Socio-Economic and Political Consequences of the Relocating Parliament

with Irakli Barbakadze

In 2012, the parliament of Georgia was relocated from the capital city Tbilisi to the town Kutaisi. Will a change in the location of the parliament reduce the centralization problem of the capital and boost the involvement of the secondary city in the political and economic processes? In this paper, we study how the parliament relocation affected local economic development and voting behavior within Kutaisi. We use a difference-in-difference design and show that relocation led to economic revival in zones close to the new parliament - increased population density, increased establishments of restaurants & shops, and increased rental prices. Moreover, using voting data, we show that people became politically active and voter turnout significantly increased in zones near the parliament. Interestingly, in 2018, the new government returned the parliament to the capital, so we expect that the positive effects within Kutaisi due to relocation should be reduced.