Georgia's economy: post-revolutionary development and post-war difficulties

Varieties of Limited Access Orders: The nexus between politics and economics in hybrid regimes

“…After the Rose Revolution of 2003 that brought Mikheil Saakashvili to power, Georgia has witnessed higher competition for political resources (Levitsky & Way, , p. 227): The 2004 elections were characterized as relatively free and fair and their administration constituted a significant improvement to previous elections (BTI, ). While Georgia differs substantially from Armenia or Belarus in this respect, the electoral improvements did not make Georgia an OAO: Mikheil Saakashvili's rise to power was accompanied by a concentration of power in the presidential apparatus and a weakening of the parliament (Papava, ). The country also still lacked a political opposition and a fully independent judiciary (Freedom House, ).…”

“…Saakashvili embraced a business‐friendly agenda that included a massive deregulation of the economy and privatization programs, but took some time to be implemented on the ground. Simultaneously, though, the new authorities engaged in processes of “deprivatization” (Papava, , p. 203), in which the government forced owners to hand over property privatized prior to the Rose Revolution to the state, and resold it. The government drastically infringed property rights, intervened with tax audits, and pressured businesses into contributing to extra‐budgetary accounts to grant favors to Saakashvili's political allies or punish political opponents (Wetzinger, ).…”

“…Our typology points out that while access to political competition increased in Georgia, economic access did not in the direct aftermath of the Rose Revolution. Developments in the economic sphere were instead indicative of the prevailing elite corruption in Georgia (Papava, ). This observation differs from assessments at the time that were mostly intrigued by Saakashvili's free market rhetoric and the fight against lower level corruption (Freedom House, ), as well as those preoccupied with the need for improving horizontal accountability in the political sphere (Hale, ).…”

“…Formal rules of governing economic competition, which the Sakashvili government introduced in the immediate aftermath of the Rose Revolution, hence showed signs of being enforced on the ground during the time period (BTI, ). In addition, pressure by the IMF had made the government abandon extra‐budgetary accounts in 2006 (Papava, ). Such changes widened economic access for businesses in comparison to the early 2000s.…”

“…Such changes widened economic access for businesses in comparison to the early 2000s. Still, Georgia remained an LAO, as property rights violations remained widespread and deregulation had sensitive side effects, such as a drastic reduction of labor rights (Papava, ).…”