2 AZƏRBAYCAN RESPUBLİKASI TƏHSİL NAZİRLİYİ QAFQAZ UNİVERSİTETİ AZƏRBAYCAN İQTİSADÇILAR İTTİFAQI MINISTRY OF EDUCATION OF AZERBAIJAN REPUBLIC QAFQAZ UNIVERSITY THE UNION OF ECONOMISTS OF AZERBAIJAN QLOBALLAŞMA PROSESİNDƏ QAFQAZ VƏ ORTA ASİYA MÖVZUSUNDA BEYNƏLXALQ KONFRANSIN MƏQALƏLƏRİ ARTICLES OF THE INTERNATIONAL CONFERENCE ON A THEME CAUCASUS AND CENTRAL ASIA IN THE GLOBALIZATION PROCESS AZƏ RBAYCAN RESPUBLİ KASININ PREZİ DENTİ HEYDƏ R Ə L İ RZA OĞ LU Ə L İ YEVİ N ANADAN OLMASININ 80 İ LLİ K YUBİ LEYİ N Ə HƏ SR OLUNUR IT IS DEVOTED 80 YEARS OF THE PRESIDENT OF AZERBAIJAN REPUBLIC HAYDAR ALIRZA OGLU ALIYEV Bakı
3 QLOBALLAŞMA PROSESİNDƏ QAFQAZ VƏ ORTA ASİYA MÖVZUSUNDA BEYNƏLXALQ KONFRANS INTERNATIONAL CONFERENCE ON A THEME CAUCASUS AND CENTRAL ASIA IN THE GLOBALIZATION PROCESS TƏŞKİLAT KOMİTƏSİNİN HƏMSƏDRLƏRİ / CO-CHAIRMEN OF ORGANIZING COMITEE: Professor Erol ORAL, Akademik Ziyad SƏMƏDZADƏ TƏŞKİLAT KOMİTƏSİNİN ÜZVLƏRİ / MEMBERS OF ORGANIZING COMITEE: Dr. Osman Nuri Aras, Dr. Selim Özdemir, Prof. İmran Cəfərzadə, İ.e.d. Rəsul Balayev, Dr. Alexander Magill, Qalib Şərifov, Yavuz Kahraman, Fikret Elma, Rövşən İbrahimov, Kənan Bəşirov, Vüqar Hacıyev, Vəfa Qurbanova, Əhməd Əhmədov, Nailə Cabbarova, Rəşad Hacıbalayev, Yeganə Məmmədova ELMİ REDAKSİYA HEYƏTİ / SCIENTIFIC EDITORIAL GROUP Prof. Niftalı Qocayev, Prof. Ömer Okumuş, Prof. Arif Şəkərəliyev, Dr. Hakan Acar, Prof. İmran Cəfərzadə, Prof. Məmməd Həsən Meybullayev, Dr. Məmmədəli Babaşov, Dr. Osman Nuri Aras, Dr. Selim Özdemir, Prof. Fuad Məmmədov, İ.e.n. Sadıq Salahov, İ.e.d. Rəsul Balayev, Dos. Eldar İsmayılov, Dr. Alexander Magill, Dr. Murat Erguvan YARADICI QRUP / CREATIVE GROUP: Dr. Osman Nuri Aras, Yavuz Kahraman TƏRTİBAT / DESIGN Sahib Kazımov Bakı
4 İ Ç İ N D Ə K İ L Ə R İQTİSADİYYAT BÖLMƏSİ 1 1. INTEGRATION OF GEORGIA WITH THE WORLD COMMUNITY İsmail ÖZSOY 3 2. KÜRESELLEŞME SÜRECİNDE KIRGIZİSTAN EKONOMİSİNİN SON ON YILININ DEĞERLENDİRİLMESİ Süreyya SAKINÇ 9 3. KÜRESELLEŞME SÜRECİNDE IMF POLİTİKALARININ SONUÇLARI: AZERBAYCAN DENEYİMİ Alkan SOYAK, Zenfira NESİROVA KÜRESELLEŞMENİN GELİŞMEKTE OLAN ÜLKE EKONOMİLERİ ÜZERİNE ETKİLERİ, KIRGIZİSTAN VE TÜRKİYE DEN İKİ AYRI UYGULAMA ÖRNEĞİ Mehmet CANDEMİR, Halil GÜNGÖR MARKET ORIENTATION AND ORGANIZATIONAL PERFORMANCE IN MAINLAND CHINA: TEST OF THE MARKET ORIENTATION SCALE (MARKOR) Erdener KAYNAK, Ali KARA ULUSLARARASI MALİ KRİZLER, IMF POLİTİKALARI, AZ GELİŞMİŞ ÜLKELER, TÜRKİYE VE DÖNÜŞÜM EKONOMİLERİ Halil SEYİDOĞLU E-NTEGRASYON AÇISINDAN E-TİCARET KAFKASYA-TÜRKİYE ÖRNEĞİ Fahriye GÖZGÜ, Halil MUTİOĞLU ÇOK ULUSLU ŞİRKETLERİN KOLLEKTİF İLİŞKİLERE BAKIŞI VE SENDİKALARIN STRATEJİK YAKLAŞIMLARI Ayhan GENÇLER, Adil OĞUZHAN KARADENİZ EKONOMİK İŞBİRLİĞİ: DÜNYA EKONOMİSİ AÇISINDAN GELECEĞİ İrfan KALAYCI AZERBAIJAN VALUATION IN THE LIGHT OF MODEL OF INDIAN INFORMATION TECHNOLOGIES Cihan BULUT KÜRESELLEŞME VERSUS ULUS DEVLETLER GEÇİŞ EKONOMİLERİNİN KIRILMA NOKTALARI Geybullah GEYBULLAYEV, İbrahim Attila ACAR, İsmail BAŞARAN FİNANSAL KÜRESELLEŞMENİN AZERBAYCAN ÖZELİNDE KAFKASYA VE ORTA ASYA YA ETKİSİ Osman Nuri ARAS GLOBALLEŞME SÜRECİNDE ULUS ÖTESİ İŞLETMELER, TÜKETİCİ DAVRANIŞLARI VE AZERBAYCAN Yavuz KAHRAMAN 80 i
5 14. TRANSFER OF TECHNOLOGIES: A META TAXONOMY Arnold REISMAN EKONOMİNİN YENİLENEN YÜZÜNDE E-TİCARET UYGULAMALARI: TİCARETİN YENİ TEMELLERİNİN ARANMASI VE GELECEĞİNE İLİŞKİN DÜŞÜNCELER Gürcan PAPATYA, Nurhan PAPATYA, A.Buğra HAMŞİOĞLU 97 SİYASƏT BÖLMƏSİ ULUSLARARASI TÜCARET HUKUKUNUN GELİŞMESİNDE TAHKİMİN ROLÜ VE AZERBAYCAN UYGULAMASI Hakan ACAR ORTA ASYA ÜLKELERINDE SOSYAL GÜVENLIK SISTEMLERININ SORUNLARI Abdulhalim ÇELİK KÜRESELLEŞME SÜRECINDEKİ KAFKASYA VE ORTA ASYA DA ÖTEKİ SORUNU Alaeddin YALÇINKAYA СРЕДНЯЯ АЗИЯ И КАВКАЗ МЕЖДУ РОССИЕЙ И США Пламен ДИМИТРОВ КАВКАЗ И БАЛКАНЫ ВO ВНЕШНЕЙ ПОЛИТИКЕ РОССИИ АКЦЕНТЫ И ПЕРСПЕКТИВЫ В ПРОШЛОМ И БУДУЩЕМ Нина ДЮЛГЕРОВА A THÜNİAN -WORLD SYSTEMS APPROACH TO THE INDUSTRIAL LOCATION AND ENVIRONMENTAL PROBLEMS: THE NEW ROLE OF TURKEY AND CAUCASIAN COUNTRİES İN THE GLOBAL PRODUCTION Mehmet C. MARİN, Hakan ALTINTAS SOME FEATURES OF CENTRAL EURASIAN CORRUPTION IN THE ERA OF GLOBALIZATION Irina Y. MOROZOVA INDEPENDENT AZERBAIJAN'S STRATEGIC IMPORTANCE: PAST, PRESENT, AND FUTURE Robert V. BARYLSKI GLOBALIZATION AND POST-COMMUNISM Peter RUTLAND СТРАТЕГИЧЕСКАЯ РОЛЬ ЦЕНТРАЛЬНОЙ АЗИИ В ГЛОБАЛИЗИРУЮЩЕМСЯ МИРЕ Фарход ТОЛИПОВ KÜRESEL KENTLERİN REKABETÇİ POTANSİYELİ: BAKÜ KENTİ ÖRNEĞİ Hakan ALTINTAŞ, Mehmet TAN STRUCTURE OF PARLIAMENTS, TERMS OF PRESIDENCY AND DEMOCRACY IN THE FRAMEWORK OF GLOBALIZATION Shah-Ahmad MUTALOV 181 ii
