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View of Tbilisi. Photo: ESI

Commenting on Saakashvili's re-election in January 2008, the World Bank's Simeon Djankov wrote an article entitled "Top Reformer Wins Election in Georgia." In the article, Djankov praised Georgia's reforms: "Since 2004, when Saakashvili won his first mandate, Georgia has been the fastest reforming economy according to Doing Business. For three years running, it appeared in the top-10 reformers' list; and was the top reformer in Doing Business 2007." The author also made clear who stood behind this breakthrough:

"Much of the credit for these reforms goes to Kakha Bendukidze, the state minister of reform. Dr Bendukidze has been reforming everything, from business entry to a new 2007 bankruptcy code."[25]

Following the government crackdown on protests in Tbilisi in November 2007, with their democratic credentials weakened, Georgia's leaders began to put increasing emphasis on their successful economic reforms. In October 2008, Georgia's then Prime Minister Lado Gurgenidze (born in 1970) wrote an op-ed in a British paper on how "Georgia can be a guiding light to other states":

"it is entirely conceivable that in 10 or 20 years time a new generation of policy makers in emerging markets around the world may draw inspiration from our efforts to build, against high odds, a functioning democracy with the highest-possible level of economic liberties."[26]

Vladimer Gurgenidze
Vladimer (Lado) Gurgenidze. Photo: Tbilisi City Council

Gurgenidze, a British citizen who had worked as an investment banker in the City of London, spoke about Georgia's governing philosophy of "compassionate libertarianism." Georgia, he pointed out, had one of the least restrictive labour codes, one of the lowest flat income tax rates (at 12 percent) and some of the lowest customs rates in the world. It had reduced the number of licenses and permits required by businesses from 909 to 159 in summer 2005, and further since. State revenues had increased from 558 million USD in 2003 to 3.3 billion USD in 2008.[27] Electricity shortages, long crippling for business and exasperating for citizens, had become a thing of the past. In 2007 FDI reached 19 percent of Georgia's GDP. Economic growth then stood at more than 12 percent.

Table: Economic Freedom

Suggested readings

In his detailed history The Making of the Georgian Nation (second edition) Ronald Grigor Suny notes that after achieving independence in 1991 "Georgians became the victims of their own excessive rhetoric and ill-considered political choices" (p. 334).  He quotes Elizabeth Fuller who described the philosophy of Gamsakhurdia (the first elected leader of Georgia, toppled by a coup in January 1992) as follows:

"Central to Gamsakhurdia's entire political career is his messianism

April 2010

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