The Evolution of Georgia’s Economic System: An Analysis

What is the economic system of Georgia? The economy of Georgia is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.

In Georgia, the economy comprises a private sector, consisting of individuals and businesses that make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of specific goods and services. No country is purely capitalist or purely communist.

What do the freedom indexes tell about the economic system of Georgia?

To determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2026 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Georgia is ranked 35th globally with a score of 69.6, placing it in the Moderately Free category. Georgia outperforms its South Caucasus neighbors Armenia (52nd) and Azerbaijan (67th) on this index.

In a similar way, the 2026 Freedom House index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections.

Georgia gets a score of 51/100 (As of 2026), which qualifies it as Partly Free. Georgia is considered to have a government that does not control what people do, and people can make their own economic decisions, but it is only considered an electoral democracy, lacking full liberal democratic protections. The downgrade reflects concerns over judicial independence, oligarchic influence, and the 2024 foreign agents law controversy.

The Link Between Public Sector Employment and the Economic System of Georgia

An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Georgia, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 17.8% (2024).

In the country’s mixed economy, the number of public sector employees as a percentage of the total workforce varies based on the specific policies and practices adopted by the State. Some economic activities are left to the private sector while others are under government control. The bigger the public sector the closer is the economy to being a command economy.

What does the biggest company in Georgia say about the country’s economic system

The biggest company in Georgia should also be looked at, as well as whether it is a state-owned or private company. In this case, TBC Bank Group is Georgia’s leading financial institution and largest domestically listed company, reporting total operating income of GEL 2.834 billion (~USD 1.04 billion) for FY2024 and holding a 38.5% share of Georgian customer loans. It is a private company listed on the London Stock Exchange.

The historical factors that have influenced the economic system of Georgia

The current mixed economy system of Georgia in the last century is the result of a combination of factors, including the collapse of the Soviet Union, the transition to a market economy, and the adoption of a new constitution.

These changes led to the privatization of state-owned enterprises, the liberalization of trade and investment, and the emergence of a new private sector. These changes have resulted in a more open and competitive economy, with increased economic growth and improved living standards.

Sources

• List of countries by the public sector size
• ILOSTAT — Georgia
• 2026 Index of Economic Freedom — Georgia
• Freedom in the World 2026 — Georgia
• TBC Bank Group Annual Report 2024

Last updated: June 20, 2026