journal N3 2025

Expanded Summary

Georgia is a post-communist country that simultaneously aspires to join the European Union. To analyze its economic situation alongside that of other post-communist or EU member states, it is essential to compare the economic growth of these countries with one another. However, we cannot directly compare actual economic growth figures because the economies differ significantly. To make meaningful comparisons, it is necessary to evaluate these economies against a common benchmark.

For this purpose, we selected a benchmark country and compared the economic indicators of other countries relative to it. Our research was conducted using both actual and forecasted data from the IMF. Since the study revealed Ireland\'s financial advantage over other countries, we chose Ireland as the benchmark and compared the economic indicators of other countries to it. As a result, we found that the Irish economy was 6.26 times larger than the Georgian economy in 2022, meaning it was 6.26 times more challenging for Ireland to achieve economic growth equivalent to Georgia\'s. This implies that Georgia\'s 10.96% economic growth was equivalent to a 1.75% growth in Ireland\'s economy (calculated as 10.96 ÷ 6.26). Therefore, to assert categorically that Georgia\'s economic growth (10.96%) exceeded Ireland\'s economic growth (9.43%), as it might appear at first glance, is incorrect. When adjusted for economic size, Georgia\'s economic growth does not surpass Ireland\'s but rather lags by a factor of 5.39 (calculated as 9.43 ÷ 1.75). After excluding the "Catch-Up Effect," we derive the adjusted economic growth from the actual growth, which we call the "hypothetical economic growth." Using this method, we calculated the hypothetical economic growth for each country from 2001 to 2030, both annually and as average values over the last three decades. These were then compared across countries. Due to the detailed nature of the data tables, the following analysis focuses on the average indicators.

Georgia\'s average actual economic growth rate (5.71%) surpasses that of all EU member states, lagging behind only a few post-communist developing countries: Tajikistan, Turkmenistan, Azerbaijan, Uzbekistan, and Armenia. However, when considering the adjusted economic growth rate (0.95%), Georgia falls behind several developing and developed countries, including benchmark Ireland. Moreover, somewhat surprisingly, Georgia—along with nine other post-communist countries (Albania, Belarus, Bulgaria, Moldova, Armenia, Tajikistan, Uzbekistan, Ukraine, and Kyrgyzstan)—outperforms nine EU member states (Bulgaria, Germany, Spain, Italy, Portugal, Greece, France, Finland, and Croatia) in terms of adjusted economic growth rate.

It should also be noted that after adopting Ireland as the benchmark country, the economic growth rates of all countries except Luxembourg decreased—some slightly, others substantially—including Georgia\'s average growth, which dropped from 5.71% to 0.95%, a decrease by about six times. To clearly illustrate these changes, it is preferable to present the table results in diagram form, which vividly reveals the magnitude of the differences between each country\'s actual economic growth and the adjusted—"hypothetical"—economic growth at a glance.

This study makes it clear that before prioritizing a country\'s high actual economic growth over others, it is prudent to consider the "Catch-Up Effect" and the implications of excluding it. This caution is especially relevant for developing countries, whose economic growth often appears strikingly high, creating the illusion that their growth surpasses that of countries with larger economies. For countries with developing economies, production development is essential. The prerequisite for this is the revitalization of various sectors and industries, which generates new opportunities for job seekers. In this process, the steps taken to develop production are crucial—not only in terms of technological progress and effective economic policies but also regarding the preparedness of a skilled workforce capable of thriving in high-tech industries. Therefore, it can be said that a defining structural characteristic of the modern economy is its function in knowledge production.