Economists disagree whether it was a good decision to reestablish the Georgian competition authority. When some years ago it was removed, the underlying logic was that a non-existing authority cannot be corrupt, and, more importantly, cannot harm the economy through misguided decisions. Assuming that corruption will not be a problem for the competition authority, neither now nor in the future, regulating markets is still a highly delicate issue which yields many possibilities to go wrong.

On February 11th, ISET hosted Olivier Harlem, Ph.D. of the Erasmus School of Economics, Rotterdam. Dr. Harlem presented his job market paper, “Earmarks”. Earmarks were U.S. federal funds that are designated for local projects and were easy for local representatives to obtain for their electoral districts.

How significant is welfare loss in the presence of cartels? How best to fight against cartels to avoid them ex-ante? These were the leading questions of the presentation of Dr. Andrea Mantovani (University of Bologna) at ISET on February 20, 2014.

An unprejudiced look at the Georgian economy is rather disenchanting. Starting in 1990 at a per capita income that was close to Poland’s, Georgia went into a free fall as a result of secession wars, loss of markets, an explosion of crime and corruption, and the staggering incompetency of its governments.

It is a commonly accepted view that corruption is bad for economic growth. It leads to an inefficient allocation of resources by contradicting the rules of fair competition and by setting wrong incentives.