Apologies | Site Maintenance

We have had some problems with the HTML in rendering paragraph breaks -- apologies if this has put multiple posts into your RSS feeds. The problem is that Blogger introduces some unusual breaks when we paste text into the online interface. We've tried cleaning all the HTML out, but this doesn't seem to be doing the trick quite yet, so we were experimenting. We hope that this is fixed now.

Who is Russia's Enemy? | Pew Research Center Data

You will have seen that we are much intrigued by the Pew Research Centers. They do surveys on global attitudes, and increasingly we are trying to make some of our questions cohere with their efforts, so that we have a more telling international comparison. (This isn't always easy, since replicating their question may go at the expense of continuity of our old questions.) 

Survey Snippet | WorldCup

Looking at the recent data from the Global Attitudes Project of the Pew Research Center, we came across a curious survey item. Who do people across the world think will win the World Cup?

Look at the table and you will see that you either think your own country will win -- or it is Brazil. And this is pretty consistent throughout the world. It's funny both how people project into their own countries, and then how beyond that the concept of soccer seems to be tied up with Brazil.

Even if you're not interested in soccer, it tells you something about how surveys work. Arguably, it is because Brazil stands out as the premier soccer country, because hardly anyone begrudges the Brazilians for winning, and because not a lot of other concepts travel along when you think about Brazil.

Does begrudging matter? It may well: it's the Argentinians and the Spaniards who were least likely in relative terms to put the Brazilians first. And it is the South Koreans and the Chinese who put Brazil first, suggesting that distance may play a role. 

Note that the Brazilians also have the highest opinions of themselves, followed by the Spanish, the Argentinians, and the Germans. (Maybe the tendency to believe that your own team will win is the same mechanism that contributes to countries sliding into war, as identification morphs into prediction of success.) 

At the same time it's curious how many people say they don't know or refused to answer. We know that in the United States soccer is not that popular. But what happened in Poland and Turkey? And in Pakistan? 

Once you look through the other survey results, you see that Pakistan had some of the highest rates of people who said they don't know, or refused to answer. (On soccer, the French were the most opinionated.) It's following these threads that makes reading survey results exciting. The Pew Research Centers have done an excellent job at making information available (their detailed report here), allowing us to trawl through their results. Future updates soon.

Greatest Threats Facing the World | Data from the 2009 CB & the Global Attitudes Survey

By Jesse Tatum and Vazha Burduli

From environmental catastrophe to violence, our world currently faces serious challenges with long-term consequences. In this context, what do people in the Caucasus consider to be the most acute problems?

Regarding the greatest threats to the world today, the spread of nuclear weapons and poverty are foremost on the minds of people in the South Caucasus, according to the 2009 CB.

The CB asked respondents to choose from a list of six dangers which one they believe poses the greatest threat to the world. In Georgia and Azerbaijan, the spread of nuclear weapons topped the list, with 44 percent and 36 percent, respectively. Meanwhile, in Armenia, poverty was chosen first, with 35 percent, just edging out the threat of the spread of nuclear weapons. Curiously, more people in Azerbaijan seemed to worry about AIDS and infectious diseases -- something still to look into.

The 47-Nation Pew Global Attitudes Survey, which also asks people which threats currently pose the greatest risk to our world, found that pollution and environmental problems are increasingly taking over the top spots as the most pressing world dangers. (Note that CRRC's question was phrased slightly differently, and offered another option.)

Compared with the Global Attitude Survey's results, people in the South Caucasus are less concerned with pollution and environmental problems than in other parts of the world, especially Sweden, Canada and East Asia (China, S. Korea and Japan).

The amount of data available between the two surveys is extensive indeed. We hope you will check out Pew's report, and then compare other figures with our CB in order to see where South Caucasian's world views fit into the international context. In the future, we plan to post more comparisons of this sort.

Language Learning in Georgia

In winter 2008, CRRC together with the American Councils conducted some research on the ways foreigners learn languages in Georgia. Hans Gutbrod and Malte Viefhues have recently published a paper in CRIA, analyzing the results and providing interesting insights into incentives to language learning and the importance of Georgian and Russian for foreigners in the country.

