6 “black holes” of Armenia’s economy

Main speaker of the workshop on “Issues of economic growth in Armenia: third generation reforms, investment environment and development premises” launched in Yerevan, was our compatriot, Russian academician Abel Aghanbegyan.

He was introducing the 120-page report made with the help of GSCM founder Radik Vadunts on Armenia’s investment policy perspectives.

Although the report was published a few years ago, covered facts and observations are still up-to-date.

According to the academician, Armenia’s economy has 6 main “black holes” (shortcomings), after overcoming which only one may think of boosting investment growth.

The first point is the level of Armenia’s socio-economic development. The academician states with regret that currently we are a weakly developed country, and the level of GDP comprising USD 4000 per capita (and by ppp—USD 8000) is rather low. He stated that temps of economic growth should be added, and temps of real growth of Armenia’s economy can be reached to 8%.

The next point is foreign trade. Aghanbegyan considers great difference of import and export (foreign trade negative flip) rather bothering. “Export should be boosted and import should be reduced on account of local production,” he said.

The academician sees a serious issue in the field of industry. He states that 16% specific gravity in GDP is very low. Accordingly, Aghanbegyan considers an exaggeration, when people say that Armenia is an industrial-agrarian state. In his words, there are lots of to-dos in the field of industry, and it’s necessary to restore the temps.

Occupation is another issue, to be more exact, unemployment (17% according to Aghanbegyan). “Occupation should be added, moreover, with high salaries. By that we’ll also contribute to return of people, who migrated from Armenia.”

According to Aghanbegyan state’s role in economy should be increased. The budget is small, and serious issues are impossible to solve by that, meanwhile, “Cracks always take place with the help of the state.”

And, finally, the 6th “black hole” is disproportionality between Yerevan and the provinces. “Everything is centralized in Yerevan,” Aghanbegyan says, calling to take steps to provide proportionality of territorial development.

Besides the “black holes” Abel Aghanbegyan has also singled out the directions, where Armenia has real possibilities for development, from them: IT, energy, diamond processing, jewelry making, tourism, copper molybdenum resources and etc.