6 13. THE SECURITY RELATIONS BETWEEN CHINA AND CENTRAL ASIA IN THE GLOBALIZATION ERA Gourbani KOSHAKI 187 MƏDƏNİYYƏT BÖLMƏSİ İSLAM VE KÜRESELLEŞME Kemalettin ÖZDEMİR GLOBAL KÖYÜN KUTSAL KİTABI Fethi Ahmet POLAT KURESELLEŞMENİN PSİKOLOJİK SONUÇLARI Canani KAYGUSUZ KİMLİKSİZLEŞTİRMENİN KÜRESELLEŞMESİ Halil MUTİOĞLU TÜRK DÜNYASI ŞAİRLERİNİN TÜRK DİLİ ÜZERİNE YAZDIKLARI ŞİİRLER VE DİL ANLAYIŞLARI İskender PALA ULUSLARARASI TURİZM EKSENİNDE KÜRESEL KÜLTÜRÜN AZERBAYCAN YEREL KÜLTÜRÜNE YANSIMALARI Derman KÜÇÜKALTAN, Gül Yılmaz KÜÇÜKALTAN, Adil OĞUZHAN REFLECTIONS OF CULTURAL GLOBALIZATION IN TV PROGRAMMES IN KYRGYZSTAN Huriye KURUOĞLU KÜRESELLEŞME VE KİMLİK Muhittin AŞKIN QLOBALLAŞMA PROSESİNDƏ DİNİ VƏ ƏXLAQİ DƏYƏRLƏR Məmmədəli BABAŞOV BİREYSEL KİMLİK VE KÜRESELLEŞME Sırrı AKBABA KÜRESELLEŞME DİN VE AHLAK M. Zeki İLGAR 271 iii
7 İQTİSADİYYAT BÖLMƏSİ 3
8 Qloballaşma prosesində Qafqaz və Orta Asiya İqtisadiyyat bölməsi INTEGRATION OF GEORGIA WITH THE WORLD COMMUNITY İsmail ÖZSOY International Black Sea University Faculty of Economics and Administrative Sciences Tbilisi / GEORGIA ABSTRACT The achievement of independence in 1991 left Georgia with inefficient remains of the Soviet-era state systems. She inherited large state-owned enterprises specializing in the products assigned by the Soviet system, which overrated manufacturing industry and undervalued services, making Georgia dependent on other Soviet republics for a wide range of products that were unavailable after After a short-term dictatorial regime, Eduard Shevardnadze maintained national unity and tried to establish international contacts. With the support of IMF a political base for a market economy was layed in On the way to build a market-oriented and democratic community, Georgia has adopted some of the best laws and institutional structures. While experiencing such a transformation in the social and economic structure within the country that results in a modern society, Georgia has become a member or a participant of more than 105 international organizations, recognizing the renewed importance of international organizations to integrate with the world community. Economists generally agree on six requirements for a successful transition from socialism to a market-based system. In this study, we will try to follow the steps taken by Georgia on that way. Key words: Planned economy, market-based economy, democratic community, transition, privatization, reform, homo societicus (man of society). INTRODUCTION Georgia is a strategically important Caucasian country situated at the crossroads of Europe and Asia and well placed to serve as one of the world's major corridors for the shipment of oil and gas of the Caspian countries. Regarded in its geopolitic and geoeconomic dimensions for its such favorable strategic location, 1 Georgia is directly connected with the restoration of the historic Silk Road that will provide the cost-effective utilization and safe transportation of the Caspian oil and gas to the international markets. Much of that gas and oil will be exported to Europe and Asia through Georgia. Being such a fulcrum for east-west energy pipelines, Georgia remains a key western interest in the Transcaucasus region. Thus, Georgia's development as a stable and democratic country, and her increasingly integration into the global economy is of great importance. During the Soviet period, Georgia had one of the highest living standards in the Soviet Union with its people who were among the best educated, and with an economy based on agribusiness, science, medicine, tourism, and aviation. Despite all, like other republics, she was not a part of the world community. The collapse of the Soviet system forced Georgia to reorient the political, economic and social structure of the country. But, immediately following the independence, the combined impacts of the civil war and economic reorientation on the society have been devastating. The loss of markets in the former Soviet Union and the cease of the input flow from the same source led to about 80 % decline in recorded GDP from 1990 to The dislocation of trade and industry and the consequent loss of budgetary revenue urged the government to borrow. Thus, the accumulation of large overseas official debts gave way to acceleration in the rate