The data indicates that while Georgian is very important for living in Georgia, Russian is more useful in a professional context. This could explain why, on average, the respondents – many of whom have worked in different CIS countries – have a better level in Russian than in Georgian. As these languages serve in different domains, knowing one did not keep the respondents from learning the other: 87 percent of the respondents with Russian skills know some Georgian as well.

To read the full paper, visit the CRIA's website.

Demographic statistics in Georgia | Results from international research

On June 1, the Georgian Center for Population Research (GCPR) and the French National Institute for Demographic Studies (INED), with support from the French Embassy in Georgia, held a seminar on mortality- and fertility-related issues in Georgia. Irina Badurashvili from GCPR and France Meslé, Jacques Vallin and Geraldine Duthé from INED presented the results of their collaborative research dealing with mortality trends and increased male sex ratio at birth.

With the collapse of the Soviet Union and ensuing violent conflicts, Georgia experienced an increase in migration and a deterioration of the civil registration system. Consequently, yearly population counts produced by the Georgian Department for Statistics were considered unreliable and independent experts started producing their own estimates of demographic indicators based on data from different sources (e.g. the Civil Register, the Ministry of Health and data collected through surveys).

GCPR has corrected official infant mortality rates based on the Georgian Reproductive and Health Surveys of 1999 and 2005, and corrected official statistics on deaths and populations over the last years. As a result, the life expectancy at birth in Georgia is estimated to be 68.8 years for males and 76.7 years for females for 2006, which is somewhat lower than certified Georgian statistics.

Corrected life expectancy trends at birth allows for reliable comparisons between the Caucasus and other countries. According to GCPR’s research, both Georgia and Armenia show a positive life expectancy trend in comparison with for example Russia, but a negative trend in comparison with other European countries. Comparisons of population figures between Georgia and most European and post-Soviet countries can be found on INED’s website.

Even though the quality of statistical data in Georgia has improved significantly over the years, official numbers for sex ratio at birth and estimates of infant deaths still remain in doubt. You can read more about sex ratios in Georgia here on the blog and on GCPR’s website.

On GCPR’s website you will also find information about research projects and a large amount of data on demographics in Georgia.

Election Maps | Who Did Your Neighbors Vote For?

Our GIS Analyst, Dato Sichinava, is now loading preliminary results onto our election maps. If you want to compare regional distribution of results, you can do so very quickly through the portal. Below you see the votes for the Alliance throughout Georgia. Note that on the portal, you can grab the handle (see the arrow) and shift it back and forth.

We also have the results for the United National Movement, and the Christian Democrats. More stuff will come online soon, and we are about to make the maps bigger, so that you can play better -- check it out here. 


We also have preliminary results for the precinct level in Tbilisi. Note that this is not yet available on the portal. But it shows a fascinating contrast of support. 

Unsurprisingly, Vake is among the strongest supporters of Alasania. Parties should find this data very useful to target their campaigning in the future.

(We would like to thank the National Democratic Institute and the Swedish International Development Agency, Sida, for their support in generating this data, and making it broadly available.)

SMS Survey | First Insights

So! Our SMS project worked quite well. Critical to its success was the systematic error control early in the day. Our interviewers still made a fair number of mistakes in the early morning. It was the first time we introduced this system, and transferring the number correctly to SMS requires significant attention to detail.

Whenever the system flagged mistakes, we called the interviewer to check, and implicitly to remind them to get it right the next time. The entire CRRC team took turns, with two colleagues in each shift, in addition to the other people in our E-Day room (the cheerful morning group pictured above). Note that we chose codes that made a transposition error unlikely. Since "Yes" was 1, and "No" was 3, you'd have to go across the keyboard to get that wrong. 

The chart shows the error rates. In the morning, we quickly manage to reduce the errors by almost half in the first hour. In the afternoon, some exhaustion sets in, but the interviewers recover in the early evening. In the last hour, however, error rates almost quadruple within an hour -- our interviewers are well and truly tired. 

More detail on this to follow. We will also enter the paper questionnaires, and then compare with the SMS results, to see whether there actually were any transposition errors. For us, this was an exciting day. 

