Business & Economics

At present, the world economy is too dynamic, more volatile and at the same time more reachable. Economic development issues are no longer the prerogative of countries’ political agenda; they are rather being transformed to universal goals, towards fulfillment of which the united efforts and resources of countries and especially global governance institutions are aligned. The development agenda worldwide are formulated based on an approach, that there are no precise and universally applicable formulae for progress; in a world of physical constraints only the generation of great ideas can make economic growth continuous and sustainable. In this context, the development paradigm supposes knowledge accumulation, creation, commercialization and transfer of new ideas and race for their effective application as core engines for progress.

Meanwhile, we are witnessing serious transformations in the global economic arena with new role distributions and emergence of new force centers; the role of emerging and developing countries continues to grow and reshape, the economic and social security issues are becoming more acute, the pace of globalization is counterbalanced with the incremental influence of regional integration, whereas the need to control over results is sharpening.

The economic development agenda of Armenia is being reshaped within the scope of these realities, first and foremost requiring to clearly assess country’s capacities and potential with a view of new conditions, to direct efforts and resources in a targeted way, to follow result-oriented governance and ensure resilient guarantees of resistance to external shocks.

First generation reforms in Armenia have laid solid foundations for the package of the second generation reforms to be worked out and brought into life. Increasing the country’s competitiveness, the modernization of the economy and approximation to the touchstones of the advanced countries, the formation of sine qua non factors of moving towards knowledge-based economy were put in the core of the reforms. In that, consistent implementation of reforms will be crystallized in achievements in which far-sighted sustainable backbones and systemic solutions overweight short-range and quick results.

The global financial crisis urged to interpose renewed tactical highlights in the mid-term political agenda. Nevertheless, the countercyclical action plan has been successfully harmonized with pre-crisis development priorities. For Armenia the crisis has proved to be a serious challenge with deep social-economic spillovers from one hand, and an important lesson to reassess the country’s economic opportunities and constraints within the global scale, from the other.

In this reality, the present economic development policy of Armenia is to ensure the fast and smooth transformation of the economy to a system inherent with:

  • high sensitivity to technological development rush; and the compensation of resource gap by the accumulation and application of new ideas;
  • maintenance of the intergenerational equilibrium of opportunities via not rebalancing the present growth and development achievements with losses of future generations’ at least similar growth opportunities;
  • implementing basic requirements for inclusive development via providing auspicious environment for it and stimulating society’s broader participation to the growth generation, manifesting the entrepreneurship and initiative as the most vital stimulus for business activation;
  • consistent development of human capital as an axis of economic transformation and a prerequisite for building competitive advantages independent of objective constraints;
  • maximum harmonization of the domestic/foreign resources’ allocation to the development priorities; and the deep-rooted claim for the policy results.

The necessary precondition for the favorable position of Armenia in the world economic tapestry is the country’s increased economic competitiveness by extending opportunities for innovation in the real sector, boosting productivity and employment in sectors with high value-added, application of state-of-the-art technologies and more sophisticated productions.Within the above specified economic development framework, the following policy pathways are accentuated as cornerstones:

  • Securing equal conditions for all economic agents: free economic competition is the only milieu for formation of effective markets and development of competitive private sector. In order to promote capital investments as the very core for real sector modernization ceaseless improvement of the business environment is crucial, involving both tax and customs administration, technical and normative regulations, investors protection and labor relations. In this context, the elimination of basic obstacles to running a business and making investments, increasing quality of infrastructures, development of corporate culture, and issues of macroeconomic stability are of vital essence.
  • Implementation of the industrial policy as a basic precondition for economic transformation: stimulating the imports of technological complexes, creating necessary conditions for transnational corporations entry, modernizing the prospective productive complexes and intense state assistance to the real sector are the key vectors of industrial policy implementation in Armenia aiming at increasing economic diversification and extending exportable sectors. The latter will be the operational purpose of impelling the country’s competitiveness globally, and in the mid-term scenario the industrial policy will, if not wholly, but mostly directed to the implementation of that aim.
  • Creation and development of basic institutions of knowledge-based economy: the strategic reference point of the economic development is the knowledge generation and its effective application. Therefore, efficient public policy implementation is traced to the deliberate reproduction of the scientific potential, organization of productive system for introducing the results of scientific and research works, the integration of education and science. In this sense the human capital development will be an anchor for the expansion of capacities to introduce the newest technologies as a core of new level of competition and business. The most essential outcome of the process is the dwindling of the natural resources’ strategic role and growing the role of human capital in the output, expansion of the production and exports of highly specialized and technology intensive final output.
  • Widening and deepening of the country’s integration into the world economy: this first of all supposes acquiring the internationally benchmarked quality and level for an external economic activity, ensuring duly working trade institutions and infrastructures, easing of trading, and, as a complementary measure, adoption of internationally well-proved trade promotion and development tools and schemes. The deep and comprehensive free trade agreement with the European Union is the proper political framework for serious and persistent institutional reforms in a range of spheres and a real guarantee to effectively implement the above mentioned actions.Not only the reformed procedures for business and fastening the protection of consumer rights, but also the export expansion and positioning of goods of Armenian origin in the European market are among of its immediate outcomes.

The above outlined economic policy is the very scope within which the synergistic impact of continuous expansion and improvement of opportunities and capacities will lead to boosting society’s material and non-material quality of life, enabling to manifest the unique place of Armenia in the world economy.

 

Ministry of Economy of the Republic of Armenia

www.mineconomy.am