of inflation from 5 % in 1990 to 8380 % in The short-lived dictatorial and paranoid regime of Zviad Gamsakhurdia in 1991, followed by the bloody process of unseating him, gave Georgia a lasting reputation for instability that damaged prospects for foreign investment and for participation in international organizations. As head of state in early 1992, Eduard Shevardnadze, the most popular politician in Georgia, maneuvered to maintain national unity. He used his familiarity with the world of diplomacy to establish international contacts, gain sympathy for Georgia and seek economic ties. With the support of IMF privatization program was extended, conditions were eased and communication systems were improved with joint enterprises in And a political base for a market economy was prepared. Laying the groundwork for building a democratic society and expediting the transition to the market economy, the transformation process in Georgia provided the framework for signing a formal agreement between the European Union and Georgia in April This agreement has potentially opened the door for Georgia to integrate into the Western Europe. The country headed by Eduard Shevardnadze shaped vividly its decision to set up an open and democratic society and ensure equality of all its citizens through the new constitution, free and fair elections, and the 1 See, Gakhokidze, Jemal, Historical Geography and The Security of a Country, Tacis, Second Quarter 2001, pp
9 establishment of local democracy. 2 Besides, the Government aimed to foster its integration into major regional and international organizations. Georgia has been a member of more than 30 international organizations, and has established formal diplomatic relations with 117 countries. Economists generally agree on six requirements for a successful transition from socialism or so-called planned economy to a market-based system. These are macroeconomic stabilization, deregulation of prices and liberalization of trade, privatization, establishment of market-supporting institutions, social safety net and external assistance. 3 At the moment, notwithstanding some serious problems, Georgia is experiencing a transition to a politically democratic and economically market-based system on the way to the integration with the world community and she has been fulfilling these requirements together with establishing relationships with international organizations. In this study, we will try to follow the steps taken by Georgia on that way. BUILDING A MARKET-BASED ECONOMY Georgia has chosen open markets and the rule of law as a path to economic growth in transition from a command to a democratic and free market system. As the initial steps of transition to a market economy were taken in February 1992, a new Anti-Monopoly Department was created within the Ministry of Economy of Georgia. The legislation and competition policy aimed at the promotion of entrepreneurship, and the prohibition of unfair competition, anti-competitive activities, misuse of market position, mergers, and other actions which provoke or may provoke the restriction of elimination of competition on the market. 4 The law on Monopoly Activity and Competition, dated December 1996, is considered to be a foundation of Georgia s commitment to free and open markets. 5 But, some critiques assert that the law on Prices and Principles of Price Formation jeopardises the competition policy. 6 Backed by the procedure of such legislative actions and with the assistance of the International Monetary Fund (IMF) were taken drastic measures to overcome the crisis and to promote economic reforms in late The main focus of the program was on the restoration of financial and budgetary control. Credits, government employment and expenditures were reduced. Further liberalization of prices was introduced and privatization was intensified. External donors and financiers funded various projects to support the revival of the economy and to establish the legal and institutional infrastructure for a market economy. Georgia's currency, the lari, which was introduced in 1995, was allowed to float freely in This attempt resulted in the stabilization of the currency, and the halt of inflation. The inflation rate in 2000 was 4.6 percent, down from 10.9 percent in 1999, 7 and 3.4 percent in It is expected to be around 5.9 in An extremely low-level rate of inflation for such an emerging