Testing Mobile Innovation in our Surveys

In running an election-day survey (not an exit poll, which we are not so enthused about), we have decided to attempt something new: we are now aggregating the information via SMS. This gives us the information in real time, and the data will be available for immediate analysis the moment the last SMS has been received. On the image below you see how this looks on our screen. Interviewers send in a code response where letters (A, D, G, and so on) signify the question number, and the numbers are the response chosen. So the letter M, for example, stands for the question "Did you, or anyone from your family, have any problems with the voter’s list?", and "3" stands for "no".

To be sure, this only works with short questionnaires, and has forced some compromises in the answer options, which we have to keep simple. However, it is an interesting step forward. While there are solutions with Personal Digital Assistants, these are expensive and would make our interviewers walk around with expensive, possible distracting gadgets. So SMS seems a good alternative for now. Implementing this project ended up being a lot of work: creating a Virtual Private Network connection with the main mobile providers (Magti and Geocell both were helpful), programming the software to disaggregate messages, writing manuals, training interviewers, testing whether it all works, building redudancies so that it becomes a robust system, and creating a system for checking errors. Errors are flagged automatically in red (see below), and we call back interviewers to correct. 

We are also trying this SMS technology with the election monitors of ISFED, since this offers a rapid way of aggregating their results. At this point this is run as a pilot, to test the technology, and how it is adopted by monitors. Parts of the software have been provided by the National Democratic Institute, and the Open Society Foundation Georgia has generously funded this effort. A lot of effort has been invested by the entire team, but especially by Irakli Naskidashvili, Tbilisi's IT wizard, and Jonne Catshoek, our Crowdsourcing Project Manager.

This will all happen today, and we will let you know how it worked, and where we want to take these applications in the future. One of the great things at CRRC is that we have this chance to goof around and try new things. 

Election Day Portal

To track what is going on during election day, Georgia's leading monitoring organizations, the International Society for Fair Elections and Democracy (ISFED), the Georgian Young Lawyers Association (GYLA) and Transparency International (TI) have created a joint portal, VoteGeorgia.ge. 

This will join the feeds from the three organizations, while also giving you a map with region-specific information. The website has been designed by TI. NDI provided critical coordination, as well as access to survey results. CRRC is providing the maps for the effort. We work with GeoCommons to provide the data on the maps. Below a snapshot of a pre-election complaint. 

Note that the maps take time to load. They are not as fast and snazzy as Flash-based maps would be, since they get populated by data that is continuously updated, during the election day and after. Here the technology is still catching up -- we are also using this as an exercise to learn how best to make mapped information available over the Internet. 


We know there are some snags -- it does not work too well with the Safari browser, for example. Further suggestions gratefully received in the comments. This is a pilot, and we want to use this opportunity to get everything right in the future. 


On CRRC's side, David Sichinava, our GIS and Database Analyst, and Jonne Catshoek, our Crowdsourcing Project Manager, were the ones who made this happen. This work has been supported generously  by the Open Society Foundation Georgia. 

Levels of trust in the banks in Georgia: Changes over the past two years

Banking is one of the fastest-growing sectors of the Georgian economy, a point which was underlined in a 2009 report from the Ministry of Economic Development of Georgia. But does this development mean that society views banks as trustworthy partners for households (HH) in Georgia?

In fact, from 2008 to 2009, the overall level of trust in banks has decreased in Georgia, especially for the HHs who say they have savings and for those who say they have debts. This could in part be due to the global financial crisis which, according to the European Bank for Reconstruction and Development’s (EBRD) 2010 country strategy report, significantly affected the Georgian economy. The crisis revealed the financial sector’s weaknesses around the world and led to widespread doubt concerning the reliability of banks.

Households & Savings

For the small number of HHs who say they have savings (9 percent in 2008, 6 percent in 2009), the level of trust in banks has significantly decreased. According to the 2008 Caucasus Barometer (CB, previously referred to as the “Data Initiative”), combining the “fully trust” and “somewhat trust” categories shows that 60 percent of HHs with savings said they trusted banks. In 2009, however, this figure fell to 49 percent. As a place to put one’s money and keep it safe, apparently, fewer people view banks in a positive light.

Even for HHs without savings – the majority of the respondents – the level of trust in banks has fallen: in 2008, 53 percent of them had said that they trusted banks, whereas only 42 percent said the same in 2009 (see Figure 1). At the same time, the number of those saying specifically they distrust banks remained the same, hinting at a high degree of uncertainty with regard to banks among the population.



