Conditions in the Soviet System

Georgia Table of Contents

Georgian nationalists contended that Georgia's role in the "division of labor" among Soviet republics was unfairly assigned and that other republics, especially Russia, benefited from the terms of trade set by Moscow. Georgian manganese, for example, went to Soviet steel plants at an extremely low price, and Georgian agricultural goods also sold at very low prices in other republics. At the same time, Georgia paid high prices for machinery and equipment purchased elsewhere in the Soviet Union and in Eastern Europe. Despite Georgia's popularity as a tourist destination, the republic reaped few benefits because most hardcurrency earnings from tourism went to Moscow and because Soviet tourists paid little for their state-sponsored "vacation packages." Georgia, however, benefited from energy prices that were far below world market levels.

Despite the ambiguities of official statistics, all evidence indicates that after 1989 Georgia experienced a disastrous drop in industrial output, real income, consumption, capital investment, and virtually every other economic indicator. For example, official statistics showed a decline in national income of 34 percent in 1992 from 1985 levels.

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Source: U.S. Library of Congress