Professor Kym Anderson examines the importance of the wine industry in Georgia and how it impacts on the country’s rural development in particular.

Despite having an open economy and well-educated labor force, Georgia is one of the poorest CIS countries, and has among the highest income inequality and poverty incidence. Almost half the workforce lives in farm households and are engaged in low-productivity activities, earning a small fraction of urban wages.

The wine industry is dominant in Georgia’s rural economy, some being for self-consumption, some for sale. Professor Anderson asks: How might the wine industry contribute more to Georgia’s economic growth, export earnings and poverty alleviation over the next decade or two?

Georgia has a comparative advantage in wine production. Domestic consumption is high relative to incomes so the obvious focus for growth is in wine exports.

With the dissolution of the Soviet Union and even more so Russia’s ban on imports of Georgian wine since 2006, Georgia suddenly has an unusually large degree of freedom to influence its comparative advantage in wine for the decades to come. A key question is: which market segments, in which destinations, to target?

Professor Anderson also considers the potential for wine tourism to contribute to wine export growth.

Access the full paper here: Rural Development in Georgia: What Role for Wine Export Growth?