Households & Debts

The level of trust in banks among HHs who reported that they have debts saw an even larger drop. Although these could be debts either to banks or to private persons, without interest, this drop could be linked to the fact that it has become increasingly difficult for HHs to take out loans to help alleviate any debts they have. Overall, 43 percent (2008) and 42 percent (2009) of the HHs claimed to be indebted. Of these HHs, 59 percent said that they trusted banks in 2008, though only 45 percent claimed the same in 2009.

On the other hand, the level of trust remained broadly similar in those HHs who say they do not have debts. Forty-nine percent of them had said that they trusted banks in 2008, while 42 percent said the same in 2009.




Conclusion

The 2008 Caucasus Barometer was carried out from the second half of October to the middle of November, and these figures offer a snapshot of how the global financial crisis may have taken its toll on HHs’ trust in banks in Georgia. Still, there are certainly other factors which play a role, and further research and commentary are needed. We invite you to access the 2008 CB dataset to make your own comparisons here.

Caucasus Barometer | A New Name for the CRRC's Data Initiative

The CRRC’s annual Data Initiative Survey will be renamed into the Caucasus Barometer starting from 2010. At CRRC, we think that the new name better reflects the essence of the survey and is more understandable for the general public and the journalists.

The Data Initiative was first launched in 2004. Since 2007, a representative sample of approximately 2,000 respondents is interviewed annually in each of the counties. They answer core questions about household composition, social and economic situation of households, employment status, assessments of social and political situation in the countries, as well as respondents’ perceptions about direction of life. In addition, we include questions about media, health, crime, and other topical issues.

The change of the name, however, will not cause any changes in the way the survey is carried out – it is still an annual survey conducted every fall in all countries of the South Caucasus, employing the same methodology and the same survey instrument. Its major goal is to get reliable longitudinal empirical data to understand various aspects of the processes of social transformation in Armenia, Azerbaijan, and Georgia. We are committed to ensure the highest possible scientific quality through all the steps of survey implementation.

The data and the survey documentation are open to all interested researchers and represent a unique tool for further quantitative analysis. You can find more information about the Data Initiative/Caucasus Barometer on our website.

The Level of Trust in Government Institutions in Georgia: The Dynamics of the Past Three Years

During the last two decades, Georgia has created new government institutions designed to serve as the tools and safeguards of democracy. But do Georgians believe that these institutions live up to their mission statements? How much do Georgians trust government institutions, and which factors influence the public’s attitudes toward them?

A look at the data from the Data Initiative (DI) over the last three years (2007–2009) shows how the level of trust in government institutions may be related to the political crises and external threats to the country, as well as to the personalities representing these institutions.

For example, the public’s trust in President Saakashvili has experienced a significant increase, especially after the 2008 August war. Combining the “fully trust” and “somewhat trust” categories shows that the percentage of the respondents who trusted the President rose from 32 percent in 2007 to 51 percent in 2008 and remained nearly the same in 2009. Moreover, combining the “somewhat distrust” and “fully distrust” categories reveals that the number of those who distrusted him dropped from 37 percent in 2007 to 18 percent in 2009 (see Figure 1). Such changes could perhaps be linked, firstly, to the events that led to the November 2007 political crisis and, secondly, to the 2008 war and the rise of external threats to the country in the subsequent years. (The DI surveys were conducted in a period of around two weeks, between September and November of the respective years.)

Figure 1: Trust in the President.

Second, the level of trust in the Ombudsman was the highest when this institution was headed by a very popular personality, Sozar Subari (see, for example, Bahrampour, “Georgia’s Counterweight to Power,” Washington Post, July 24, 2009). The level of trust in the Ombudsman rose from 36 percent in 2007 to 58 percent in 2008, while the percentage of those who distrusted this institution fell to seven percent.

When Subari was replaced in September 2009, however, the public’s trust in the Ombudsman’s institution took a reverse turn, dropping by almost a third. While the level of distrust in this institution remained the same, the number of the respondents who trusted the Ombudsman dropped from 58 percent to 40 percent (see Figure 2).

