Economy in trap of institutions (ABSTRACT)

Paata Leibashvili

The liberal model of economic reforms in the post-Soviet countries based on the principles of the “Washington Consensus” which is more and more criticized by scientists from all over the world.

Criticisms from the positions of institutional economic theory is more consecutive and reasonable. Misunderstanding of the mechanisms of institutions’ influence on market economy and other spheres of social life accounted for great deal of mistakes in the implementation process of economic reforms. Institutions are written and unwritten norms, laws and rules, stereotypes of human behaviour in the society. They provide for co-ordination of social and individual interests and efforts of economic agents in the functioning process of economy. Transition periods in the development of society are characterized by disintegration of old institutional structure and lack of a new one, which leads to the derangement of normal functioning of economy and society on the whole. Underestimation of the role of institutions in the reform process of Georgia has become main reason of deformation in the legal conscience of society, delay in democratic and economic reforms in Georgia. The article deals with a number of problems in economy of Georgia within the context of “institutional economic theory”. The article is a short and altered variant of the economic essay “Georgian reforms in “institutional trap” (P. Leiashvili, “Georgian reforms in “institutional trap”, Tbilisi, “Aisi”, 2003).