The Diaspora makes direct foreign investments (DFI) in Armenia, private money exchange, shows political aid and spreads the propaganda of Armenian culture in foreign countries. Based on the experience of other ethnic groups, it has been proven that the Diaspora plays a major role in the development of countries. For example, according to some evaluations, in 1999, 70% of China’s direct foreign investments were made by Chinese by origin. However, we can’t say the same for Israel. Although the Jews spread all over the world (especially in the U.S) have played an important role in establishing the Israeli state and reaching success, however the direct foreign investments made by them and their actives have formed only 6% of the GDP of Isreal in the entire history of the country.
How are things in Armenia? How many direct foreign investments are made by the Diasporan-Armenians in Armenia? What are the main factors for getting the Armenians living abroad to make investments in Armenia and the motives for deciding to make investments? In order to answer these questions, the “Economy and Values” research center, along with the “Caucasian Center for Research Resources” (CCRR), has conducted studies by researching nearly 2600 companies making foreign capital and 6500 shareholders. Researchers have come to the following conclusion:
“The Armenian Diaspora has played a significant role in making direct foreign investments in Armenia, but that role has been smaller than the actual size of the country.”
The thing is that between 1994 and 2004, the investments from the Armenian Diaspora have only formed 25% of the direct foreign investments and 70% of Armenia’s foreign investors. The investment of an average Armenian who has contacts with the Diaspora has come up to be 150,000 dollars, while the number of individuals and businesses making investments from the Diaspora is 2200. Russia, the U.S. and Iran are the leading foreign investors in Armenia, then France, Syria and Lebanon.
If Armenian investors making direct foreign investments in the Armenian Diaspora make up 25%, then who are the rest? Based on the analyses of the “Economy and Values” research center, 40% of investments are substructure investments (“ArmenTel”, “ArmRusGazard” “Distributive Networks”, “Hrazdan Energy Company”), 24% Armenian investments (“Yerevan Brandy Factory”, “Kastel”, “Armenal”, the large companies included in the “Property in exchange for debt” program), 4% “phony” investments. These companies are registered as foreign companies but, based on research, bring in capital to Armenia. The main fields of interest to Armenians in the Diaspora are the IT/communications field, diamond production, jewelry, tourism, agro-business, small industry and construction.
The research center has conducted a survey among Armenian Diaspora businessmen making investments in Armenia with the purpose of figuring out the motives for investments. Based on the results, the Diaspora has helped out Armenia mainly by benevolent programs and humanitarian aid, political aid, cultural ties, as well as exchange of information and knowledge.
“On the scale of investment possibilities, Armenia still doesn’t place high in investments made in the Diaspora. Armenia is not really competitive for the Diaspora,” states the research center’s analysis. It states that Armenia has used up all the resources that the Armenian Diaspora has to offer based on its nationalism, but they have ended in small investments. Since the analysts believe that this can not be effective, they feel the necessity of coming up with new strategic reforms. Basically, the target for provoking investments has to be business motives, and not “friend-relative”, “nationalist” concepts. The analysts propose making Armenia more attractive to foreign businessmen. Of course, the ties between Armenia and the Armenian Diaspora can serve as the most significant strategy. The research center specialists believe that the key participants must be the Armenians in charge of the large companies.