South Caucasus and Central Asia - The Belt and Road Initiative : Georgia Country Case Study
Georgia is the only country in the CAC region that can access markets around the world through its own seaports and thus less dependent on China’s BRI overland corridors for trade, investment and growth. Nevertheless, the Georgian government is inv...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/701241593499467340/South-Caucasus-and-Central-Asia-The-Belt-and-Road-Initiative-Georgia-Country-Case-Study http://hdl.handle.net/10986/34122 |
| Summary: | Georgia is the only country in the CAC
region that can access markets around the world through its
own seaports and thus less dependent on China’s BRI overland
corridors for trade, investment and growth. Nevertheless,
the Georgian government is investing in the one BRI corridor
China, Europe route that passes through the Caucuses,
partly because it provides a faster route to China. The
potential for larger volume of Chinese transit cargo on this
route may also be attractive given its desire to become a
major transit and trading hub in the region. With greater
people-to-people contact between China and Georgia, there
could also be greater access to China’s outward FDI under
the BRI that would bring with it capital, better technology
as well as managerial and marketing know-how. Chinese
private firms are already investing in Tbilisi, Kutaisi and
other areas in the country. Georgia’s liberal investment and
trade regime, especially its free trade agreements with the
European Union (EU), China, Turkey, and its location, make
it eminently suited for such FDI inflows, including
participation in China-centric Global Value Chains (GVCs).
This note assesses the potential impact of BRI over
connectivity and the Georgian economy. It looks at how, if
fully implemented globally, the BRI is expected to achieve
better transport connections and greater economic
integration of participating BRI countries, discusses
improvements in Georgia’s cross-border transport,
electricity and ICT infrastructure to-date, and the
potential impact of the completion of BRI transport projects
on lowering Georgia’s shipment time. It further looks at the
likely economic impact of BRI reductions in shipment time on
exports, FDI and GDP, the within-country regional
distribution of that impact and how complementary polices
can enhance the positive impact, mitigate risks and reduce
regional inequity. Finally, it also examines the fiscal risk
of scaling-up investment in BRI projects in the coming years
without undermining medium-term debt sustainability. |
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