Georgia - Enterprise Privatization

Enterprise privatization

Another key element of economic reform, privatization of state enterprises, was stifled under Gamsakhurdia. He feared that the "economic mafia," which already owned a significant share of the nation's wealth, would use that wealth to accumulate state assets. Rapid growth had already occurred in the private retail sector, however, once cooperative enterprises began expanding in 1988. In 1990-91 privately run "commercial shops" began proliferating, often in place of state stores. Typically, these shops offered consumer goods brought from Turkey and resold at very high prices. The Law on Privatization of State Enterprises was adopted in August 1991 to outline general principles, and the Committee on Privatization was established in 1992. Under Shevardnadze, privatization began cautiously in August 1992 when the State Council adopted the State Program on the Privatization of State Enterprises. The law copied Russia's approach to privatization by providing for several methods, including "popular privatization," consisting of a combination of vouchers distributed to the public and auctions of state enterprises. The country's political crises delayed meaningful measures, however. By 1993 few Georgian industries had been privatized, although large numbers of small enterprises were scheduled for privatization in 1993 and 1994.

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