Regional Disparities in Georgia: Evidence from Microdata

The purpose of this report is to take stock of the existing regionally disaggregated data and to identify disparities between the regions of Georgia, thus filling a critical gap in the literature. The analysis in this report is building on Geostat statistics, in particular the Integrated Household Survey, the Millennium Challenge Corporation Survey, and the Village Infrastructure Census. While in principle this allows for a detailed analysis of regional disparities, this is limited by issues with the data. Two issues are of importance. First, with the last census dating back to 2002, the reliability and quality of the current survey data is potentially compromised. Second, large and systematic data gaps exist for infrastructure, environmental issues, and cultural and recreational resources. It should also be noted that most surveys for any observation only indicate the region, but not the municipality. Thus any analysis is restricted to be along existing regional boundaries. This report finds that while there are differences between regions, most of the systematic regional disparities can be explained by differences in urbanization rates across the regions. Relatively more urbanized regions, and in particular the capital city Tbilisi, tend to have a higher per capita gross value added, a more diverse and sophisticated economic structure, and a better developed infrastructure. At the same time unemployment tends to be higher in relatively more urbanized regions. This indicates not strong rural labor markets, but rather a large share of subsistence farmers in rural areas. Important dimensions of regional disparities that cannot be explained by differences in urbanization rates alone are income, inequality and poverty. While there are questions about the reliability of income data, this is an important finding as the level of urbanization, economic performance or structure, or infrastructure would not predict these outcomes.