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ARMENIA: MONOPOLY STRUCTURE
Vestnik Kavkaza, Russia
July 18 2014
18 July 2014 - 11:24am
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.
http://vestnikkavkaza.net/articles/economy/57857.html
Vestnik Kavkaza, Russia
July 18 2014
18 July 2014 - 11:24am
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.
http://vestnikkavkaza.net/articles/economy/57857.html