Transnationalization and the Georgian State: Myth or Reality?

  • Nina Dadalauri


This chapter investigates the diffusion of neoliberal tax policy principles post-Soviet Georgia. I discuss the conventional explanations from the literature on policy diffusion and the politics of taxation and tax policy reform. These include domestic and external factors, such as external influence through conditionality, party ideology, veto players and trade unionism.

I apply a process-tracing method to explore how Georgian tax policy was (re)made over a period of 15 years. Two arguments are developed: one that the making of the new Georgian state and tax policy formation are interlinked processes; second, the transnationalization of a policy arena, that is infiltration by nonstate actors who internalize external policy norms and preferences, can lead to a tax policy shift towards neoliberalism. However, the creation of a capable Georgian state was a by-product of changes in tax policy and administration after the political changes of 2003. I conclude that transnationalization can explain the process of policy reforms in reducing marginal tax rates, adopting a flat tax rate and simplifying tax policy to attract capital and promote economic growth.


European Union International Monetary Fund Veto Player Nonstate Actor Georgian Government 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



I am very grateful to László Bruszt and Ronald Holzhacker for their insightful comments and suggestion for this chapter. I have also benefited greatly from generous comments of the participants in the three workshops organized under the European Research Colloquium during 2007–2008. I also owe thank you to Niko Orvelashvili and Davit Chelidze for providing with needed information on Georgian tax system.


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Online News

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  1. Interview 1 was conducted with a local tax expert through telephone in December 2008.Google Scholar
  2. Interview 2 was conducted with a local tax expert through telephone in January 2009.Google Scholar

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© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Department of Political ScienceUniversity of AarhusAarhusDenmark

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