Tweet
REVERSING THE LOGIC OF GROWTH
By Mher Ohanian
Yerkir/arm
September 02, 2005
According to the data provided by the CIS Inter-State Committee on
Statistics, among the CIS countries the economy of Azerbaijan has
experienced the fastest growth in the first half of 2005. The growth
rate of the Armenian economy for the same period has been 10.2%. While
in Armenia agriculture and construction remained the main sources of
economic growth, in Azerbaijan the growth was accomplished through
production and sale of oil.
Summing up qualitative changes
It is obvious that the Armenian economy, irrespective of several
internal and external circumstances, has entered a certain level
whereby definition of strategic priorities for development becomes
crucial. Judging from the statistics, the Armenian economy ... is
one of the most dynamic and growing economies in the world.
According to expert estimates, the average annual growth of GDP has
constituted 8.5% for the period of 1994-2004. With such growth rate,
Armenia can only aspire for EU membership in some 10-12 years after
an average per capita income of 6500-7000 dollars is ensured for
the population. Meanwhile, for Armenia, a country with developed and
high quality human resources, such a scenario is not acceptable. The
experience of the recent years shows that much higher growth rates
can be achieved - 9.5-12.5%.
On the other hand, it should be noted that in the context of the
present economic situation the economic growth cannot be sustainable
in the long run. It is obvious that the present economic growth is
concentrated in several sectors.
Meanwhile, the factors contributing to favorable conditions in these
sectors cannot be sustained. This is true for large scale construction
works and agriculture. Therefore, if the share of these sectors in the
economy decreases with time, the economic growth will also slow down.
The agricultural sector in Armenia is in a privileged position vis a
vis the foreign producers since the domestic agricultural sector is
exempt from VAT. However, these privileges will be gradually eliminated
in 3-4 years. In this context, if the inevitable increase of the prices
of agricultural products is not balanced with growth of productivity
in the agricultural sector, economic decline will be inevitable.
Finally, one of the main factors contributing to the economic growth in
Armenia has been large scale foreign financing through loans provided
by international financial organizations and humanitarian assistance
from donor countries and international organizations.
This assistance has made it possible to sustain the infrastructures
and ensure the population's purchasing power. The last factor has
stimulated activation of the domestic producers. Provision of foreign
loans and formulation of domestic demand have thus made it possible
to significantly decrease imports increasing instead exports from
the country.
By Mher Ohanian
Yerkir/arm
September 02, 2005
According to the data provided by the CIS Inter-State Committee on
Statistics, among the CIS countries the economy of Azerbaijan has
experienced the fastest growth in the first half of 2005. The growth
rate of the Armenian economy for the same period has been 10.2%. While
in Armenia agriculture and construction remained the main sources of
economic growth, in Azerbaijan the growth was accomplished through
production and sale of oil.
Summing up qualitative changes
It is obvious that the Armenian economy, irrespective of several
internal and external circumstances, has entered a certain level
whereby definition of strategic priorities for development becomes
crucial. Judging from the statistics, the Armenian economy ... is
one of the most dynamic and growing economies in the world.
According to expert estimates, the average annual growth of GDP has
constituted 8.5% for the period of 1994-2004. With such growth rate,
Armenia can only aspire for EU membership in some 10-12 years after
an average per capita income of 6500-7000 dollars is ensured for
the population. Meanwhile, for Armenia, a country with developed and
high quality human resources, such a scenario is not acceptable. The
experience of the recent years shows that much higher growth rates
can be achieved - 9.5-12.5%.
On the other hand, it should be noted that in the context of the
present economic situation the economic growth cannot be sustainable
in the long run. It is obvious that the present economic growth is
concentrated in several sectors.
Meanwhile, the factors contributing to favorable conditions in these
sectors cannot be sustained. This is true for large scale construction
works and agriculture. Therefore, if the share of these sectors in the
economy decreases with time, the economic growth will also slow down.
The agricultural sector in Armenia is in a privileged position vis a
vis the foreign producers since the domestic agricultural sector is
exempt from VAT. However, these privileges will be gradually eliminated
in 3-4 years. In this context, if the inevitable increase of the prices
of agricultural products is not balanced with growth of productivity
in the agricultural sector, economic decline will be inevitable.
Finally, one of the main factors contributing to the economic growth in
Armenia has been large scale foreign financing through loans provided
by international financial organizations and humanitarian assistance
from donor countries and international organizations.
This assistance has made it possible to sustain the infrastructures
and ensure the population's purchasing power. The last factor has
stimulated activation of the domestic producers. Provision of foreign
loans and formulation of domestic demand have thus made it possible
to significantly decrease imports increasing instead exports from
the country.