ISET Economist Blog

A blog about economics in the South Caucasus.

Does Georgia Need Highly Educated Workers?

A pleasant surprise awaited me on my first day as a student of Tbilisi State University’s Business and Economics Faculty. Thanks to my performance on the national admission exam (ერთიანი ეროვნული გამოცდები), I was inducted into the so-called “Elite Group,” piloted by TSU in an effort to attract Georgia’s best and brightest. There were 50 of us in the group, mostly from working class families, and none felt like they belonged to any kind of “elite.”

In the end, I really enjoyed my “elite” status. Not because I could assert dominance over “mere mortals,” but because it was fun to be surrounded by likeminded people, learning together, with a positive impact on each other’s motivation. The education we received was only marginally better than the rather pedestrian TSU Business and Economics standard, but the majority of us looked beyond TSU, taking part in student exchange programs, and seeking out (and finding) opportunities for further education abroad.

However, being part of the “elite” was not exactly a rose garden. Often, students from other groups would make sarcastic comments. Some of the TSU faculty, who were not selected as our lecturers, would try to teach us a lesson in modesty by attempting to lower our self-esteem. Soon enough, a “class conflict” evolved, and within just a few years, the elite group concept was ditched in favor of a more egalitarian approach to education.


TSU’s attempt at merit-based selection of students into an “elite group” represents something known in the literature as “ability grouping”1 – one of the most controversial topics in general education since the early 20th century. Ability grouping’s effect on students’ achievement have been extensively studied over that time period, and it suggests that it primarily benefits high achievers. Meta-analysis conducted by Adam Gamoran in 1992 concluded that ability grouping typically leads to more inequitable outcomes: high-track students gain, and low-track students fall farther behind. In the end, overall achievement at the school level may not improve. More recent studies (e.g. Lleras and Rangel, 2009; Hanushek and Wößmann, 2006) also suggest that ability grouping increases inequality.

The pros and cons of ability grouping have been summarized by Slavin (1990) as follows:

Advantages of ability grouping Disadvantages of ability grouping
Learning pace and method is better adjusted to students’ abilities, helping both students and teachers. Slow pupils are further slowed down by the weak peer environment and (potentially) anti-intellectual atmosphere in low-track classes.
Students do not lose interest and motivation: stronger students are not bored, weaker students do not fall behind. Low-track classes tend to be taught by weaker teachers by dint of management policy and self-selection (teaching strong students is more fun).
Weaker students get more opportunities for self-expression, and are not overshadowed by top performers. Being assigned to a low-ability group potentially carries a stigma, negatively affecting students’ motivation and performance.
Bright students may improve their achievement thanks to peer pressure and competition. Gifted students may suffer a drop in self-esteem when grouped with other gifted students.

Of course, ability grouping is just one possible response to excessive standardization in the traditional model of mass education. Alternative pedagogical approaches, such as the Montessori method, completely obviate the need for segregation into ability (or age) groups by doing away with standardization. If every child or student is offered a choice of activities and is allowed to develop according to his or her motivations, innate talents and abilities, the whole idea of segregation into rigid ability groups goes by the wayside.

Still, given that there is only one Montessori school in Georgia and that the vast majority of Georgian students are offered only standard mass education, the question of ability grouping loses none of its relevance. How much importance should Georgia attach to promoting academic excellence at the top? Is it socially optimal to invest in a small number of high achievers, or should the entire thrust of Georgia’s education policy be on closing social and cultural gaps?


How much academic excellence a country needs (and can afford) may depend on its level of economic development. This is a key insight from Michael Porter’s theory of stages of development, as practiced, for example, by the World Economic Forum (WEF) in its Global Competitiveness report.

According to this theory, at low levels of economic development (as measured, for example, by income per capita), a country’s progress mainly depends on its factor endowment, such as unskilled labor, land and natural resources. Companies sell basic products e.g. raw agricultural products and commodities, competing primarily by price. Maintaining competitiveness at this stage hinges primarily on the availability of an inexpensive, healthy and basic-skilled workforce.

When a country exhausts its cheap labor reserves, wages start rising, forcing companies to invest in more capital-intensive technologies, substituting machines and highly skilled machine operators for low-skilled labor. At this intermediate stage of development, economies progress depending on how successful they are in making more efficient use of available factors and, in particular, upgrading the skill endowment of their workers. Companies focus on adding value, processing raw materials, and assembling garments, vehicles and electronic equipment. With quality and efficiency becoming the name of the game, competitiveness increasingly depends on the availability of a more productive, middle-skilled workforce.

