While written in 1991, “The Development Frontier” by Peter Bauer has lost none of its relevance for Georgia and other predominantly agrarian economies of the 21st century. Economic development, suggests Bauer, “begins with the replacement of subsistence activities by production for sale.
Everyone using the service of the Tbilisi marshrutkas experiences one of two extreme cases: the marshrutka either moves tantalizingly slowly or excessively fast. How can this apparent paradox be explained? In search of an answer, let us turn to game theory, one of the appealings outgrows of mathematical economics.
Tbilisi public transportation resembles a classic Greek tragedy. In those pieces, usually, the gods interfere with human affairs and create a big mess. In Tbilisi, marshrutkas were operating in a competitive market and state intervention led to the creation of a monopoly.
On Monday evening I am taking the express train from Tbilisi to Samtredia with my wife and two kids (business class, 120GEL). We plan to stay overnight in a little family hotel (40GEL), and at 6.30 am we’ll board the Wizz Air flight to Katowice, Poland, at the cost of €40 a person and €35 per suitcase (one way).
As Stephen Dowling put it in his BBC News article a few years ago, “when it comes to crossing the road, there's no such thing as an international standard. Every country does it differently.” How people drive and cross the road, according to Dowling, is a matter of a country’s cultural values. Is it really?