market economy as Georgia is a result of very strict monetary policy implemented by the National Bank of Georgia with the support of IMF and World Bank. 8 The economy began to experience modest but increasing levels of GDP growth. The deficit in the state budget realised 2.9 percent in 2001, exhibiting a decline from 3.6 percent in Price liberalization was nearly complete since the liberalization of the price of bread in June This step toward price liberalization, which was considered successful reform particularly in this field, did not affect the rate of inflation. Several projects in the spheres of health, transport, municipal infrastructure and agriculture were financed by the Word Bank to restore macroeconomic stability, to promote the resumption of growth and to improve living standards. 10 In general Georgia has adhered to fiscal and monetary policies that promote balanced, sustainable economic growth and facilitate the functioning of markets. However, it has poor rates of tax collection. Consequently, the state budget remains highly dependent on external financing and loans from the National Bank of Georgia. By evading tax obligations, the large 'shadow economy', places legitimate businesses at a significant competitive disadvantage and inhibits their development. The 'shadow economy' accounts officially stands between percent of GDP but is commonly thought to be substantially higher. As reorienting the economy towards the west, there has been an inevitable change in the mix of sectors which are experiencing growth. Agriculture was the most responsive to the change from a command to market economic system. Branches of industry are adjusting according to market principles. The service sector is growing rapidly in size and sophistication in response to the needs of a market economy. The main reason for Now, Georgia is a presidential republic based on a classical democratic model consisting of an executive, legislative, and judiciary branches. The Parliament represents the legislative power. The principles of the rule of law are based on the Constitution of Case, Karl E.; Fair, ray C., Principles of Macroeconomics, Prentice-Hall, New Jersey, USA, 2002, pp Lapachi, Ketevan, Anti-Monopoly Regulation in a Transition Country: The Example of Georgia, European Competition Law Review, Sweet & Maxwell, Vol: 22, Issue: 9, September 2001, p Lapachi, Ketevan, An Examination of the Present Competition Law of Georgia Using Pittman s Criteria, The Antitrust Bulletin, The Journal of American and Foreign Antitrust and Trade Regulation, Spring 2002, p.190. See, Lapachi, (2002), p. 205, with reference to Larry, Morgan, The Law on Prices and Principles of Price Formation: A Barrier to Free Markets 1 (CEPAR Economic Commentary Report 6, Nov. 1997). Problems of Economic Transition (Ed. Papava, Vladimer and Elene Chikovani), November/December 1997, p. 7. Liparteliani, Lekso, Georgia: A Decade of Transition, Georgian Economic Trends, TACIS, 2002, No: 2, p Liparteliani, op.cit., p See for some, Problems, op.cit., p. 8.
10 Qloballaşma prosesində Qafqaz və Orta Asiya İqtisadiyyat bölməsi this was the fast growth of transport, telecommunication and financial services sectors. 11 The share of private sector in the Georgian economy continues to increase both from internal growth within private enterprise and from the government's continuing privatization program. The Parliament passed enabling legislation which extends to private enterprises legal title to the land on which they stand. The process of registering titles to agricultural land has been completed. PRIVATIZATION Privatization is considered one of the most important indicators of the transition. The Georgian government has largely put into place the legislative framework to promote and sustain a free and competitive market-oriented economy and to encourage foreign investment. The privatization of Georgian state assets was initiated with the Law on Privatization of State Enterprises in This legislation provides for national treatment of both foreign and local investors who wish to participate in the privatization process. The Law on Privatization of State Property, adopted in May 1997, recognizes four forms of privatization: tender, auction, lease buy-out, and direct sale. Parliament made a commitment that all new legislation beginning September 1, 1998 should be in full compliance with the legal norms of