Georgia's Actions to Became Integrated into
the International Community: An Example of
Reflexive Practice
Ia Natsvlishvili,
Tbilisi State University
Tbilisi Georgia
Georgia’s Reforms-Positive Test
•
institutional reforms of transitional countries and
integration in to the international community have great
importance because successful institutional reforms
encourage investment flow.
• Successful institutional reforms in Georgia were based on
the concept on the “Washington Consensus”.
• Remarkable actions were also made towards the
integration into the European higher education area.
• Georgia’s actions to become integrated in the international
community are a positive test of “Washington
Consensus” and the“Bologna Process”.
“Washington Consensus”
Market fundamentalism
• The “Washington Consensus” (1989 John Williamson) describes a
set of ten specific economic policy prescriptions of reform for crisiswracked developing countries.
• The concept was developed by Washington D.C based institutions
such as the IMF, WB and the US Treasury Department
• Critics include George Soros, Nobel Laureate Joseph E. Stiglitz, some
Latin American politicians and heterodox economists.
• "Stabilize, privatize, and liberalize" became the mantra of a generation
of technocrats who cut their teeth in the developing world and of the
political leaders they counseled.” (Dam Rodrik, professor at Harvard
university; paper Goodbye Washington Consensus, Hello Washington
confusion?,)
• Criticism of the WC has been associated with Socialism and with
Anti-Globalizm.
• Following the 2009 G-20 London summit, British Prime Minister
Gordon Brown declared "the old Washington Consensus is over".
WC Top Ten recommendations
• Fiscal discipline;
• Public spending redirection toward broad-based provision of key progrowth, pro-poor services like primary education, health care and
infrastructure investments;
• Tax Reforms– broadening the tax base and adopting moderate
marginal tax rates;
• Interest rates-that are market determined and positive (but moderate) in
real terms;
• Competitive exchange rate;
• Trade liberalization;
• Liberalization of inward foreign direct investment;
• Privatization of state enterprises;
• Deregulation except for those justified on safety, environmental and
consumer protection grounds, and prudent oversight of financial
institutions;
• Legal security for property rights.
Reflection of WC in Georgia’s
reform history- reflect and act
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systematic economic reforms
strategic geopolitical location
stable macroeconomic environment
comfortable trading environment
effective tax reform
simplified procedure of licensing and business start
up
• aggressive privatization policy
• strong efforts to reduce corruption
• adequate legal environment
Evidence of success
• World Bank - in 2008 according to speed of economic reforms
Georgia moved from 118th place to 11th. By the evaluation of
the experts of the same organization, no other country in the
world executed so many reforms so fast in 2005-2008 as it did
Georgia.
• . In the united researches of World Bank and EBRD "Business
environment and industry" it is indicated that in 2004-2008
Georgia executed the greatest corruption decrease among
developing countries. According to economic freedom, Georgia
took the 21st place among 161 countries and 20th place among
41 European countries.
Evidence of Success
• The World Bank and EBRD in their report state that among
private firms corruption decreased from 60% to 15%. According
to the data of 2005-2008, the number of firms paying bribes for
any reason decreased from 44 to 11%.
• Business freedom 78.9
• Trading freedom 61.8
• Fiscal freedom 94.2
• Government freedom 91.3
• Monetary freedom 77.9
• Investments freedom 60
• Financial freedom 70
• Property freedom 30
• Corruption 23
• Working force freedom 99.9
Crossroad Between Europe and
Asia
• Georgia is located at the crossroad between Europe
and Asia. Therefore its transport highways are the
bridge, connecting important regions of the world.
These are: Europe – 495 million, countries of Black
Sea coast – 243 million, Turkey – 73 million,
Caucasus region – 16 million people.
Reasons for Attractiveness
• Adequate institutional reforms and a free market oriented
economic policy, stable and attractive macroeconomic
environment, competitive trade regulations, a liberal tax
code, an aggressive privatization policy, a modernized
business licensing system, an adequate technical regulation
system, a competitive and dynamic banking sector, diverse
investments sectors;
• A strategic geographic location, a country of ancient
culture and traditions, milestones in Georgia's
transformation to a market economy;
• Despite the current global financial crisis and the Russian
–Georgian War in 2008 Georgia remains attractive place
for investments because of successfully implemented
institutional reforms.
The biggest investors in Georgia for
2008 (in thousands of USD)
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Source: Department of statistics of Georgia. Tbilisi 2009.
Direct foreign investments in Georgia.
Millions of USD. Source: Statistical
department of Georgia. Tbilisi 2009.
Keys of Success: Reflecting and Acting according to the
“Bologna Process”
• Integration process toward the European higher education
area and international educational community;
• Establishment of European Credit Transfer System and
three level degrees (undergraduate, graduate and doctoral);
• Modernization of curricula, support to the mobility of
students and professors;
• Developments of field specific national standards
according to the Western European experience.
• Georgia is in the process of successful implementation of
the recommendations of an ambitious European Project the “ Bologna Process”
Paper presented at the
Washington Academy of Sciences Conference
Washington D.C.; March 27-28, 2010