Finally, as a country’s income per capita continues to increase relatively to the rest of the world, its labor becomes too expensive to be competitively engaged in the mass production of standard goods (which can be produced in cheaper jurisdictions). At this stage, any routine operation that can be sent overseas gets outsourced. Companies are forced to focus their domestic operations on high-end services (e.g. financial), highly automated manufacturing, R&D and product innovation, posing very high qualification requirements for their workers and offering higher compensation in return.

Importantly, countries at any stage of development need workers of all three qualification levels. However, they don’t need them to the same extent.


Generally speaking, Georgia does not stand out when it comes to the performance of its education system. Far from it. Judging by its performance on the internationally comparable PISA tests in math, science and reading (the most recent data available is from 2015), Georgia remains far behind most countries that chose to participate in PISA, ranking 60th in mathematics, 63rd in science, and 65th in reading, out of 72 participating countries. However, after taking into account that Georgia has been recently upgraded by the WEF to the group of efficiency-driven economies (the second, intermediate category on Porter’s list above), its  schools produce about the “right” number of high achievers, slightly less than 1% of the total student population. This is, of course, far below top performing countries, such as Singapore, but acceptable for the country's level of development. Likewise, with slightly more than 50% of Georgian students qualified as “low achievers” in PISA, Georgia’s performance in this regard is also roughly in line with that of other members of our club. Yes, Russia and Bulgaria are doing much better, but they also have much higher levels of income per capita and smaller shares of rural population.

Country* Share of top-achievers** Share of low-achievers***
Russia 4.3 18.8
Bulgaria 2.9 37.9
Georgia 0.9 50.8
Brazil 0.7 56.6
Montenegro 0.5 51
Thailand 0.5 46.7
Albania 0.4 41.7
Colombia 0.4 49
Jordan 0.2 49.8
Guatemala 0.1 56
Mexico 0.1 47.8
Peru 0.1 58.5
Dominican Republic 0 85.7
Tunisia 0 65.9

PISA is an international study which aims to evaluate education systems worldwide by testing the skills and knowledge of 15-year-old students in reading, mathematics and science. Georgia participated in two PISA waves (2009 and 2015) involving almost 4,000 students from about 200 schools.

A comparison of PISA results for 2009 and 2015 indicates considerable progress especially when it comes to addressing the equity challenge: Georgia has been relatively more successful in improving performance at the bottom, and relatively less successful in promoting academic excellence at the top of the performance distribution.


*countries belong to the group of efficiency driven economies in 2017, according to the WEF classification

**Students who are able to creatively and autonomously apply their knowledge and skills to a wide variety of situations (PISA test, 2015)

***Students who can answer questions that provide clear directions and single information sources and connections. However, they typically cannot make more complex uses of information and reasoning (PISA test, 2015)

As Georgia ponders its future education strategy, it faces a tradeoff.

First, it could try to do more to promote excellence at the top by encouraging private investment in schools, universities and colleges, creating “elite” ability groups within its public schools and universities, and removing bureaucratic hurdles for those willing to create the new and different.

The alternative is to continue enforcing certain minimum standards of education as a means of closing social gaps and cultivating a cadre of middle-skilled workers: steady, responsible and hard-working, able to speak a foreign language and operate computers or machines.

The first strategy, while appealing to the proud Georgian ego, is fraught with risks. First, it may not be feasible given the dearth of high quality instructors and institutional capacity to innovate and nurture talent. Second, it may not be affordable from the purely financial point of view – high quality instruction comes with significant costs, including faculty compensation and infrastructure. Third, even if Georgia were to educate hundreds of world-class IT engineers, it may not be in a position to retain its top talent. When it comes to wages, availability of venture capital for startups, and career prospects in established companies, Georgia is simply no match for more developed competitors in Western Europe and/or North America. Thus, overinvestment in high-end education may result in brain drain, rather than faster development.

The second strategy, of cultivating middle-skill workers, seems to be more feasible, as well as desirable, considering the current stage of Georgia’s development. A sufficiently large pool of middle-skilled workers with lower wage costs in comparison to developed world might play a key role in attracting offshored jobs.

1 Ability grouping is defined by Slavin "as any school or classroom organization plan that is intended to reduce the heterogeneity of instructional groups"; it refers to both in between-class ability grouping and in within-class ability grouping (Slavin, 1990). 

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Saturday, 24 March 2018

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