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Georgia Human Development Report 2008 The Reforms and Beyond Published for UNDP Georgia Copyright © 2008 United Nations Development Programme 9 Eristavi Street, 0179 Tbilisi, Georgia All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission ISBN 978-9941-0-0571-8 Editing: Caitlin Ryan Cover and layout: Dimitri Modrekelize, Contour Ltd. Printing: Calamus Graphics Studio Executive summary Team for the preparation of Georgia Human Development Report 2008 Project coordinator Viktor Baramia Lead author George Welton Co-authors Tinatin Zurabishvili and Natalia Nozadze Research assistant George Kiziria Authors of background papers Givi Kutidze, Eka Avaliani, Lasha Gotsiridze, Giorgi Berulava, Tato Urjumelashvili, Shorena Abesadze, Tinatin Zurabishvili, Vakhtang Megrelishvili, Keti Kinkladze, Nino Kizikurashvili, Giorgi Meladze. Human development advisors Andrey Ivanov and Shahrbanou Tadjbakhsh Indicators computation: Nodar Kapanadze and Mihail Peleah Georgia Human Development Report 2008 Forewords The UNDP National Human Development However, as we enter the second phase of the Report comes at an important time in Georgia’s reforms we need to be forward-looking. The relentless pursuit of enhanced economic devel- Report reminds us that the objective of these opment for all. The beginning of this administra- reforms has always been Human Development tion’s second term is an ideal time for reflection in the fullest sense. We do not only seek to pro- on what we have achieved and what we still need duce a wealthy society. We want our society to be to do. As a long-term supporter of Georgian re- democratic and participatory, educated, healthy forms, UNDP is ideally placed to engage with us and secure. The first round of reforms have taken in this reflection, combining insider knowledge us on the path towards these goals and provided and outsider objectivity. the general framework for future improvements, which can only be brought about if we continue Any discussion about how to proceed should with our unwavering commitment to further en- also include a wide range of opinions, local and hance the economic liberties in Georgia and its international, from inside the government and openness to foreign investment. from wider society. The National Human De- velopment Report has helped incorporate these The first task of the new Government is to ensure voices to offer a broad-ranging and independent that every part of Georgian society feels the full assessment that should be invaluable in framing benefits of what we have achieved and has the the policy discussions. opportunity to realize his or her full potential. We have already initiated targeted social assist- The title of the Report is indicative. It is not just ance, higher pensions as well as a basic package of a testimony to the remarkable reforms that have universal healthcare provisions. This has offered taken place in Georgia over the last four and a protections for the most vulnerable and is alle- half years. Even more important, it looks at the viating extreme poverty. While we will expand reform process in a long-term perspective, be- these programs in the next few years, broaden- yond an account of what has been done. It is also ing of the opportunities created by the reforms a timely reminder of our shortcomings and the needs to go further than social assistance. work we still have to do, of the inevitable gaps and the possible ways of addressing them. The Human Development Report, therefore, of- fers useful insights as we reflect on where to go In reflecting on the past, the Report is a testi- from here. Since the Rose Revolution, Georgia mony to our many successes. Since the Rose has benefitted enormously from its close collab- Revolution the Government finances have been oration with the international community. The secured through a consistently supply-side ap- Human Development Report is an extension of proach resulting in low, flat taxes which we strive that collaboration. We hope it will encourage to reduce further and restrictions on doing busi- an inclusive policy debate on how we build on ness have been removed. As a result, the Govern- current successes to create a just, prosperous and ment has been able to repair roads, irrigation, secure future for everyone in the country. electricity and water supply, to improve the in- frastructure of education and healthcare and to attract investment that has grown the economy and created jobs. The people are freed from the blight of corruption. They can rely on the police to protect their security and deal with Govern- Vladimer Gurgenidze ments without paying bribes. Prime Minister Georgia Human Development Report 2008 No one who has lived in Georgia since 