Summary 

The article is about an influence of non-effective norms on economy. It makes clear that if there are effective institutions founded in economy, the tendency of developing the economy is faster. The phenomenon of ‘’institutional trap’’ is characteristic issue for post-soviet countries, so it is about homo transformaticus’s choice to be a law-breaker or not. Article represents Russian economic case when in transition process there was risen many series of ‘’institutional traps’’, that led the economy to difficulties.

Article represents the definition of ‘’institutional trap’’ and simple examples to help reader understand the idea of it. Author considers that with liberalization of economy, chances of founding such institutions are growing. Hereby, ways to avoid this in the beginning is also given. Precisely, foreseeing of transactional and transformative costs will take care about protection of economy from the threat of ‘’institutional traps’’. In any society, there are law-breakers and law-enforcer. As many of them are honest, as low is a chance for non-effective norm to dominate. Domination of violative norms may not cause the demolition of system, this is called mixed equilibrium. Despite the domination of effective norms, we still face the ‘’institutional trap’’.

The author represent an example from current reality of Georgian economy. He considers the probation system as ‘’institutional trap’’ and thinks that labor codex should contain a topic about this. Current condition of labor market is very convenient for decision maker structures that the subject is such a messy.

The author concludes that while launching reforms, the main threat is that transitive norm should not become permanently transitive. For example, if protectionism is necessary for some time, but it should not lead the competitiveness of economy in trouble. To achieve this, you should plan the takedown of institutions that are needed while transition in the beginning. On the other hand, the healthiness of institutional environment is influenced by the variety of institutional environment. It is impossible to prematurely determine the effectiveness of any institution or the role of any institution in the chain of institutions. But, as various the institutional environment is, as much solution can be found out of the ‘’trap’’.