Project description

Title: Private sector development in the South Caucasus
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Armenia, Azerbaijan, Georgia
Lead executing agency: Ministries of economy in Armenia, Azerbaijan and Georgia
Overall term: 2008 to 2012

Context

In recent years, the countries of the South Caucasus, Armenia, Azerbaijan and Georgia, have introduced sweeping free market structural reforms, opened up to international trade and movement of capital and have made considerable progress in improving regulatory conditions for the private sector. In the World Bank’s 2010 Doing Business Report, all three countries are in the top quarter of the 183 countries: Georgia is ranked 11th, Azerbaijan 38th and Armenia 43rd. This places them far above the average for the other countries in the region. Despite these economic successes, business and trade relations between the three countries remain underdeveloped, and the potential for trade with the EU and neighbouring countries is still far from exhausted. The planning and implementation of harmonised, coordinated economic and financial policies, especially as regards the promotion of international trade, continue to reveal considerable shortcomings.

Objective

The economic development process is being more successfully planned and implemented by selected institutions in the South Caucasus.

Approach

The project promotes the more successful planning and implementation of economic development through two mutually supportive components.

The economic and financial policy component helps to improve the competences of state ministries and agencies for analysis, planning and steering.

The trade promotion component supports strategies to remove barriers to trade that have been identified in the action plans of the European Neighbourhood Policy (ENP). This primarily means improving food security and competition policy. The component also includes the initiation of a regular exchange of information and experience among the South Caucasian countries.

Moreover, the project supports national trade fairs as well as collective appearances at international fairs, including participation in international political dialogue forums, which will lead to closer economic cooperation.

Results achieved so far

The countries have participated with collective stands at international trade fairs in Germany: at the Anuga food and beverage fair, twice during the International Green Week in Berlin, and at BioFach, the biggest trade fair in the world for organic consumer goods.

A number of joint workshops have been held, especially for the promotion of regional tourism. Alongside the improvement of business relations with international companies, this also contributed to bringing about rapprochement in a post-conflict region.

As part of the consultation work undertaken jointly with the Legal and Judicial Reform project in the South Caucasus on Armenian competition policy, the establishment of a bonus programme (chief witness regulation) was included in a draft revision of competition legislation. After it is passed, this legislation will facilitate efforts to combat anti-competitive structures. In Georgia GIZ (until December 2010 GTZ) provided advice on a revised version of pharmaceutical legislation, which has now already entered into force. This should facilitate trade for pharmaceutical products from the EU.

Together with the project Support for the implementation of the Armenian PRSP, the regional project Private sector development in the South Caucasus supported the Armenian Ministry of Economy in the development, presentation and discussion of the first Armenian Economic Report (2009). This includes, inter alia, an evaluation of the impact of the global financial crisis on the Armenian economy and proposals for possible ways of overcoming the crisis.

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• Private sector development in the South Caucasus
  Developing trade potential
  de-wirtschaftsfoerderung-suedkaukasus.pdf, 0.46 MB (German)