Leveraging Digitalization to Stimulate Formalization of Economic Activities

As the COVID-19 pandemic keeps taking its toll on the daily lives of people across the globe, it has also revealed serious fragilities in developing countries - specifically, the large informal sectors in Georgia and the Kyrgyz Republic. The informalities in both countries account for a significant portion of their economies, keeping a substantial number of workers out of the social safety net and undermining the effectiveness of governmental policies. 

To help the European Bank for Reconstruction and Development (EBRD) tackle the informalities in these two countries, the Columbia SIPA Capstone team drafted an action plan consisting of respective digitalization solutions for each country. The foundational research for the action plan comprised of understanding the current efforts for digitalization and sectoral bottlenecks through interviews with local professionals from the government and the industry, surveying best practices in other countries as well as multinational firms, and evaluating various digitalization solutions based on each country’s needs and capabilities. 

Specifically—in Georgia, the focus was placed on the logistics sector for which the team formulated customized digitalization solutions on inventory management, educational training, and blockchain technology. In the Kyrgyz Republic, the team focused on digitalization solutions for the agriculture and construction sectors with detailed recommendations on implementing an e-governance system across different agencies.  The Columbia SIPA Capstone team’s action plan aimed to add value to the EBRD’s efforts to provide Georgia and Kyrgyz Republic with technical assistance in policy/legislative reforms that could significantly reduce economic informalities and create momentum for continued development.