კონფერენცია

∘ Nazira Kakaulia ∘ Valeri Arghutashvili ∘
LAND REFORM CHALLENGES IN GEORGIA IN TERMS OF INSTITUTIONAL PROPERTY RIGHTS

Summary

The theory of property rights, which established in the 1960s and 1970s, is developing today as a methodological and theoretical basis for three new directions of economic analysis - the economics of law, new economic history, and theories of economic organizations. The unity of such approaches is commonly referred to as "transactional economics" and "neo-institutionalism".

All of the above problems significantly impede the process of country's economic development, and poverty reduction measures remain a distant prospect.

The purpose of this work is to identify the problems existing in the Georgian land market and identify possibilities of their solutions by using and applying the institutional leverage of property theory. The work will also focus on the factors hampering the functioning of institutions that slow down long-term economic growth. Georgia as an agricultural country, to a large extent, its development potential depends on the successful implementation of land reforms in the country. In this regard, the work will focus on recent land reform in the country and its effects in terms of poverty alleviation and improved public welfare.

Well-known American economists Robert Coase and Armen Alchian stood at the forefront of the theory of property rights. Since the early 1980s, the economic theory of property rights has gained widespread recognition in Western Europe, especially in the Federal Republic of Germany. Unfortunately, the theory of property rights in Soviet critical literature was not reflected at all.

Accordingly, the study of the current state of the institutional theory of property rights is even more justified if we take into account the relevance that has recently been acquired by the discussion of property-related objections. Therefore, the study of transformational processes in Georgia and in particular land reforms in the light of these theories will contribute to further scientific research.

We believe that the country's long-term economic success, especially in the field of agriculture, without the protection of property rights and the creation of a transparent system of land ownership is almost unbelievable. We believe that the lack of transparency in the protection of land rights is a high risk for the country and impedes the development of the rural economy. The analysis aims to identify the specific problems facing the development of the land market and to present possible ways of solving them. The theory of property rights and its related concepts in the analysis clearly show another form of constraint that is inherent in the institutional structure of society.

The main principle of the country's economic development strategy is to ensure the freedom of the private sector in conditions of optimal, efficient and transparent government activity. This implies the establishment of an economic discipline in which the private sector itself makes decisions, the supremacy of property rights is protected and the private sector is the main driver of economic development. Free market relations will be combined with an optimal model of state regulation. The state ensures the welfare of each citizen, based on the principle of optimal and effective government.

Despite the work done and efforts by the state and donors, it is still difficult to determine in Georgia how much land belongs to the private sector, what is the total area and number of these plots. It is very difficult for an interested person to find out where this or that plot is located and which could be economically interesting. Moreover, even the state authorities themselves find it difficult to know what area of agricultural land remains in their possession.

Although the process of establishing farms in Georgia is progressing more and more, especially in the field of viticulture and perennials, and through the acquisition of land by foreign and Georgian investors, the degree of protection of existing agricultural land is much lower than desired. This increases the degree of uncertainty associated with economic activity and creates the risk of expropriation even if currently the risk is extremely low. In addition, there is a risk that a conscientious buyer or investor may be in a geographic area where the vast majority of adjacent land is unregistered. In addition, the Civil Code record also potentially enables the state to own land that is unregistered or simply expropriate land without the proper compensation and / or justification. Moreover, the chaotic environment associated with the degree of protection of land tenure makes it virtually impossible for foreign investors to access insider information transparency. Once the plots are registered as assets in a transparent manner and when all relevant information is provided equally to all stakeholders, the likelihood of such complications is reduced to almost zero.

Registration in the vast majority of countries has had significant positive effects. As in many countries, mechanisms for consolidating land market principles will be established. Understanding the positive impacts in transition countries and the impact of individual land registration on key economic parameters will significantly accelerate economic growth in the country and contribute to poverty alleviation measures.

Talking about the implementation of serious rural development and rural infrastructure development programs is logically incorrect using only the market principles of gradual land registration as a mechanism to counter the state-sponsored one-time land registration program. The market mechanism is important because it enables the state to quickly create the legal and regulatory infrastructure needed to operate a market economy. Without formalizing the land ownership it will be very difficult, to develop and implement targeted appropriate social measures to overcome the rural poverty, because the land ownership right is not formalized, there is no or is incapable mechanism of collecting land taxes, which is reflected in the deficit of local Government incomes. Without formalization of land ownership, it is extremely difficult to carry out relevant statistical or analytical activities, as well as developing and implementing rural development programs as one of the essential tasks of completing agricultural land registration, as well as addressing environmental problems.

The proposed methodology for solving problems and costs in Georgia, during settlement of problems associated with the degree of agricultural land protection, the past experience, the mistakes and achievements, as well as reforms during the last two decades of large-scale demographic, economic, political and social should be taking into account. provided for the development of measures designed to solve the problems related to past experience, the mistakes and achievements, as well as the last two decades of large-scale demographic, economic, political and social reforms. It has to be said that much has changed in Georgia during this period, which could not be fixed during the preparation and implementation of land reform. It has to be said that much has changed in Georgia during this period, which could not be reported during the preparation and implementation of land reform.

All of the above problems significantly impede the process of country's economic development, and poverty reduction measures remain a distant prospect.

