Despite
the privatization process in 90s. and after the Rose Revolution, the
significant part of assets still are under state ownership. As researches shows
more then 65-70% of assets are owned by state and the rest of them are
privatized. Significant portion of land parcels (65%), forest and wooded land (100%), mining sites
(100%), buildings, 1400 state companies are not still privatized. Right now,we
face the underdeveloped capital market. Catch the point from the first
paragraph, we need more assets under private property to establish the basic
institution of market economy – capital market.
The
core question is why these assets are not privatized yet? The answer is that it
is impossible to privatized so huge amount of property for money in the short
period of time. If we try to do this we will get undervaluation of those
assets. What we actually should do is privatization without selling them for
money. Why is this so important? Because we will receive privatized assets for
sure, and we give everyone the posibility to participate in economic activity.
It is obvious, that Kaldor-Hicksian paradigm of growth (orientation on growth
and then redistribution) is not sustainable path (because of political and
economic reasons), it is better to give people possibility to acquire the
assets, and to participate in economic activity by this way. Why this is an important?
In Kaldor-Hicksian paradigm, government
collect taxes and then it redistributes to its citizen, under such
circumstance, citizens tend to elect
more socially oriented government which erodes financial stability of country. If people will have
property under their control they have more possibility to attract finance and
participate in economic activity themselves.
How we
can do this? In our scheme of privatization, people do not pay money to acquire
property over some assets. They will receive special “money”- “Invest” (as it
is called by us) from the government, only one thing that they can do with this
money is to purchase an assets in auction (Of course, everyone can sell or buy
“Invests”). Government sells thousands of land parcels, buildings, shares of
state owned companies, and people have right to acquire this property with “Invests”.
This process continues during 18 months; this is very important in this scheme
of privatization, because people learn from the process. In our scheme of
privatization government also privatized some mining sites: marble, granite, bentonite
clay and so on, to do this government firstly establish state owned joint stock
companies (which owns hugh amount of subsoil) and then it privatize 76% of its
share. How it happens? Everyone in each month receives “invests”, let`s 1000 “Invest”
on their account in a bank. After this, everyone will have possibility to
collect those notes or directly to submit on the account of corporation,and
he/she will receive exactly same share as his/her
contribution to the total amount of “Invests” accrued on the corporation`s
special account.
After
this process, we will get private corporations which own mining site, also
other core assets (land, buildings, and etc.) will be privatized. Moreover, as
this assets will be privately owned then owners will have much more interest to
make more long term investment. Generally, we will get widespread private
property over an assets. This will assist development of capital market, attraction
of venture capital and investment in real economy. Hence, the first is a
private property and then right institutions for market economy.
Ramaz Gerliani
Co-founder of "Economic
Policy Experts' Center", Ph.D. in Economics
Mate Gardava
Co-founder
of "Economic Policy Experts' Center", Doctorate in Economics
Ketevan Krialashvili
Chairperson
of NGO "Economic Education and Strategic Research Centre", Researcher of "Economic Policy Experts'
Center", Doctorate in Economics
Lasha Arevadze
Invited
expert, Doctorate in Economics
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