the European Community. Important legislative milestones were reached in 2000 with the passage of key legislation aimed at extending the scope of the privatization program, creating capital markets, promoting accounting reform, and registering ownership of enterprise and agricultural land. State price controls are being phased out. With the establishment of legal framework for the market economy in 1996, the right of possession of agricultural land was conveyed to citizens of Georgia by the Law on Agricultural Land Ownership. This law would undoubtedly lead to the complete privatization of agricultural land. The laws on Monopolistic Activity and Competition dated June 1996 and on Bankruptcy as well as other fundamental laws, were also adopted by Parliament. Thus, the government together with the main ministries signaled its intent to implement these economic frameworks. By the end of 1998 the privatization of small enterprises was largely completed, with 12,860 enterprises passing into private ownership. Of these, approximately 80 percent were in the trade and services sectors. 12 Over the years, the privatization is approaching its end because the amount of available companies is diminishing. However, privatization of large enterprises such as telecommunications, energy, manufacturing sectors is still ahead and presumably there will be small enterprises created as a result of restructuring. Thus, the privatization process of small enterprises may last longer. Even though the privatization of small enterprises does not necessarily imply their efficient operation in future, the existing resale market seems to be effective enough to ensure the acquisition of assets by more capable owners, also increasing the competition. Giving the customers freedom of choice enables market forces to provide sustained pressure on companies to increase efficiency. 13 REFORMING THE BANKING SYSTEM The Georgian banking system is at the stage of development. The Law on the Central Bank, adopted in 1996, introduced a two-tier banking system consisting of the National Bank of Georgia (NBG) and commercial banks. 14 Since 1994, Georgia has embarked on a comprehensive program of banking sector restructuring, with the help of U.S. experts. The reforms aiming at upgrading and enforcing prudential standards for commercial banks have yielded positive results, particularly with regard to banking sector consolidation, leading to a sharp reduction in the number of banks from 229 in early 1994 to 26 in The minimum authorized capital requirement was raised incrementally 15 after which some bank licences were revoked by the NBG. Further reduction in the number of banks through mergers and outright closures is anticipated. Only licensed banks are permitted to conduct hard currency transactions. Georgian law does not restrict the free flow of financial resources. All these measures increased confidence in the banking system. Private commercial banks commenced operations in 1989 when the liberalization in the financial system began. Foreign investment accounts for approximately one third of total bank capital. More than twenty banks have been created with the inclusion of foreign capital. Currently, more than forty banks operate under general licenses that allow them to carry out international transactions and currency exchange operations. 16 The portfolio investment regulatory system is currently being developed. The Law on Stock Markets, adopted in December 1998, established the legal framework for the creation and operation of a stock market. The law states licensing conditions for stock exchange, central depositary, brokerage companies and registrars. A regulatory agency, the National Commission for Securities (NCS) was created to supervise all market The share of services in 2001 amounted to 60 percent of GDP, compared to only 44 percent in By sector, the large privatized enterprises included: Agriculture/Food (28.5%), Construction (18.5%), and Industry (15.2%). Tacis, Georgian Economic Trends, 2002, No: 2, p. 45. Banks & Bank Services in Georgia, GAT Advertising & Publishing Company, Tbilisi, 2000, p.5. From 500 Lari in 1997 to 5 million Lari by the year Presently, two foreign banks have branch offices in Georgia: Ziraat Bankasi, Turkey, and The Caucasus Development Bank, Azerbaijan. 6
