Caucasus

This region lies between the Black and Caspian seas. It is on the old silk trade route from China to Europe and has a rich and often conflict-ridden history.

In many ways, the region does not either fit into the middle east or Europe and has been highly influenced over recent centuries by its major neighbours – Russia, Ottoman Turkey and Persia/Iran.

The Caucasus mountains have peaks exceeding those of the Alps and form a natural southern barrier for Russia. However, the Republic of Chechnya has been an area of violent civil unrest – particularly since the breakup of the USSR. Likewise, on the other side of the mountains the Georgian provinces of Abkhazia and Ossetia are also politically isolated and internally unstable. Another political blackspot is Nagorno-Karabakh claimed by both Armenia and Azerbaijan.

Armenia is a largely Christian Apostolic country with a fairly sophisticated and well-educated population – in spite of its relatively low R&D expenditure. Historically the Armenian diaspora in Turkey and beyond were traders and merchants, taking advantage of the country’s strategic geographical position. The country has been variously dominated by its larger neighbours – Iran, Turkey and Russia, but has maintained its own distinctive culture.

Armenia is a democratic presidential nation. It is a member of the Council of Europe and the World Trade Organisation. The legal system is based on the civil law model and laws generally enforced. Because of its fears concerning Turkey it permits the existence of a Russian military base.

Azerbaijan has vast oil and mineral resources. Although the majority of the population are formally Shia Muslims, few actually practice their religion. There is a very low level of press freedom in the country and a general low respect for human rights. A high level of corruption exists in senior political circles and much of the country’s oil and mineral wealth does not percolate down to the bulk of the population.

Georgia has, since independence from the Soviet Union in 1991, followed a pro-western policy that has led it into conflict with Russia and suffer two breakaway states in Ossetia and Abkhazia. It is a member of the United Nations and Council of Europe and its economy is gradually recovering from the shock of a Russian embargo and imposition of increased fuel prices in the early years of the 21st century. A flat-tax system was introduced in 2004 and contributed vastly to tax revenues. Laws are well established, comprehensive and now fairly well enforced – with the police now also responsible for border security. In 2005 the entire traffic police (300,000 strong) was dismissed due to corruption and an entirely new force recruited.

Labour market summary: Although a comprehensive framework of labour laws exists in each country – especially Armenia – there is a general low level of enforcement. For instance, Armenia does not have any specialist labour courts. There is also a high level of wage arears in some companies and this is especially the case with those operating in the informal economy. Unemployment and underemployment is high and there is a generally inadequate safety net for those without work.

Greatest advantages: Strategic geographical position and resource rich economies

Greatest disadvantages: Level of corruption, size of the informal economy and political instability.

Proportion of global land area: 0.12%
Proportion of global population: 0.21%
Annual rate of population increase: 0.5% (Highest in Azerbaijan)
Life expectancy: Men 69 years Women 76.7 years
Working population in the informal economy: 52%
GSI Modern slavery (Forced Labour) (proportion of global total) 0.47%
Unemployment rate: 19%
GDP/capita PPP (current) $8,849 (Armenia, $10,024 Georgia, $17282 Azerbaijan
Female labour participation rate: 58%
Male labour participation rate: 71%

World Bank rating (ease of doing business): 40 (of 189) Georgia ranked 9/189
FedEE overall employment potential rating 7/10
FedEE regulatory rating: 4/10 – weak laws and low enforcement

Minimum wage rates (selected states)
Armenia: 76,600 drams gross per month (2016)
Azerbaijan: 130 manats gross per month (1.1.2018)
Georgia: Living wage (not statutory) 167 Lari gross a month (July 2017)