Figure 2: Trust in the Ombudsman.

Unlike the President and the Ombudsman, the levels of trust in the Parliament and the executive government (the Prime Minister and ministers) were lower, perhaps attributable to the lower degree to which most MPs and cabinet members are perceived to be politically independent figures. The level of trust in the Parliament, for example, rose significantly from 19 percent in 2007 to 34 percent in 2008 and remained the same in 2009. Meanwhile, the number of the respondents who distrusted the Parliament dropped from 44 percent in 2007 to 26 percent in 2009 (see Figure 3). The figures in each category of trust in the executive government were nearly the same as that of the Parliament.

Figure: 3: Trust in the Parliament.

Overall, these snapshots show that the public’s trust in government institutions was the lowest in 2007, which coincides with an acute political crisis in Georgia. However, after the 2008 war, the levels of trust grew and, with the exception of the Ombudsman’s institution, remained relatively high compared with the previous years.

You can access the DI dataset here to analyze the public’s trust in other institutions and make comparisons with Armenia and Azerbaijan.

South Ossetia: Enhancing the Public Debate

On 15 April, in front of a packed house at the Heinrich Böll Foundation in Tbilisi, Ron Asmus led a public debate on his new book, A Little War that Shook the World. The evening featured the kind of discussion one would expect: the strategic interests of Russia, the US and Europe, Georgia’s path to democracy and the international mechanisms and organizations that failed to prevent the 2008 August war in South Ossetia.

I will not go into the actual details of the debate, since there was nothing people interested in the Caucasus have not heard before. Instead, I want to use it as an opportunity to illustrate how seemingly smaller-scale research can enhance public debate. Some of the CRRC’s recent projects on the August war and its aftermath, for example, might help to go beyond the usual geostrategic–political rhetoric bandied about.

On 9-10 April 2010 the CRRC, in collaboration with Saferworld, held five focus groups with participants from villages near the administrative boundary line (ABL) with South Ossetia. Focus groups (FG) are a research tool that can help to shed light on the public’s opinions on specific topics. They complement other tools like surveys, where issues and opinions are quantified, by providing insight into how those opinions come into being and the reasons people adopt them.

In the discussions that evolved around questions about community safety and citizens’ understandings of conflict, it quickly became apparent that those who are most affected by the war have a genuine interest in solving the underlying conflict. Many of the FG participants pointed out that mixed Georgian–Ossetian ties go back centuries, and their lives were drastically altered when the ABL between Georgia and South Ossetia was closed. No longer are people allowed to travel freely to see friends or family or to engage in cross-border trade. According to the participants, these severe changes increase the economic and psychological trauma brought about by the war.

It is these everyday concerns of the people most affected that the CRRC wants to reveal to the public. Debates on geostrategic issues, such as the one held by Asmus last week, are important for understanding how the war broke out. However, they generate few concrete recommendations for resolving the problems already existent in the war’s aftermath – problems which are acute for the communities in the areas surrounding South Ossetia.

By giving a voice to the people in the area, the CRRC and Saferworld hope to help refocus public discourse on the most important issue when it comes to geostrategy: making the lives of people safe and peaceful.

The report is not quite public yet, but to be notified when it becomes available, please contact Malte (malte.viefhues@crrccenters.org) or Jesse (jesse.tatum@crrccenters.org).

Abortion rates in the South Caucasus among the highest in the world

Last month we wrote a blog post on gender imbalance in the South Caucasus showing that there is an abnormal high number of boys being born in the region. Several comments were posted on the blog site that brought attention to abortion rates in Armenia, Azerbaijan and Georgia.

Prior to the collapse of the Soviet Union, induced abortion was used as a means of fertility control due to the lack of effective contraception methods. According to the Alan Guttmacher Institute and the World Health Organization, the number of induced abortions worldwide started decreasing in the mid 1990s and the most dramatic decline occurred in Eastern Europe. In the South Caucasus, however, abortion rates remain high.