2003 can Georgia has come a long way in a short time. fail to notice the scale of the reforms introduced The first phase of the reforms showed that the since the Rose Revolution. Every part of the Georgian people have both vision and determi- country has been affected and, four and a half nation. By encouraging debate on the human years later, the changes have been impressive. dimensions of the reforms, we hope to assist The legal, institutional and physical infrastruc- Georgian society in addressing the challenges ture of the country as well as the environment to human development both by improving ar- for doing business have been transformed. eas which require further attention, as well as building upon the successes already made. This National Human Development Report looks at the way the reforms have affected or- The date of publication of this report is timely. dinary Georgians and pays particular attention Parliamentary elections in May 2008 marked to their impact on economically vulnerable the end of the latest election cycle and the be- groups. Much has been written about the posi- ginning of a new Government and Parliament. tive impact of the reforms in Georgia on the With the country moving to the second phase business climate and macroeconomic indica- of the reforms, we believe it is the right time to tors. While these are important advances, eco- reflect on the achievements and challenges of nomic growth alone does not necessarily lead the first phase, and to fine-tune the direction of to human development. To achieve this wider new and emerging reforms. These opportuni- goal, growth needs to be equitably distributed ties are rare and UNDP is well placed to be a and sustainable, and it needs to be used for part of the process. creating opportunities for participation and greater security for all. The Government of Georgia has already recog- nized that more needs to be done in order for the reforms to improve the lives of all sectors of the population. Access to healthcare, and in- creased job opportunites in particular, continue Robert D. Watkins to be the major issues of concern. In addition to Resident Representative the promotion of macro-economic growth and United Nations Development Programme attempts to improve the efficiency with which social services are provided, the Government has tried to tackle these problems by increasing social payments, and has put in place targeted social assistance programmes. Recognising that still more can be done, this report was conceived with a view to assist the Government in developing policy focusing on the human dimension. The report results from a series of discussions held with the Govern- ment, civil society groups, international and lo- cal NGOs, and a wide range of local experts. We therefore believe that the report’s conclusions are inclusive, balanced and forward-looking. Georgia Human Development Report 2008 Acknowledgement This report could not have been prepared without the generous contribution of a large team of participants. UNDP wants to particularly thank the lead author of George Welton and his team who worked very hard to produce the final report. We would also like to thank UNDP Bratislava office for their inputs, particularly Andrey Ivanov and Mihail Peleah. We thank all those individuals and organiza- tions involved directly or indirectly in providing guidance, support and inputs to the report. Advisory Committee ment of Statistics); the Ministry of Environ- The report benefited from the guidance and mental Protection and Natural Resources; the support of an advisory committee that includ- Ministry of Finance; the Ministry of Education ed Maka Antidze, Kakha Bendukhidze, Giorgi and Science and the Ministry of Labor Health Chirakadze, Giorgi Chkheidze, Per Eklund, and Social Protection. Vladimer Gurgenidze, Gilbert Hie, Ani Kata- midze, Davit Kereselidze, Robert Lidell, Davit Losaberidze, Zaza Meishvili, Cedric Retail- Consultations leau, Ekaterine Sharashidze, Van Roy South- The HDR formulation process has gained worth, Sozar Subari, Giorgi Tavadze, Ekater- greatly from the advice of Shahrbanou Tadjba- ine Tkeshelashvili, Levan Tsutskiridze, Robert khsh, Pierre Garello, Vakhtang Lejava, Tamara Watkins, and Robert Wilson. Kovziridze, Andrey Ivanov, Mihail Peleah and Nato Alhazishvili, and Section Reviewers Gio- vanna Barberis, Robert Christensen, Kendra Contributors Gregson, Nino Kutateladze and Davit Tvala- Background papers were prepared by Shorena beishvili. Abesadze, Eka Avaliani, Irakli Berekashvili, Participants in the different working Giorgi Berulava, Lasha Gotsiridze, Keti Kin- groups: Ana Kvanchilashvili; Lasha Mgeladze; kladze, Nino Kizikurashvili, Givi Kutidze, Levan Khetsuriani; Tamuna Gurchiani; Zaal Vakhtang Megrelishvili,