11 participants. Georgian Stock Exchange (GSE) is a non-profit joint stock company established by brokerage companies. Trading on the exchange market started in April The electronic trading system of GSE was developed with the support of USAID. Capital markets development took a giant leap forward with significant technical assistance from international donors. The primary goal of the newly established Georgian Stock Market is to create a transparent, liquid, and organized securities market with a viable trading mechanism. The stock market organizes public trading of securities in compliance with the exchange rules and procedures, and disseminates information on trading results and prices. The Law on Accounting, adopted in February 1999 required all joint stock companies in Georgia to adopt international accounting standards by January Private firms are not authorized by law or any regulation to adopt articles of incorporation or association that limit or prohibit foreign investment, participation, or control of domestic enterprises. TRADE AND FOREIGN INVESTMENT REGULATIONS Georgia became a member of the World Trade Organization (WTO) in June This is another step towards Georgia's integration into international trade. As a member of the WTO, Georgia has had access to assistance in coordinating its legal framework with international norms. The ongoing customs reform implemented with assistance of western consultants is expected to bring customs operation in compliance with the Customs Code of 1997 and Law on Customs Tariffs of Pre-import certification was introduced in mid by the British firm contracted to perform this function. The Law on Customs Tariff and Duty of 1998 provides for customs valuation of goods based on internationally recognized practices, as defined by the WTO. Georgia is a leader in the former Soviet Union of developing the legal infrastructure for an attractive investment climate. Georgia maintains no currency controls, allows foreign investment in all but a few sectors deemed strategically important, and has implemented an impressive privatization program, including land privatization. Georgia has signed agreements on a free trade regime with 8 CIS countries. The formal legislative framework of Georgia concerning foreign investment conforms to internationally accepted norms and principles. The legal framework governing ownership and privatization is provided by several related acts. Property rights in the extractive industries, intellectual property rights and financial sector legislation are governed by several laws in the western standards. The Georgian Constitution provides for protection of ownership rights, specifically the universal rights to ownership, acquisition, disposal or inheritance of property. Foreign citizens living in Georgia possess rights and obligations equal to those of the citizens of Georgia. The Constitution allows restriction or revocation of property rights only in cases of extreme public necessity, and then only as directly envisaged by law. Georgian law prohibits expropriation, that is nationalization, of foreign investments, except in cases involving natural disasters, acts of God, other cases of force majeure, 17 and epidemic emergencies. Georgia is trying to integrate with the rest of the world by signing bilateral investment agreements. Georgia has negotiated bilateral agreements on investment promotion and mutual protection with 25 countries. Georgia's legal regime for dispute settlement procedures meets international standards. According to the Georgian legislation, the rights and guarantees of a foreign investor cannot be less than the rights and guarantees of Georgian individuals or legal persons. As for property rights, including those of foreign investors are protected by the legislation. Corruption seems to be the most serious problem of Georgia, like other post-soviet countries, that threats the establishment of a free and truly independent country. In July 2000 the Government of Georgia created an Anti-Corruption Commission to deal with this problem. SOCIAL POLICY AND SOCIAL SAFETY NET Before the onset of transition, Georgia, like other transition economies, had well-developed social security nets covering the same risks as in the developed countries. The cradle-to-grave protection was provided to the entire population. But this comprehensive safety net left people with little experience in dealing with economic uncertainty. Therefore, one of the problems that remains still unsolved is social safety net. The state social security system technically provides pension, unemployment and maternity benefits. These benefits are negligible, however, and the system is not running well. Currently, social policy reforms are among the top priorities of the National Poverty Reduction and Economic Growth Program and acknowledged by the government to be a long term strategic objective. 17 Force or power that can not be fought against.