Data show that the South Caucasus countries have among the highest abortion rates in the world. The official number of induced abortions is not extremely high but this statistics should also not be considered completely reliable due to underreporting. According to UN data from 2004-2005 there are nine abortions per 1 000 women of reproductive age (15-49 years) in Azerbaijan, 13.9 Armenia and 19.1 in Georgia. This can be compared to for example 1.3 in Austria and 5.7 in Croatia. The most alarming numbers can be found in Russia though with more than 50 abortions per 1 000 women of reproductive age. Nevertheless, data from other sources present higher abortion rates for the South Caucasus. The Reproductive Health Surveys from the Centers for Disease Control and Prevention, and a Demographic Health Survey in Armenia (both from 2005) look at total abortion rates, which is the expected average number of abortion a woman will have during her reproductive years. The total abortion rate is 1.8 abortions per woman in Armenia, 3.2 in Azerbaijan and 3.7 in Georgia. Thereby the abortion rates in Georgia are the highest in the former Soviet Union and are estimated to be among the highest in the world.

It is being argued that the reason for the high abortion rates in the South Caucasus is the lack of modern contraception. The prevalence of modern contraception methods (the percentage of women of reproductive age, married or in union, currently using contraception) was, according to UN statistics, 13 percent in Azerbaijan in 2006, which is among the lowest of the former Soviet Union countries and below most other countries in the world. As a point of comparison, the prevalence in the U.S. was 68 percent in 2002.

High abortion rates have consequences both for the individual woman and for the society as a whole. Abortions bring health risks, especially in countries such as Georgia where the government’s spending on health care is low and most people do not have access to adequate health care. Some abortions take place outside of medical facilities, leading to complications and in some cases even deaths. Even in cases of legal abortions there is a risk of post-abortion medical problems when the quality of medical service is low. According to a survey carried out by the Open Society Institute’s Network Public Health Programs, half of all Georgian women consider abortion a health risk. Moreover, according to data from the UN, the fertility rates in the South Caucasus are among the lowest in the world. In Azerbaijan, the fertility rate is 1.82, in Georgia 1.41 and in Armenia 1.39 (the world average is 2.55). It means for example that the Georgian population is expected to decrease from 4.2 million in 2010 to 3.3 million in 2050. You can read more about the implications of low fertility rates on the UN Population Division website.

To return to the previous blog post on gender imbalance, the societies’ preference for boys is nothing new but the practice of selective induced abortion has put this preference into practice. The distorted sex ratios in the South Caucasus question the explanation that high abortion rates are a matter of lack of access to contraception methods. We have found little up-to-date information on this and would be grateful if anyone can post links with references to relevant research on abortion in the South Caucasus.

Research on Education of IDP Children in Georgia

On 29 March the Norwegian Refugee Council (NRC) held a presentation in Tbilisi of the research report “Not Displaced, Out-of-Place – Education of IDP children in Georgia”. The research project examines the academic performance of children in so-called Abkhaz public IDP schools in comparison with children in local schools. The research was conducted in the 13 remaining Abkhaz public schools for IDPs that were established in the early 1990s, in the newly established Tserovani School for children displaced from South Ossetia, and in local schools.

The main finding from the research shows that IDP children are disadvantaged in the education system. It has, however, more to do with their economic situation than their IDP status. Pupils from Abkhaz public schools do relatively well in some science subjects, but worse in others. A consequence is that the amount of pupils from Abkhaz public schools that enter higher education is lower than the amount of pupils from local schools.

For different reasons it has long been the case that many pupils use private tutors to be better prepared for the national entry exams (NEE). Private tutors are considered the primary factor that determines success in the NEEs. As IDP families are generally poorer than non-IDP families, they are less able to afford private tutors, leaving the pupils less well-prepared for the NEE. Moreover, research shows that performance is strongly related to conditions in the schools and at home. For many pupils in Abkhaz public school, neither the schools nor the homes provide an environment conducive to studying. The report shows that Abkhaz public schools are in worse state than local schools, and in some cases even dangerous.

As a positive finding, the research shows that IDPs are discriminated against to a lesser extent today than a couple of years ago. It differs between the regions, though: the situation is best in Tbilisi, whilst in other places discrimination against IDP children is significant. As a result, parents move their children from local schools to Abkhaz public schools. It raises the questions whether Abkhaz public schools should be closed down in order to avoid a segregated system, or if they should remain as a way of ensuring that IDP children get to go to school in an environment free of discrimination.

