By Susanna Petrosyan, Yerevan. Exclusively for Vestnik Kavkaza
Experts believe that the monopoly structure the Armenian government supports is the main cause of countless socio-economic problems. Small and medium-sized enterprises pressured by larger competitors are closing down due to lack of equality. About 3,000 shops have closed in the country in the last 3 years. According to a World Bank report, Armenia is the last in the list of anti-monopoly policy and intensity of domestic competition in Europe and Central Asia. As a result, the population suffers from high unemployment and low incomes that are in a negative proportion to growing prices for goods and services.
Declarative statements of the government about growing economic activity and high economic “achievements” do not correlate with the reality characterized by lack of competitive climate in the economy. Small and medium-sized businesses offering jobs have to develop in such conditions. The socio-economic situation in the country has been going downhill in the past six years: the number of the unemployed and people living in poverty and leaving the country rocketed. According to the National Statistical Service of Armenia, over a million people live in poverty and extreme poverty. The poverty level increased by about 10%, compared with 2008.
According to the UN, the average unemployment level is 15.4% in Armenia. 18.7% of people aged 18-30 and 23.45% aged 20-24 have no jobs. Unemployment among people aged 15-24% exceeds 40%. It is alarming that 83.5% of young Armenians would accept temporary residence abroad and 36.8% would leave the country for good if they could.
In order to understand the cause of such a situation, one needs to analyze the political situation in the country. The ruling Republican Party of Armenia has absolute political monopoly of power. This gives it power over the economic monopoly, which in its turn strengthens political domination. A small group of criminal oligarchics closely connected to the government has the majority of the Armenian economy in its hands.
The government strives for reproduction and control over economic resources in the hands of large monopolies with direct access to prevailing authorities. Armenian human rights activist Karen Andreasyan said in his report published in February 2014 that tax and customs functionaries are still engaged in business, gaining advantage over other businessmen.
Connection between large business and the state system and power and wasteful spending of foreign loans have forced the West and Russia to reconsider their policies in granting Armenia loans, becoming another blow for the weak economy.
The government promotes development of large business at the expense of small and medium-sized ones. High taxes and constantly changing tax laws have provoked an investment drop of 60% in the Armenian economy. Economic analyst Vaagn Khachatryan said that reduction of investments could threaten growth of the GDP. Russia, U.S., UK, France and other countries cut investments in Armenia by about 70-80%. Influential investors of the diaspora, full of experience given by foreign Armenians and suffering from racketeering of Armenian high-ranking officials, have decided to cut donations to construction of churches in their homeland, something corrupt functionaries are concerned about.
Some specialists are searching for solutions to socio-economic problems (such as poverty and unemployment) in realization of special agricultural programs, development of programs to train young people leaving school after grade 9, encouraging entrepreneurship. Maybe it has its logical reasons, but resolving the numerous problems in the country requires systemic changes. Until then, as long as they remain unaccomplished, unemployment, poverty and migration will only grow.
caused socio-economic problemsBy Susanna Petrosyan, Yerevan. Exclusively for Vestnik KavkazaExperts believe that the monopoly structure the Armenian government supports is the main cause of countless socio-economic problems. Small and medium-sized enterprises pressured by larger competitors are closing down due to lack of equality. About 3,000 shops have closed in the country in the last 3 years. According to a World Bank report, Armenia is the last in the list of anti-monopoly policy and intensity of domestic competition in Europe and Central Asia. As a result, the population suffers from high unemployment and low incomes that are in a negative proportion to growing prices for goods and services.Declarative statements of the government about growing economic activity and high economic “achievements” do not correlate with the reality characterized by lack of competitive climate in the economy. Small and medium-sized businesses offering jobs have to develop in such conditions. The socio-economic situation in the country has been going downhill in the past six years: the number of the unemployed and people living in poverty and leaving the country rocketed. According to the National Statistical Service of Armenia, over a million people live in poverty and extreme poverty. The poverty level increased by about 10%, compared with 2008.According to the UN, the average unemployment level is 15.4% in Armenia. 18.7% of people aged 18-30 and 23.45% aged 20-24 have no jobs. Unemployment among people aged 15-24% exceeds 40%. It is alarming that 83.5% of young Armenians would accept temporary residence abroad and 36.8% would leave the country for good if they could.In order to understand the cause of such a situation, one needs to analyze the political situation in the country. The ruling Republican Party of Armenia has absolute political monopoly of power. This gives it power over the economic monopoly, which in its turn strengthens political domination. A small group of criminal oligarchics closely connected to the government has the majority of the Armenian economy in its hands.The government strives for reproduction and control over economic resources in the hands of large monopolies with direct access to prevailing authorities. Armenian human rights activist Karen Andreasyan said in his report published in February 2014 that tax and customs functionaries are still engaged in business, gaining advantage over other businessmen.Connection between large business and the state system and power and wasteful spending of foreign loans have forced the West and Russia to reconsider their policies in granting Armenia loans, becoming another blow for the weak economy.The government promotes development of large business at the expense of small and medium-sized ones. High taxes and constantly changing tax laws have provoked an investment drop of 60% in the Armenian economy. Economic analyst Vaagn Khachatryan said that reduction of investments could threaten growth of the GDP. Russia, U.S., UK, France and other countries cut investments in Armenia by about 70-80%. Influential investors of the diaspora, full of experience given by foreign Armenians and suffering from racketeering of Armenian high-ranking officials, have decided to cut donations to construction of churches in their homeland, something corrupt functionaries are concerned about.Some specialists are searching for solutions to socio-economic problems (such as poverty and unemployment) in realization of special agricultural programs, development of programs to train young people leaving school after grade 9, encouraging entrepreneurship. Maybe it has its logical reasons, but resolving the numerous problems in the country requires systemic changes. Until then, as long as they remain unaccomplished, unemployment, poverty and migration will only gr
