Archaeological research demonstrates that Georgia has been involved in commerce with many lands and empires since the ancient times, largely due its location on the Black Sea and later on the historical Silk Road. Gold, silver, copper and iron have been mined in theCaucasus Mountains. Wine making is a very old tradition. The country has sizable hydropower resources. Throughout Georgia's modern history agriculture and tourism have been principal economic sectors, because of the country's climate and topography.
For much of the 20th century, Georgia's economy was within the Soviet model of command economy. Since the fall of the USSR in 1991, Georgia embarked on a major structural reform designed to transition to a free market economy. As with all other post-Soviet states, Georgia faced a severe economic collapse. The civil war and military conflicts in South Ossetia and Abkhazia aggravated the crisis. The agriculture and industry output diminished. By 1994 the gross domestic product had shrunk to a quarter of that of 1989. The first financial help from the West came in 1995, when the World Bank and International Monetary Fund granted Georgia a credit of USD 206 million and Germany granted DM 50 million.
Since the early 21st century visible positive developments have been observed in the economy of Georgia. In 2007 Georgia's real GDP growth rate reached 12%, making Georgia one of the fastest growing economies in Eastern Europe. The World Bank dubbed Georgia "the number one economic reformer in the world" because it has in one year improved from rank 112th to 18th in terms of ease of doing business. The country has a high unemployment rate of 12.6% and has fairly low median income compared to European countries.
The 2006 ban on imports of Georgian wine to Russia, one of Georgia's biggest trading partners, and break of financial links was described by the IMF Mission as an "external shock", In addition, Russia increased the price of gas for Georgia. This was followed by the spike in the Georgian lari's rate of inflation] The National Bank of Georgia stated that the inflation was mainly triggered by external reasons, including Russia’s economic embargo. The Georgian authorities expected that the current account deficit due to the embargo in 2007 would be financed by "higher foreign exchange proceeds generated by the large inflow of foreign direct investment" and an increase in tourist revenues. The country has also maintained a solid credit in international market securities. Georgia is becoming more integrated into the global trading network: its 2006 imports and exports account for 10% and 18% of GDP respectively. Georgia's main imports are natural gas,oil products, machinery and parts, and transport equipment.
Tourism is an increasingly significant part of the Georgian economy. About a million tourists brought US$313 million to the country in 2006. According to the government, there are 103 resorts in different climatic zones in Georgia. Tourist attractions include more than 2000 mineral springs, over 12,000 historical and cultural monuments, four of which are recognised as UNESCO World Heritage Sites(Bagrati Cathedral in Kutaisi and Gelati Monastery, historical monuments of Mtskheta, and Upper Svaneti).
Georgia is developing into an international transport corridor through Batumi and Poti ports, an oil pipeline from Baku through Tbilisi toCeyhan, the Baku-Tbilisi-Ceyhan pipeline (BTC) and a parallel gas pipeline, the South Caucasus Pipeline.
Since coming to power Saakashvili administration accomplished a series of reforms aimed at improving tax collection. Among other things a flat income tax was introduced in 2004. As a result budget revenues have increased fourfold and a once large budget deficithas turned into surplus.
As of 2001 54% of the population lived below the national poverty line but by 2006 poverty decreased to 34%. In 2005 average monthly income of a household was GEL 347 (about 200 USD). IMF 2007 estimates place Georgia's nominal GDP at US$10.3 billion. Georgia's economy is becoming more devoted to services (now representing 65% of GDP), moving away from agricultural sector ( 10.9%).
Today transport in Georgia is provided by means of rail, road, shipping and air travel. Positioned in the Caucasus and on the coast of the Black Sea, Georgia is a key country through which energy imports to the European Union from neighbouring Azerbaijan pass. Traditionally the country was located on an important north-south trade route between European Russia and the Near East and Turkey.
In recent years Georgia has invested large amounts of money in the modernisation of its transport networks. The construction of new highways has been prioritised and, as such, major cities like Tbilisi have seen the quality of their roads improve dramatically; despite this however, the quality of inter-city routes remains poor and to date only one motorway-standard road has been constructed - the ს 1.[
The Georgian railways represent an important transport artery for the Caucasus as they make up the largest proportion of a route linking the Black and Caspian Seas, this in turn has allowed them to benefit in recent years from increased energy exports from neighbouringAzerbaijan to the European Union, Ukraine and Turkey. Passenger services are operated by the state-owned Georgian Railwayswhilst freight operations are carried out by a number of licensed operators. Since 2004 the Georgian Railways have been undergoing a rolling program of fleet-renewal and managerial restructuring which is aimed at making the service provided more efficient and comfortable for passengers. Infrastructural development has also been high on the agenda for the railways, with the key Tbilisi railway junction expected to undergo major reorganisation in the near future. Additional projects also include the construction of the economically important Kars–Tbilisi–Baku railway, which for the first time will connect much of the Caucasus with Turkey by standard gauge railway
Air and maritime transport is developing in Georgia, with the former mainly used by passengers and the latter for transport of freight. Georgia currently has four international airports; the largest of which is by far Tbilisi International Airport, hub for Georgian Airways, which offers connections to many large European cities. Other airports in the country are largely underdeveloped or lack scheduled traffic, although, as of late, efforts have been made to solve both these problems. There are a number of seaports along Georgia's Black Seacoast, the largest and must busy of which is the Port of Batumi; whilst the town is itself a seaside resort, the port is a major cargo terminal in the caucasus and is often used by neighbouring Azerbaijan as a transit point for making energy deliveries to Europe. Scheduled and chartered passenger ferry services link Georgia with Ukraine and Turkey.