia. The situation is much better in Azerbaijan, where only 37.9% consider their families poor and improvements over the past three years were noted by one third of respondents. The perception that the economic situation was worsening was more prevalent among Armenian households (26.2%) compared to Azerbaijani (13.9%) and Georgian households (3.6%). Georgian respondents were, by far, the most optimistic about their future. The study showed that 79.4% of Georgian respondents believed that their economic situation would improve. This may be partially attributed to the drastic political change of November, 2003.

Gender also clearly plays a role in the economic well-being of families. Of female-headed households, 54.4% (compared to 41.0% of male-headed households) described their households as poor. The average income of male-headed households was substantially higher at 167.8 dollars compared to female-headed households where the average income was only 115.5 dollars. Female-headed families were not only poorer than male-headed households, but they more often perceive their economic status as having worsened. According to the findings, 37.8% of female-headed households compared to 31.8% of male-headed ones pointed to the worsening of their economic condition during past three years. This research raises important questions about how to help single women raising children in the South Caucasus.

Minority Youth in Georgia

Nino Japaridze analyzed what is needed to integrate Azeri and Armenian youths into Georgian public life.

What are some of their main grievances? The focus groups (ethnic minorities and Georgians) in Tbilisi, Marneuli, Bolnisi and Akhaltsikhe showed that education is a major problem. Minorities don’t know Georgian, and therefore said that they were not able to participate in the national university entrance exams. As a consequence, they were not happy about the educational reform.

What else? Youths say they need employment. They also want places for entertainment, a space that is for them to socialize. Drug addiction was mentioned as a big problem.

Japaridze's recommendations are not new, but almost by default one sounds like a broken record when talking about minority integration:

1. give minority groups the feeling that grievances are being heard and addressed;
2. offer Georgian language classes;
3. provide training courses on rights, so that citizens know and can exercise their rights;
4. start regional healthcare reform;
5. facilitate investment, to reduce unemployment.

Additionally, Japaridze used the CRRC Data Initiative 2004 to analyze the attitude of South Caucasians toward certain groups of people (homosexuals, drug addicts, alcoholics, those with HIV, and people having tuberculosis). According to the data, Georgians are most tolerant, with Armenians second, followed by Azerbaijanis. Most respondents prefer marriage with the same nationalities, but regarding friendship a third of the respondents express no national preferences.

Details on our website.