September 2nd 2024

Not so very long ago, there was a small country at the crossroads of Europe and Asia. This country’s economic development had been stifled by seventy years of Soviet central economic planning. After gaining independence in 1991, Georgia faced short-term economic crises, wars on multiple fronts, and a corrupt, unqualified government that always seemed on the verge of tipping over.

Then, something extraordinary happened. A new generation of leaders accepted responsibility for the country’s future, replacing the aging Soviet holdovers who had lingered long enough to lead Georgia down a road to nowhere. Many of these young reformers had adopted pro-market viewpoints while studying in the United States and Europe. They set out to build a functioning capitalist economy for the first time in Georgia’s long history.

The wave of young leaders, most notably Mikheil Saakashvili, entered office after the Rose Revolution in 2003. Their United National Movement (UNM) party led Georgia until 2012. While they are no longer in power, they left a lasting, positive mark on the country’s economy.

Georgia’s market transformation during that period is a case study of the success of open economies. It also demonstrates that market-driven growth in human productivity is especially important for countries like Georgia—small, lacking natural resources, and with essentially nonexistent industrial bases.

At GIC, we've witnessed and contributed to similar transformations globally. From billionaires and celebrities to entrepreneurs, we’ve helped over 1,500 successful clients create holistic strategies to grow their wealth and increase their freedom. We can help you do the same—so what are you waiting for? Get in touch with GIC, and let us help you go where you’re treated best.

Economic growth came relatively quickly after the Rose Revolution. In 2006, Georgia was ranked 112th on the World Bank’s Doing Business survey. By 2007, it had climbed to number 18, earning the title of the world’s leading economic reformer. As of 2023, it ranked 7th place globally.

Making the country an easier place to start a business immediately translated into a flood of startups. Business density tripled, and Georgia became a center for offshore investment.

Georgia’s economy grew by an average of 5.36% from 2004 to 2023—impressive figures for any country, especially considering the negative growth in 2009 due to the aftermath of the 2008 Russian invasion.

The proportion of the population living in poverty declined rapidly over the same period. In 2003, 40% of Georgians were living on $3.90 per day or less (adjusted for changes in purchasing power). By 2022, that percentage had fallen to a historic low of 5.6%.

Georgia's economic growth directly correlates with reductions in extreme poverty, providing more people with access to markets and creating even more opportunities for private businesses to produce and exchange goods and services.

Georgia’s economic transformation didn’t happen overnight, and like all instances of economic development, it is an ongoing process with no endpoint. However, several key policies have helped propel it forward:

Georgia doesn’t have much of an industrial base and runs a perennial current account deficit. However, instead of attempting to build the country’s industry through government intervention—a policy model that has failed in many parts of the world—the government has opted to let the market decide which goods and services should be produced.

Georgia became a WTO member in 2000 and now has one of the world’s most open trading regimes. Its average most-favored-nation tariff rate (the average rate it applies to imports from other WTO countries) is 1.5%—the lowest among all WTO members.

A country can never have enough talented, enterprising, or wealthy people. That’s especially true for an emerging market like Georgia, which needs to attract offshore investment and entrepreneurship to achieve lasting economic growth.

The Georgian government has made it easy for foreign nationals to live and work in the country. Foreigners are not required to obtain a work permit to earn income legally in Georgia. While they do need a residence permit, the process is simple and usually successful. Obtaining a second passport in Georgia is also possible.

Perhaps nothing is worse for a developing economy than barriers to entry. Such barriers impede growth by allowing monopolies to dominate sectors and use their wealth to influence government policy for their benefit. Potential competitors are denied market access, prices rise, and quality declines.

The Georgian economic model recognizes the benefits of open-access markets. Consequently, the UNM government sharply reduced the number of licensing requirements in the economy. Government agencies were ordered to justify each of their licensing requirements. Those not crucial for the economy’s functioning were swiftly canceled.

Georgia also subscribes to the “Silence is Consent” principle. This means that, in cases where a license is required, 30 days following submission, the applicant is free to legally do business unless expressly told otherwise by the authorities.

Much has been said about Georgia’s low tax rates, and they are indeed low by most standards: 20% on personal income, 15% on corporate income, 5% on dividends and interest, and 1% on property. Plus, there is no capital gains tax on foreign-source income. Low tax rates are a clear growth facilitator.

What deserves more attention is the simplicity of the Georgian tax system. When the UNM took the country’s leadership in 2003, the Georgian tax code had 21 different taxes. By 2008, that number had fallen to six, where it stands today (including import duties). To make matters even simpler, the government introduced an electronic system for both filing and paying taxes.

Given all of Georgia’s economic success, it should be a serious consideration for those looking to obtain a second passport, set up an offshore company, or make offshore investments.

For wealthy entrepreneurs and investors, there are countless opportunities in Georgia and across Europe. GIC is here to help as a boutique consultancy for those who want to legally reduce their taxes, diversify, protect their assets, and increase their freedom.

Navigating the world of second passport services has become increasingly complex, with significant changes in recent years. Don’t waste any more time. Apply here to become a GIC client, and let us help you legally go where you are treated best.