Ivane Javakhishvili Tbilisi State University Paata Gugushvili Institute of Economics International Scientific C O N F E R E N C E S "ECONOMY – XXI CENTURY"

E ISSN 2587 - 4691	∘ Nazira Kakaulia ∘ Valeri Arghutashvili ∘ LAND REFORM CHALLENGES IN GEORGIA IN TERMS OF INSTITUTIONAL PROPERTY RIGHTS Summary The theory of property rights, which established in the 1960s and 1970s, is developing today as a methodological and theoretical basis for three new directions of economic analysis - the economics of law, new economic history, and theories of economic organizations. The unity of such approaches is commonly referred to as "transactional economics" and "neo-institutionalism". All of the above problems significantly impede the process of country's economic development, and poverty reduction measures remain a distant prospect. The purpose of this work is to identify the problems existing in the Georgian land market and identify possibilities of their solutions by using and applying the institutional leverage of property theory. The work will also focus on the factors hampering the functioning of institutions that slow down long-term economic growth. Georgia as an agricultural country, to a large extent, its development potential depends on the successful implementation of land reforms in the country. In this regard, the work will focus on recent land reform in the country and its effects in terms of poverty alleviation and improved public welfare. The theory of property rights, which established in the 1960s and 1970s, is developing today as a methodological and theoretical basis for three new directions of economic analysis - the economics of law, new economic history, and theories of economic organizations. The unity of such approaches is commonly referred to as "transactional economics" and "neo-institutionalism". Well-known American economists Robert Coase and Armen Alchian stood at the forefront of the theory of property rights. Since the early 1980s, the economic theory of property rights has gained widespread recognition in Western Europe, especially in the Federal Republic of Germany. Unfortunately, the theory of property rights in Soviet critical literature was not reflected at all. Accordingly, the study of the current state of the institutional theory of property rights is even more justified if we take into account the relevance that has recently been acquired by the discussion of property-related objections. Therefore, the study of transformational processes in Georgia and in particular land reforms in the light of these theories will contribute to further scientific research. We believe that the country's long-term economic success, especially in the field of agriculture, without the protection of property rights and the creation of a transparent system of land ownership is almost unbelievable. We believe that the lack of transparency in the protection of land rights is a high risk for the country and impedes the development of the rural economy. The analysis aims to identify the specific problems facing the development of the land market and to present possible ways of solving them. The theory of property rights and its related concepts in the analysis clearly show another form of constraint that is inherent in the institutional structure of society. The main principle of the country's economic development strategy is to ensure the freedom of the private sector in conditions of optimal, efficient and transparent government activity. This implies the establishment of an economic discipline in which the private sector itself makes decisions, the supremacy of property rights is protected and the private sector is the main driver of economic development. Free market relations will be combined with an optimal model of state regulation. The state ensures the welfare of each citizen, based on the principle of optimal and effective government. Despite the work done and efforts by the state and donors, it is still difficult to determine in Georgia how much land belongs to the private sector, what is the total area and number of these plots. It is very difficult for an interested person to find out where this or that plot is located and which could be economically interesting. Moreover, even the state authorities themselves find it difficult to know what area of agricultural land remains in their possession. Although the process of establishing farms in Georgia is progressing more and more, especially in the field of viticulture and perennials, and through the acquisition of land by foreign and Georgian investors, the degree of protection of existing agricultural land is much lower than desired. This increases the degree of uncertainty associated with economic activity and creates the risk of expropriation even if currently the risk is extremely low. In addition, there is a risk that a conscientious buyer or investor may be in a geographic area where the vast majority of adjacent land is unregistered. In addition, the Civil Code record also potentially enables the state to own land that is unregistered or simply expropriate land without the proper compensation and / or justification. Moreover, the chaotic environment associated with the degree of protection of land tenure makes it virtually impossible for foreign investors to access insider information transparency. Once the plots are registered as assets in a transparent manner and when all relevant information is provided equally to all stakeholders, the likelihood of such complications is reduced to almost zero. Registration in the vast majority of countries has had significant positive effects. As in many countries, mechanisms for consolidating land market principles will be established. Understanding the positive impacts in transition countries and the impact of individual land registration on key economic parameters will significantly accelerate economic growth in the country and contribute to poverty alleviation measures. Talking about the implementation of serious rural development and rural infrastructure development programs is logically incorrect using only the market principles of gradual land registration as a mechanism to counter the state-sponsored one-time land registration program. The market mechanism is important because it enables the state to quickly create the legal and regulatory infrastructure needed to operate a market economy. Without formalizing the land ownership it will be very difficult, to develop and implement targeted appropriate social measures to overcome the rural poverty, because the land ownership right is not formalized, there is no or is incapable mechanism of collecting land taxes, which is reflected in the deficit of local Government incomes. Without formalization of land ownership, it is extremely difficult to carry out relevant statistical or analytical activities, as well as developing and implementing rural development programs as one of the essential tasks of completing agricultural land registration, as well as addressing environmental problems. The proposed methodology for solving problems and costs in Georgia, during settlement of problems associated with the degree of agricultural land protection, the past experience, the mistakes and achievements, as well as reforms during the last two decades of large-scale demographic, economic, political and social should be taking into account. provided for the development of measures designed to solve the problems related to past experience, the mistakes and achievements, as well as the last two decades of large-scale demographic, economic, political and social reforms. It has to be said that much has changed in Georgia during this period, which could not be fixed during the preparation and implementation of land reform. It has to be said that much has changed in Georgia during this period, which could not be reported during the preparation and implementation of land reform. All of the above problems significantly impede the process of country's economic development, and poverty reduction measures remain a distant prospect. The purpose of this work is to identify the problems existing in the Georgian land market and identify possibilities of their solutions by using and applying the institutional leverage of property theory. The work will also focus on the factors hampering the functioning of institutions that slow down long-term economic growth. Georgia as an agricultural country, to a large extent, its development potential depends on the successful implementation of land reforms in the country. In this regard, the work will focus on recent land reform in the country and its effects in terms of poverty alleviation and improved public welfare.