The audience agreed that the most preferable solution is to improve the standard in the Abkhaz public schools, thus also attracting non-IDPs. As a summarizing remark, the audience also called for the Georgian government to step up and spend more money on education. According to statistics from UNESCO, Georgia is one of the former Soviet countries that spends smallest part of the budget on education. In 2007 Georgia spent 2.7 percent of the GDP on education, in comparison to for example 6.6 percent in Kyrgyzstan and 5.3 percent in Ukraine.

Read more about education of IDP children on NRC Georgia's website. You will also find several articles on education in Georgia here on the blog site.

2010 Big Mac Index | Increased differences between Baku and Tbilisi

In 2007 we wrote a blog post on the Big Mac Index, an index published by The Economist as an informal way of measuring purchasing power parity (PPP). The idea is that a dollar should buy you the same amount in all countries, and as a Big Mac is assumed to be produced in the same way everywhere it can serve as a point of comparison. You can thus determine how far off the exchange rate is between countries, in terms of citizens’ ability to buy the same “basket” of goods and services (in this case a Big Mac hamburger).

Back in 2007 a Big Mac cost 4.60 GEL (lari) in Georgia (which at the time was equal to 2.60 USD) and 2.50 AZN (amat) in Azerbaijan (2.73 USD). The price was thus similar in the two countries, and, according to the 2006 Big Mac Index, comparable to Hungary and Mexico. The same year, one had to pay 3.15 USD for the burger in the U.S. The only former Soviet country on The Economist’s list was Russia, and it placed much further down with the cost for a Big Mac equaling 1.6 USD.

Three years on a striking difference in price is now apparent. McDonalds is still not established in Armenia but a comparison can be made between Azerbaijan and Georgia and the rest of the world. As of March 2010, the price for a Big Mac in Georgia is 5.50 GEL, which according to the current exchange rate equals 3.2 USD. The price has therefore risen by almost 20 percent but at the same time the USD has gotten weaker in comparison with the GEL. According to the 2010 index, Georgia places between South Korea and Britain, relatively close to the U.S. at 3.58 USD. Without making any attempts to evaluate the strength of the lari in comparison to the USD, the Big Mac Index shows that the Georgian currency is somewhat undervalued.

In Azerbaijan, by contrast, the price for a Big Mac today is as much as 3.2 AZN, which equals 3.98 USD, a 28 percent increase from 2007. The huge increase in price means that a Big Mac in Azerbaijan is now more expensive than in the U.S., placing Azerbaijan on the same place as Australia, according to the index, indicating that the amat went from being slightly undervalued in comparison with the USD in 2007 to being overvalued today.

	2010	2006
Switzerland	6.16	4.93
Euro Area	4.62	3.51
Canada	4.06	3.01
Azerbaijan	3.98	2.73
Australia	3.98	2.44
Hungary	3.85	2.71
Turkey	3.71	3.07
United States	3.58	3.15
Japan	3.54	2.19
Britain	3.48	3.32
Georgia	3.2	2.6
South Korea	3	2.56
Poland	2.86	2.09
Mexico	2.56	2.66
South Africa	2.44	2.29
Russia	2.39	1.6
Egypt	2.37	1.61
Taiwan	2.36	2.35
Indonesia	2.28	1.54
Thailand	2.16	1.51
Malaysia	2.12	1.47
China	1.83	1.3

*Note that the numbers for Azerbaijan and Georgia are from 2007.

The price difference between Baku and Tbilisi was only 13 cents in 2007 but today is as much as 1.03 USD. Differences between the two countries have thus grown immensely in only three years. Russia is still in the lower part of the list with the cost for Big Mac being 2.34 USD. China is at the very last place of The Economist’s rating, indicating that the RMB (yuang) is greatly undervalued in comparison with the USD.

Comparing the currencies in the South Caucasus with the starting point in a McDonalds product might not be suitable for several reasons (e.g. there are few McDonalds restaurants in the Caucasus compared to other countries). The International School of Economics in Tbilisi (ISET) has recognized this and created their own index: the “Khachapuri Index”. It is based on the Big Mac Index but with the main purpose to measure inflation. Have a look at here.

Comments and comparisons to other purchasing power indices are welcome!