“Taking into account the overall development of the political economy of Georgia since 2003, it can be concluded that the ‘success story’ of the country’s transformation is not as shiny as framed by many. W
Institutional economists have outlined that “in order to reach a considerable level of human development and to make development less uneven, three conditions are fundamental, together with GDP growth. They are 1) management of social conflicts, 2) reducing inequality, 3) giving economic opportunities and to exploit those opportunities” (Tridico 2006: 37). In Georgia, the third condition has partly been met after Saakashvili took office, however, conditions 1 and 2 need to be further tackled. In the coming months and years, it remains to be seen if the Georgian transformation may go beyond formal reforms and can further influence also problematic informal institutional structures such as ongoing high-level corruption. The upcoming parliamentary and presidential elections and Saakashvili’s related actions (Civil Georgia 2011) will be a litmus test in this regard.”hile the Rose Revolution has without doubt led to numerous remarkable changes of the economic and political institutions, many of the previously existing problems have prevailed below the surface of Georgia’s transformation. Although more effective economic policies were introduced in several areas, this often happened at the cost of democratic governance mechanisms.