Susanna Petrosyan, Yerevan. Especially for Vestnik Kavkaza
Armenia's accession to the Eurasian Economic Union (EAEU) actualized the problems associated with local production, competitiveness of Armenian goods, the prospect of their implementation on the domestic and foreign markets. Just a month after the country's accession to the EAEU, Armenian millers faced a serious potential loss of the internal market. Imports of cheap flour from Russia have hit the interests of local producers by creating unequal conditions of competition. Experts believe that the reason for this is the sharp drop in the ruble exchange rate, resulting in exports from Russia becoming much more profitable than their own production. But it's not just about the situation around the supply of flour.
For 15 years, Armenia's economy has been orientated toward the development of imports to the detriment of local production. This economic policy has a political background. According to the economist and representative of the Board of the opposition party "Armenian National Congress", Vahagn Khachatryan, support for large importers by the government due to the desire of the authorities to reproduce, in which the major monopoly-importers play the most significant role. As a result of the government's economic policy, the core of which is still cooperation with a large-scale commercial capital program aimed at imports, the country formed a considerable trade imbalance in favor of imports, the amount of which is three times higher than exports. This trade imbalance leads to the removal of large volumes of Armenian currency, which becomes the source of a number of many other problems in the economy.
If we talk about the competitiveness of Armenian products, it is necessary to pay attention to its high cost, the cause of which remains high. Transport costs make up 10-15% of the cost structure of production. But the main reason for the high cost of Armenian products is the difficult situation which is being faced by local producers, and it is the exclusive way of the economy, and lack of real competition.
Representatives of the ruling Republican Party of Armenia (RPA) point to the high cost of Armenian products which, in their opinion, makes no sense to compete with imported goods. Such a statement was recently made by an MP from the faction "RPA" Alexan Petrosyan, according to whic, the cost of one unit of Armenian products is 64% more expensive than the cost of goods imported to Armenia from China or Argentina. Firstly, it is unclear which group of goods was mentioned by the deputy, and secondly, it doesn't matter how much Chinese and Argentine products are cheaper, to their initial value is added transportation costs, which ultimately forms the market value of the goods.
According to PhD in Economics Zoya Tadevosyan, even if such cheap commodities do exist, it does not mean that they should be given preference at the expense of national manufacturers, which have practically been eradicated with the help of the government’s policy.
“Following the logic of the republicans, Armenia needs to give up its industry and orient solely towards imports. The economy needs developing instead of talking about cheap products. The RPA is trying to justify its incompetent economic policy,” assumes Tadevosyan.
The long promotion of monopolistic importers by the government has put national manufacturers in a very complicated situation, even in such a sector as agriculture.
Numerously, some experts have expressed concerns that certain contacts in customs offices allow importers to deliver much cheaper agricultural products than national ones. A row that erupted around tomatoes from Turkey a few years ago is a good example.
The development of conditions for a real, instead of declared, competitive business atmosphere may become a solution, though unlikely in the light of the current government. In this aspect, it is very important that the objective situation in Armenia starts changing under the influence of external factors and, most importantly, under the economic problems of Russia. The fall of the Russian ruble in ratio to the dollar provoked a dramatic fall of transfers sent by Armenian migrants from Russia to their homeland in dollars, becoming a blow to the “transfer economy” that has existed for over 10 years. Reduction of cash transfers has had a negative effect on the consumer potential of the population, hence on the volumes of commodities sold, many of which are delivered by monopolistic importers. Thus, the long exploitation of the “transfer” model, serving the interests of importers instead of the development and formation of a differential economy backed by local manufacturers, has lead to an arduous socio-economic situation, where the interests of ordinary citizens, national manufacturers and monopolistic importers are at stake.
