The FINANCIAL - Inclusive and Sustainable Development of the Mountainous Regions: Myth or Reality?

Inclusive and Sustainable Development of the Mountainous Regions: Myth or Reality?

Inclusive and Sustainable Development of the Mountainous Regions: Myth or Reality?

The FINANCIAL -- Mountains cover 54% of Georgia’s territory. People living in those areas represent the most vulnerable group of Georgian society. Land erosion and climate changeare prevalent in the mountains; unsustainable use of natural resources (forests in particular) and limited access to infrastructure pose significant risks to the lives of people there.

In order to ensure the inclusive and sustainable development of the mountainous regions, the Georgian Governmentadopted the Law on the Development of Mountainous Regions in 2015. A bit later, in 2018,the government drafted a strategy and action plan for the period of 2019-2023. The Law offers certain concessions to permanent residents of the mountainous regions, as well as enterprises operating there. Those concessions include higher pensions for the elderly population, increased salaries for medical workers and teachers, vouchers for students, partial coverage of electricity costs during winter, andmonetary payments to families with children. Apart from social concessions, there are income and property tax concessions for the residents of mountainous regions. The law also defines the types of enterprises that are subject to tax concessions.


As for the strategy, it assesses the current socio-economic conditions in the mountains, analyzes their strengths, weaknesses, opportunities and challenges (SWOT), and describes the major goals and objectives to be reached by the state policy. The strategy is accompanied by an action plan which contains a list of projects to be implemented in the mountainous regions of Georgia.


Obviously, in terms of regulations, the state has already done considerable work. However, the question is whether the incentive mechanisms along with the projects envisioned are enoughto achievethe goal of inclusive and sustainable development in the mountains.


A LONG WAY TO GO
The recent study conducted by the ISET Policy Institute shows that there is a considerable lack of all types of resources in the mountains. The only exception might be natural resources, which are favorable for tourism development. Availability of pastures is yet another strength, which supports the development of the agricultural sector. In terms of infrastructure, the main roads are in satisfactory condition, though village roads often require repair. Roads to pastures also require rehabilitation. Supply of natural gas, electricity, and tap water is also limited in some municipalities. For example, there is no natural gas in Lentekhi municipality and several villages even lack tap water and electricity. There are 88 high mountainsettlements without electricity. Most of the high mountain settlements do not have access to broadband internet, and even mobile coverage is not available in some areas. Out of 1,730 high mountain settlements, 1,460 do not have access to natural gas. As for access to capital, availability of state programs and grants from international organizationsin recent years has improved access to finances in general, nevertheless, access to commercial financial resources is still limited. Mortgage requirements and high interest rates on commercial loans reduce access to capital for local producers. At the same time investors’ interest is rather high in somemountainous municipalities (e.g. Kazbegi, Borjomi, and Mestia) which positively affects access to capital. Investment projects are currently underway in some other mountainous regions (e.g. Adjara). Interestingly,in spite of limited access to financial resources, many mountainous regions cannot fully absorb and utilize the state municipal budget. Technologies and innovations are also limited and mostly applied in the energy sector (usage of solar panels for energy generation), while production in other sectors is more extensive, rather than intensive. As in the lowlands, in the mountainous regions of Georgia access to modern technologies and their application is rather low.


While all the factors mentioned above are important for the development of the mountainous regions, there are two other critical aspects to consider: thegeographical locationand human resourcesofthemountainous regions.The majority of mountainous municipalities (Oni, Lentekhi, Dmanisi, Adigeni, Aspindza, Akhalkalaki, and Ninotsminda) share a border with other countries. In terms of human resources, the general tendency of the workforce is to migrate away from the mountains. This is particularlynotable in Lentekhi and Oni municipalities. The majority of thepopulation there (60-70%) isofretirement age.There are many abandoned villages in mountainous regions,while in some villages only a few people remain over winter. Current trends lead to the depopulation of mountainous regions and depopulation on Georgia’s borders poses extremely significant risks to the country’s national security.

WHERE DO PEOPLE GO?
As stated above,constrained resources result in an outflow of the local population from the mountains to either the economically more developed lowlands in Georgia or abroad. Municipalities in mountainous regions are not sufficiently developed to be so-called “gravity centers” – relatively large, economically developed places which attract people from other places. The analysisconducted by ISET-PI shows that,not surprisingly, gravity centers currently coincide with the biggest cities in Georgia. Thus, Tbilisi is the gravity center for the Kazbegi, Dusheti, Tianeti, and Tetritskaro municipalities. For the mountainous municipalities of Oni, Ambrolauri, Tsageri and Lentekhi, Kutaisi is the gravity center, while Mestia municipality, is attached to Zugdidi. Batumi represents the gravity center for Keda, Shuakhevi, and Khulo municipalities, while Akhaltsikhe is the gravity center for Aspindza, Akhalkalaki, and Ninotsminda. The city of Marneuli attracts people from Tsalka and Dmanisi municipalities, and Telavi is the gravity center for Akhmeta municipality.


The mountainous municipalitiesheavily depend on the gravity centers, and this dependence is usually one-sided. This trend is common not only in Georgia, but in countries all over the world, because people, particularly young people, strive to live in economically-developed places which offer more opportunities for work and leisure. In this kind of setup, it is difficult for the mountains to be an attractive place to live. Nevertheless, it does not mean that it is impossible to make them attractive.


In order to achieve this goal,focusing on territorial development policies instead of focusing on the development of a single sector is recommended. One has to explore in more detail the links between the mountainous regions and gravity centers in order to offer similar opportunities and services in the mountains whenever possible anddevelop supporting services for gravity centers and build clusters there.
It is vital to consider the diversity of the mountainous regions from a very early stage inthe policy-development process in order to adjust state policies and subsidy programs to the local context.The requirements of state subsidy programs do not usually considerthe limited availability of some resources in the mountains (e.g. notary, legal services), which hinders the inhabitants of mountainous regions from effective participation in state programs. Generally, application of a bottom-up approach in the development of state programs and actual (not formal) decentralization in decision-making can significantly improve the efficiency of state policies in the mountainous regions of Georgia and make life in the mountains more attractive.

Author: The FINANCIAL

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