FDI jumps in Georgia

>>China is now the largest investor in Georgia>>

DEC. 10 (The Conway Bulletin) — Foreign direct investment (FDI) in Georgia, vital for its economy, soared to $508m in the third quarter of 2014, its highest quarterly intake for six years (Dec. 9).

The data from Georgia’s national statistics office also showed that China had contributed $149m, 29% of the total. This is double China’s previous record FDI injection in Georgia. By way of comparison, the entire quarterly FDI for Georgia in Q2 2014 was $151m.

These figures are good news for Georgia but it has to tread carefully.

Clearly an increase in FDI is good. Georgia’s economy is reliant on FDI as a major source of income. When Georgia and Russia fought a brief war in 2008, FDI dried up, hurting the economy.

But an influx of Chinese money poses new problems and new strains. China has opened a cultural office in Tbilisi and Southern China Airline now offers direct flights to Urumuqi in the west of the country.

Chinese companies, though, often prefer to fly in workers from China rather than hire local workers, straining relations with local communities. Of course, Georgian policymakers will welcome the rise in Chinese investment. They must also manage it carefully.


>>This story was first published on Dec. 10 2014 in issue 212 of the weekly Conway Bulletin newspaper. For more info on the Bulletin, click here

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