In this article, we study the long-run effect of the Soviet shadow economy on attitudes toward the market economy and competition in Georgia—a former Soviet republic known for the high prevalence of the shadow economy. We use the density of Soviet-era organized crime as a proxy for the local prevalence of shadow economy and instrument it with agroclimatic suitability for citrus fruits, exploiting the fact that citrus and other subtropical agricultural products were an object of shortage and illicit trade during the Soviet era. We show that the citrus-suitable parts of Georgia have a higher density of Soviet-era thieves-in-law and that survey respondents living in these areas are more likely to report lower preference toward state ownership of businesses and higher appreciation of competition. Higher social legitimacy of private entrepreneurship is likely to be behind these findings: employed respondents in citrus-producing areas rate fairness of their compensation higher than in the rest of Georgia when they have their own business and rate it lower when they work in the public sector.
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Research Article| November 17 2023 Early Publication
Market under the Radar: Soviet Shadow Economy and Post-Soviet Preferences in Georgia
International Center for the Study of Institutions and Development, Institute for Industrial and Market Studies, HSE University, Moscow, Russia
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Communist and Post-Communist Studies 1–27.
Denis Ivanov, Anton Aisin; Market under the Radar: Soviet Shadow Economy and Post-Soviet Preferences in Georgia. Communist and Post-Communist Studies 2023; doi: https://doi.org/10.1525/cpcs.2023.1997909
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