At the presidential debates held on 17 October 2013, presidential candidate for the coalition Georgian Dream Giorgi Margvelashvili stated: “Georgia is one of the most backward countries in terms of wealth distribution. Our coefficient for the distribution of the country’s wealth among the people is 40, [to be more precise,] over 40. This is the worst coefficient of all the former Soviet Union countries.”FactCheck inquired about the factual accuracy of the statement basing the inquiry on the data provided by the World Bank.
Considering the fact that the presidential candidate emphasises the unequal distribution of economic wealth, we assume that he refers to the Gini coefficient. The Gini coefficient represents the most widely used indicator for measuring inequality of income (consumption) distribution. The Gini coefficient ranges from 0 to 1. A coefficient of zero indicates perfect equality in the country while a coefficient equal to one expresses maximal inequality in the income (consumption) distribution (the entire income is essentially in the hands of a single person). Sometimes the Gini coefficient is multiplied by 100 and in that case the indicator varies from 0 to 100 (a similar technique is applied by the World Bank as well). Therefore, the lower the Gini coefficient, the higher the equality in the distribution of income (consumption) in the country and the more favourable the indicator.
As maintained by the researchers, the Gini coefficient is closely linked with social unrest. An inequality of distribution correspondent to the coefficient of 40 or higher is likely to kindle commotion in society and is mainly witnessed in the developing and underdeveloped countries. The case of the United States is noteworthy in this context asitsGini coefficient is remarkably high for a developed country in that it exceeds 40 (if calculated solely based on the inequality of wages [and not the final incomes]) and is reduced to 37 if we incorporate into the calculation the money transfers (income redistribution) received by the American citizens.
The Gini index generally ranges from 25 to 70 while in the majority of the developed countries the coefficient varies from between 25 and 35.It is to be emphasised that the Gini ratio measures only the inequality in the distribution and overlooks the size of incomes and, therefore, the coefficient of any specific country being inthe interval of 25-35 (which is witnessed in numerous developed and underdeveloped countries) does not imply anything in particular with regard to the volume of incomes (or consumption).
As reported by the National Statistics Office of Georgia, the Gini coefficient of Georgia by total incomes and total consumption is as follows:
The data by the World Bank (Gini coefficients of former Soviet Union countries are listed in the table below) demonstrates that the Gini ratio for Georgia is indeed the highest among the former Soviet countries which implies that the inequality in the distribution of incomes/distribution among the citizens of Georgia is higher than in any of the former Soviet countries. Notwithstanding the fact that the listed indicators are from different years, the World Bank describes them to be the latest data available.
It should be kept in mind that the indices for Uzbekistan and Turkmenistan were obtained more than ten years ago and could have changed significantly in the meantime. Due to the difference in the years of calculation, the above-listed indicators do not produce a clear picture with regard to Georgia being the leading country by high Gini coefficients but as it shows Georgia to have the highest ratio among the former Soviet countries, we can assuredly assert that Georgia holds one of the worst positionsin terms of the inequality in income distribution among the former Soviet Union countries and isconsiderably behind the majority of the developed countries.
Conclusion As gathered from the data by the World Bank, the Gini coefficient of Georgia (42) is the highest among the former Soviet countries. Hence, the facts voiced by the presidential candidate are confirmed by the statistical data of GeoStat and the World Bank and Giorgi Margvelashvili’s statement: “Georgia is one of the most backward countries in terms of wealth distribution. Our coefficient, describing the distribution of the country’s wealth among the people, is 40, [to be more precise,] over 40. This is the worst coefficient of all the former Soviet Union countries,” is TRUE.