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During his visit to the talk show, Choice, the Minister of Economy and Sustainable Development of Georgia, Dimitri Kumsishvili, stated that Georgia used to hold the 120th

position out of 128 countries in terms of property rights protection whilst today its position has improved significantly.

FactCheck

verified the accuracy of this statement at the request of its reader.

Well protected property rights represent one of the most significant (if not the most significant) factors of a country’s economic development. The issue of property rights protection in various countries of the world is studied by several international organisations which then assign and publish ratings after the studies are conducted. The Minister of Economy and Sustainable Development of Georgia did not name the source upon which his statement was based; however, the figures he stated are closest to the data published in terms of the Global Competitiveness Index. The implementer of this study is an influential Swiss organisation – the World Economic Forum (WEF).

Property rights protection in the Global Competitiveness Index is determined based upon the following methodology:  questionnaires are personally sent to hundreds of active businessmen in Georgia in which they are required to comment upon the quality of the protection of material and intellectual property rights in Georgia. The respondents express their positions in points ranging from 1 to 7 with 1 indicating ‘very bad’ and 7 indicating ‘very good.’

The 2012 Global Competitiveness Index study covered a total of 144 countries. Georgia was assigned 2.91 points in terms of property rights protection and held the 129th place out of the 144 countries studied. The final point of property rights protection consists of two criteria – the protection of material property rights and the protection of intellectual property rights as separate entities. In 2012, Georgia held the 131st place (3.07 points) in terms of the protection of material property rights whilst it held the 126th

place (2.59 points) in terms of the protection of intellectual property rights.

The 2015 Global Competitiveness Index study (2015 was assessed based upon the data from March and April 2015) covered a total of 140 countries. Georgia occupied the 78th place (4.0 points) in terms of property rights protection. Georgia holds the 58th place (4.34 points) in terms of material property rights protection and the 101st place (3.34 points) in terms of intellectual property rights protection. Despite the fact that the 78th

place with 4.0 points does not indicate well protected property rights, a 51-position progress in approximately three years is quite a good result. Georgia’s rating in terms of material property rights protection improved by 73 positions but showed a much more modest improvement in the case of intellectual property rights protection with 25 positions. In addition, it should be pointed out that Georgia’s ratings in terms of property rights protection were worsening from 2009 to 2012 (see Table 1).

Table 1:

Georgia’s Positions in Terms of Property Rights Protection in the Global Competitiveness Index

2009 2010 2011 2012 2013 2014 2015
Protection of Property Rights 104 116 118 129 124 93 78
   Material Property 109 120 120 131 120 85 58
       Points 3.45 3.24 3.23 3.07 3.41 3.86 4.34
   Intellectual Property 100 97 105 126 124 106 101
       Points 2.81 2.87 2.76 2.59 2.71 3.05 3.34

The issue of property rights protection in 129 countries of the world is also studied by an American organisation, the Property Rights Alliance. It periodically publishes the International Property Rights Index which, based upon various criteria, assesses the protection of property rights in different countries. In terms of the 2015 report, Georgia occupied the 95th

place out of the 129 countries studied. Georgia has 4.2 points out of the maximum 10 points and shares its assessment with Bolivia, Mali, Cote d'Ivoire, Mozambique and Nepal.

The aforementioned International Property Rights Index consists of three main categories:  the legal and political environment, the protection of material property rights and the protection of intellectual property rights. Georgia holds the 59th place in terms of the legal and political environment assessment, the 68th place in terms of the material property rights protection assessment and the 125th place in terms of the intellectual property rights protection assessment. These three criteria also have sub-criteria which show that Georgia has the lowest points in terms of copyright protection (1.0), loan availability (2.3) and political stability (4.1). It achieved the highest points in property registration (10 points which is the maximum) and corruption control (5.7). We cannot compare the results of the 2015 International Property Rights Index to those published in the previous years as the methodology changed significantly from 2015. According to the old methodology, Georgia held the 107th

place out of 130 countries in 2012.

Property rights protection is also studied by another influential American organisation, the Heritage Foundation, which publishes the annual Index of Economic Freedom.

Property rights protection is one of the criteria for the assessment of a country’s economic freedom. The assessment is made by analysing a country’s acting legislation and its actual implementation. As concerns Georgia, it has the single lowest point in this criterion with 40 out of 100 points with its assessment not having changed to any significant degree from 2010 to 2015. Georgia’s 40 points mean that the courts are highly ineffective in protecting property rights. In addition, the actual discussion of a property rights case takes place so late in the process that the court ends up not being addressed at all. Furthermore, there is corruption and judges are under the influence of various branches of the government. The expropriation of property is also admissible.

Conclusion Our study revealed that Dimitri Kumsishvili is talking about the Global Competitiveness Index in his statement according to which Georgia held the 129th place out of 144 countries in 2012 although moving to the 78th

position in 2015. This Index studies property rights protection by surveying businessmen in the country.

Moving from the 129th to the 78th position within the past three years is no doubt quite a positive trend; however, the 78th position does not reflect a high level of property rights protection with the issue remaining among Georgia’s top challenges. This situation is also illustrated by other indices such as the International Property Rights Index which studies the issue in much more detail. According to this Index, Georgia holds the 95th

place out of 129 countries. If we look at the Index of Economic Freedom, Georgia has the lowest point for property rights protection.

Despite the fact that Dimitri Kumsishvili’s statement is correct in terms of the progress made within a specific index, FactCheck also takes other studies into account and concludes that the Minister’s assessment is MOSTLY TRUE.