The OECD is celebrating its 50th anniversary this year. Throughout its history, the OECD has assisted countries in reforming and improving their policies to promote economic growth and development. It has fostered more open societies and the rule of law and has helped build the institutions necessary for the good functioning of market-based economies. This experience has been particularly valuable to countries undergoing political and economic transitions.

Development in Eastern Europe and the South Caucasus was prepared as a joint effort between the Development Centre’s Black Sea and Central Asia Initiative and the OECD Eurasia Competitiveness Programme (DAF/PSD), supported by regional correspondents located in each of the countries.

The transition from a centrally planned to a market economy is not an easy process and has required strong political will and wide ranging economic reforms in the countries of Eastern Europe and the South Caucasus (EESC).

Development in Eastern Europe and the South Caucasus provides detailed country reviews of Armenia, Azerbaijan, Georgia, the Republic of Moldova and Ukraine. It explores current economic performance and the challenges of economic development and competitiveness. 

Armenia recorded an average economic growth of 13% in 2002-07. In 2008, gross domestic product (GDP) had doubled to USD 10.3 billion compared to its level in 2002 in real terms. Investments in the construction sector, powered by migrant worker remittances and to a lesser extent by foreign direct investment (FDI), provided the basis for economic growth. 

The global economic boom of 2000-08 and the steep rises in petroleum prices resulted in very rapid growth for Azerbaijan.

The reforms implemented between 2004-08 aimed at deregulating the economy, reducing corruption, setting up free-trade principles and creating effective administration mechanisms to ensure economic development in Georgia.

In 2009 the economy was seriously affected by the global economic crisis and a tense political climate. Gross domestic product (GDP) declined by 6.5% year-on-year (yoy) to USD 5.4 billion, due to the collapse of domestic demand, exports, remittances and foreign direct investment (FDI). However, this fall was slightly less than the 9% forecast by the International Monetary Fund (IMF) forecast of 9%. Furthermore, industrial output was down by 25% and unemployment doubled by the end of 2009. At the beginning of 2010, improved external environment and liberalisation measures led to foreign trade and real GDP growth due to increases in industry, trade and transport activities.

Ukraine grew rapidly from 2000, with a yearly average of 7.4% growth until 2007. The country has strong potential from its position between Europe and Asia, large foreign direct investments (FDI), an educated labour force, fertile land and rich natural resources. Despite this, major structural problems and high resource and energy dependence led to a larger economic decline in 2009 than in many other countries. Forecasts in 2007 prior to the crisis had already predicted lower growth in 2008 (6%).