12 Qloballaşma prosesində Qafqaz və Orta Asiya İqtisadiyyat bölməsi CONCLUSION AND SUGGESTION After experiencing a terrible practice under the Soviet system, being isolated from the modern world, now Georgia has adopted some of the best laws and institutional structures on the way to a democratic and marketoriented community. The legislation of Georgia concerning foreign investment conforms to internationally accepted norms and principles. The banking system has been reformed and many other regulations have been made to meet the needs of the modern age. Privatization has nearly been completed. Georgia seems to have virtually fulfilled the requirements for a successful transition from socialism to a market-based system except for the social safety net. While the legal framework for private business is largely in place, enforcement of laws and presidential decrees is relatively absent or ineffective. The most urgent problem is the activity of the state bureaucratic monopoly that is, the restriction of competition by the activities of government bodies and officials. Old-minded bureaucrats seem to be the most resistant powers against the reforms. Lack of sufficient staff to manage the new market system appears to be an important problem. Even though macroeconomic stabilization has been achieved, it realised at a level where the economy suffers unemployment and low output. Therefore, the poor fiscal situation, poverty, unemployment, pervasive corruption, and the arbitrary implementation of laws and regulations are the main problems of Georgia. The country is being affected by such economic problems and the growing popular nostalgia for the materially more beneficial old days, and frustration over the apparent lack of results from legislated reforms. Despite the state social security system technically provides some benefits, these are negligible and the system is not running well. Official government salaries have been eroded by inflation over the years to a point where most are at or below subsistence level, and many civil servants seek to supplement their income by opportunities their positions present. That seems to lay a favourable ground for corruption. The poor enforcement of existing laws and illegal practices by Georgian officials has cast a shadow on Georgia's performance as a transition economy. Pervasive nature of corruption and its high visibility have stunted economic growth and seriously undermined the credibility of the Government and its reforms. The main sources of corruption are lack of legal culture and the atmosphere of non-punishment. The lack of skilled employees, economists and lawyers is another problem for the unsuccessful enforcement of laws. It is typical for the best specialists to move from government to private structures and foreign institutions, for reasons including low salaries and bad working conditions. In order to remove corruption and to achieve a healthy and wealthy society in the long run, homo economicus must not be ultimate target as stated by some writers. 18 He should be provided with moral values including legal culture so that he may be concerned about the interests of the society and turn to a man of society. Strong family ties between the members of a typical Georgian family eased so far the sever effects of economic crises of 1990s. Likewise, men of society can overcome all the problems including corruption that cannot otherwise be solved. Currently there is a transformation in the human dimension in Georgia as in other transitional economies. This transformation took place firstly from homo sovieticus to homo transformaticus in the last decades of the Soviet system, now homo transformaticus is changing to homo economicus. We don t see homo economicus sufficient for the future of these countries and offer a further study on the transformation of human dimension and recommend it be improved to be man of society. 18 Problems of Economic Transition, p