This paper provides an overview of recent economic developments in Georgia. The country has made significant, but incomplete, progress toward establishing the rule of law. The rapid accumulation of wage and social transfers arrears is one of the factors of the worsening poverty. The banking sector reforms have started to yield positive results, particularly with regard to banking system consolidation. The energy sector exchange, trade and payments systems, tax summary, and statistical data on the economic indices of Georgia are presented in the paper.
Recent studies have highlighted the adverse impact of corruption on economic performance. This paper advances the hypothesis that corruption is largely a symptom of underlying weaknesses in public policies and institutions, a formulation that provides deeper insights into economic performance than do measures of “perceived corruption.” The hypothesis is tested by assessing the relative importance of structural reforms vs. corruption in explaining macroeconomic performance in the transition economies. The paper finds that for four widely used measures of economic performance—growth, inflation, the fiscal balance, and foreign direct investment—structural reforms tend to dominate the corruption variable.
In the USSR in 1990, social security reforms led to the imposition of a uniform system of benefits in a large and demographically diverse country. This required inter-regional transfers, which are now no longer feasible with the demise of the USSR. Relatively high contribution rates also pose a problem for a nascent commercialized sector. The paper argues that benefit levels in some former Soviet Union countries are now unsustainable. The price shock associated with the “transition” to a market economy should lead to a consideration of a “mix” of policies, including a basic benefit in kind. While funded systems may eventually reduce contribution rates, there are implementation difficulties in the medium term.
Ms. Ratna Sahay, Mr. Stanley Fischer, and Mr. Carlos A. Végh Gramont
This paper presents evidence on the behavior of output and inflation in the transition economies during 1992–95. A regression analysis explores the differences in output performance across the transition economies during this period. The paper then engages in a numerical, somewhat speculative, exercise to assess the long-run growth potential of the transition economies. It concludes that it should take about 20 years for the faster reformers to reach current OECD per capita levels.
The demographic characteristics of different regions in the former Soviet Union influence the nature of poverty in the newly successor independent states of the FSU. Despite a common policy inheritance, major adjustments are needed in the major social protection instruments to reflect differences in demographics along with a changing resource base.
Drawing on recent examples of corruption in the Baltics and former Soviet Union, this pamphlet analyzes the links between governance and corruption, and emphasizes the high economic cost that corruption exacts. The pamphlet outlines how the IMF is working with the countries of the former Soviet Union to curb corruption, and put in place the regulatory and legal changes needed to support good government.
In the late 1980s and early 1990s, some 25 countries began their dramatic transformation into market-based economies by liberalizing prices, dismantling the remaining instruments of Soviet-type central planning, and starting fundamental structural economic reforms.
Ukraine has made impressive progress in restructuring and stabilizing its economy over the past two years, and yet much remains to be done to revive output and establish a market economy. The 16 papers included in this volume, edited by Peter K. Cornelius and Patrick Lenain, were presented at a seminar sponsored by the IMF and the World Bank in July 1996, which brought together government officials, academics, and staffs of international organizations to discuss a comprehensive medium- term strategy for Ukraine. The papers cover the medium-term macroeconomic framework; wages, poverty, and social safety net reform; private sector development; trade policies and sectoral reforms; and institution building and good governance.