Analysis by Beka Bochorishvili, Research Fellow on Conflict Studies at Geocase; Master's in International Relations at Tbilisi State University and Guram Baakashvili, Research Fellow on Economic Policy at Geocase; PhD Candidate at Business and Technology University.
This paper examines the role of the Deep and Comprehensive Free Trade Agreement (DCFTA) in promoting trade diversification for Georgia, a country historically reliant on a limited range of export commodities and markets. By analyzing trade data from 2019 to 2024, this study evaluates the progress and challenges associated with Georgia’s efforts to diversify its export portfolio and reduce economic dependence on key trading partners.
Findings indicate that while the DCFTA has facilitated increased access to European markets, encouraging growth in non-traditional export sectors such as processed agricultural goods and light manufacturing, the overall diversification remains limited. Georgia’s trade continues to be dominated by a few high-volume exports, especially minerals and ferroalloys, and a sustained trade deficit with the EU underscores the structural imbalance driven by a reliance on imported machinery and pharmaceuticals.
Additionally, regulatory alignment with EU standards, though beneficial, presents a significant compliance burden for small and medium-sized enterprises (SMEs), constraining broader market participation. To fully realize the potential of the DCFTA, this paper recommends strategic investment in production infrastructure, targeted support for SMEs, and expansion of trade partnerships beyond the EU to achieve a resilient, diversified economy. This study contributes to the literature on trade agreements and economic resilience, highlighting the DCFTA as a valuable yet challenging tool for sustainable economic transformation in developing countries.
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