Georgian Economy: Main Directions and Initial Results of Reforms

On the theory of post‐Communist economic transition to market

“…Their authors come from both economies in transition and western developed nations (e.g. Abalkin, 1997; Belokrylova, 2002; Buzgalin, 1994; Geiger, 1992; Nikolaeva, 2001; Papava, 2002b).…”

“…That model of capitalism that is shaping up after the downfall of the Communist regimes is significantly different from its American, European or Japanese counterparts. This allows us to introduce the term “post‐Communist capitalism” (Papava, 2002b).…”

“…If there is a big question mark over the country's future and its ability to survive, there must be no doubt whether the “Shock Therapy” method is really needed, as under such circumstances the country has no choice and positive results are almost guaranteed. Such a situation might be classified as “Minimal Shock with Maximum Therapy”or “Soft Big Bang” (Papava, 2002b, pp. 54‐5).…”

“…To the extent that post‐Communist transformation is, by nature, a long process, there emerge natural questions:Which way should the reform go after the end of “Shock Therapy”?What steps should be taken to follow up and build on the achievements of “Shock Therapy”?One possible answer to these questions rests on a “Social Promotion” method of economic reforms which requires to create certain conditions that by encouraging the formation of a strong class of businesspeople will speed up the process of social stratification; on the other hand, to ensure support of reforms on the part of low‐income groups and improve their hard living conditions, a consistent and a beneficiary‐oriented social assistance policy should be developed and implemented (Papava, 1996a, pp. 260‐7; 1996b, 1999, pp. 281‐91).…”

“…A combination of well‐known mechanisms of promoting supply and demand, namely the so‐called Laffer/Keynesian Synthesis, is proposed as a theoretical base of the “Social Promotion” method (Papava, 1996a, pp. 263‐4, 266‐7; 1999, pp. 287‐91).…”