1. “New currency”- “Invest” as a medium of exchange for Privatization in Georgia
NGO "Economic Policy Experts Center"
2016
We want to start our discussion with the citation from Shleifer and Vishny (1998) “Privatization
offers an enormous political benefit for the creation of institutions supporting private property
because it creates the very private owners who then begin lobbying the government...for institutions
that support property rights.” Hence, we need to establish wider private ownership over assets, and
then we can talk about market economy.
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.

2. “New currency”- “Invest” as a medium of exchange for Privatization in Georgia
NGO "Economic Policy Experts Center"
2016
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

3. “New currency”- “Invest” as a medium of exchange for Privatization in Georgia
NGO "Economic Policy Experts Center"
2016
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