Vladimer Papava

On the Theory of Post-Communist Economic Transition to Market

Purpose – The paper investigates the utility of economic theory for post-Communist economic transformation. It serves to explain the main reasons for market reform failure in different post-Communist countries. Design/methodology/approach – A literature review suggests that after the collapse of the Communist system there was no economic theory of transition to market. Whenever one considers the transition of post-Communist economies to a market system (which, in fact, is nothing but post-Communist transition to capitalist economies), it has to be placed on record, as this kind of transition has no precedent in history. Findings – The main mistake of gradualists stems from their overlooking some very important conditions for successful transition: political guarantees and internal assets for reforms. And the success of shock therapy rests on the paradox, “the worse, the better”. Originality/value – There is as yet no special economic theory of post-Communist transformation and it is just developing. This paper helps one to understand the main features of shock therapy and gradualism for designing the framework of such a theory. It is geared towards researchers and students interested in the theoretical aspects of the post-Communist economic transition to markets.

A new concept for the Caucasus

This article offers a new perspective of the regional dimensions and historical, political and economic legacies of the Caucasus. The Caucasus is composed of three regions: the Central Caucasus (Armenia, Azerbaijan and Georgia), the North Caucasus (some southern autonomous republics of Russia), and the South Caucasus (some northern provinces of Iran and Turkey). Azerbaijan, Georgia and Turkey are one ‘team’ in the implementation of regional projects for the development of transportation networks, while Armenia, Iran and Russia are in principle opposed to these projects. Further activation of the cooperation of the United States and the European Union in the Caucasus is, therefore, very important in obtaining as many alternative sources of oil and natural gas as possible.

Becoming European: Georgia’s Strategy for Joining the EU

Civil society must be a participant in formal political institutions if democratic and market reforms are to take root.

Necroeconomics – The Theory of Post-Communist Transformation of an Economy

The paper offers a new view of the process of post‐Communist transformation of an economy. The collapse of the Communist regime had the result that with rare exceptions all goods produced in these countries were incompatible with international standards due to low quality and/or high prices. The economy of that type can be referred to as “dead” economy, or “necroeconomy”. “Routine”, which has been deeply rooted in the command economy over many decades, is the reproductive base of necroeconomy. The “routine” which reproduces necroeconomy depends, inter alia, on the behavior of the homo transformaticus, who in the realm of entrepreneurship assumes a title of “post‐delets”. The end of necroeconomy is the only true indicator of the end of post‐Communist transformation.

Anatomical Pathology of Georgia's Rose Revolution

The article discusses the problems of the successes and the failures of Georgia’s post-revolutionary economic development. Amongst the positive results, the significant increase of national budget revenues and the overcoming of the energy crises should be emphasized. At the same time, mistakes in terms of both the building of a democratic state and economic policy were made. Making the judiciary an appendage to the General Prosecutor’s Office and the executive branch, the government’s control of the media and its defiance of property rights, are among the most serious errors of Georgia’s post-revolutionary development.

The Economic Development Complex in the Black Sea Area: The Impact of the Global Financial and Economic Crisis

Currently, the Black Sea Region1 is not as integrated economically as to allow one to outline some common development trends of all regional economies. The most of the region’s nations (Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Moldova, Romania, Russia, Serbia, and Ukraine), except Greece and Turkey, are post-Communist countries. The purpose of this paper is to highlight the economic development difficulties of the post-Communist Black Sea Region and to examine the key economic problems of all the countries encompassing it in the context of the ongoing financial crisis.

Poverty Reduction through Private Sector Development in Georgia: Policy, Practice and Perspectives

This paper deals with the experience gained in the area of poverty reduction and private sector development in Georgia. The Economic Development and Poverty Reduction Programme approved by the President of Georgia in 2003 has never been implemented because the Georgian Government had neither the will nor the ability to launch its implementation. The post-revolution Government was not always consistent in its endeavours to support private sector employment programmes. Very often its steps were populist rather than practical. Poverty reduction may be achieved as a result of co-ordinated efforts of the government and the private sector.

A New View of the Economic Ability of the Government, Egalitarian Goods and GNP

In modern economics several recognized theses may be called into question. This holds true for factors of production and incomes from them, transfer payments and the problems of their inclusion in the Gross National Product (GNP). In the article these problems are analyzed.

On the First-Generation Post-Communist Reforms of Georgia's Economy: A Retrospective Analysis

This article reviews the first-generation post-Communist reforms of Georgia’s economy. It points out the mistakes made during the reform of post-Communist Georgia’s economy and identifies the reasons for the failure of Shock Therapy in post-Communist Georgia based on an analysis of the successful economic reforms carried out in Poland. It focuses special attention on how the mistakes were corrected, thus leading to the Minimum Shock with Maximum Therapy program that proved favorable for Georgia’s economy.

Taxes, Production Technology, and Economic Growth

The article examines two different approaches to estimating the effect of the tax burden on the amount of total output and budget revenues. The first approach is based on a transformation model, in which the main role is played by a production function with variable elasticity. The second approach uses a behavioral model, with a specific version of an entropy function. Both models make it possible to determine the so-called fiscal points corresponding to the maximum production effect and the budgets maximum tax revenues. The conclusion is drawn that, of these points, only the points of the behavioral model correspond to the Laffer concept, since for points derived from the transformation model the amount of use of economic resources is exogenous, while for the points of the behavioral model this amount occurs endogenously. The results obtained are illustrated using existing data on the U.S. economy.