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Vladimer PAPAVA, Micheil TOKMAZISHVILI
Vladimer Papava, D.Sc. (Econ.), professor, Senior Fellow at the Georgian Foundation for Strategic and International Studies, a Senior Associate Fellow of the Joint Center of the Central Asia-Caucasus Institute (Johns Hopkins University-SAIS) and the Silk Road Studies Program (Uppsala University) (Tbilisi, Georgia).
Micheil Tokmazishvili, D.Sc. (Econ.), professor, Member of the Board of National Bank of Georgia, Senior Expert at the Case Transcaucasus, Gender Budgeting Consultant at the UNDP Gender and Politics Program in the Southern Caucasus (Tbilisi, Georgia).
NECROECONOMIC FOUNDATIONS AND THE DEVELOPMENT OF BUSINESS IN POST-REVOLUTION GEORGIA
ABSTRACT
After fifteen years of economic transformations we can conclude that the transition period in Georgia and many other post-communist countries has ended but, unfortunately, the economic (and not only economic) system is far from the Western style of capitalism. It is better characterized as “post-communist capitalism.” The key reason is the “necroeconomy.” The collapse of the communist regime and the breakdown of the command economy revealed that, with rare exceptions (hydroelectric power, mining and primary processing of raw materials), the goods produced in these countries were incompatible with international standards and could not compete with Western products. Only an efficient bankruptcy law is an effective tool against necroeconomy. In transition countries, including Georgia, business procedures were so burdensome that some entrepreneurs corrupted officials in order to speed up the process. Others, as a means of avoiding oppressive regulations, conducted their businesses unofficially. Regulation that imposes costs beyond the expected social benefits is usually regarded as red tape. Inefficient administration and poor institutional development raise costs, which is further aggravated by a lack of business practice and regulatory experience. Unfortunately, there are a lot of problems related to the protection of human rights and the guarantee of property rights within the implementation of the new legislation.
Introduction
The collapse of the communist regimes in the countries of Eastern Europe and the break-up of the U.S.S.R. were watershed historical events at…………….
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